Customer acquisition cost — total sales and marketing spend divided by the new customers it won.
Add up everything you spent to win customers over a period, then divide by the number of new customers that period produced. Include ad spend, the salaries of sales and marketing staff, tools and software, agency fees, and any commissions attributable to acquisition. The key is consistency: use a defined period and count the customers won within it, so spend and results line up.
Last quarter you spent $10,000 across all acquisition activity and signed 200 new customers. CAC = 10,000 ÷ 200 = $50. If sales salaries and commissions add another layer of cost, fold them in on top of the marketing spend — a marketing-only CAC will read lower than the fully loaded figure, so be clear about which one you are quoting.
A CAC in isolation tells you nothing — $50 is cheap for a product with a $2,000 lifetime value and ruinous for one worth $30. CAC only means something next to LTV:CAC ratio; a healthy business keeps lifetime value at least 3× CAC. Watch, too, how you scope the number: this calculator measures CAC for a specific set of spend and customers, which differs from blended CAC that averages paid and organic acquisition together. Manage paid channels on their own CAC and judge the whole business on the blended one.
How do you calculate CAC? Divide total marketing and sales spend by the new customers acquired in the same period.
What costs go into CAC? All acquisition sales and marketing costs — ad spend, staff salaries, tools, agency fees, and commissions.
What is a good CAC? It depends on lifetime value. Target an LTV:CAC ratio of at least 3:1 rather than chasing a fixed dollar number.
