CAC Formula: How to Calculate Customer Acquisition Cost
The Customer Acquisition Cost (CAC) formula quantifies the total expenditure required to acquire a new customer, serving as a vital metric for evaluating the efficiency of sales and marketing efforts.
Bottom Line
The Customer Acquisition Cost (CAC) formula quantifies the total expenditure required to acquire a new customer, serving as a vital metric for evaluating the efficiency of sales and marketing efforts.
CAC Calculator
Calculate customer acquisition cost, payback period, and LTV:CAC efficiency.
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Formula
Copy the exact expression or work through it step by step below.
CAC = Sales And Marketing Spend / New Customers Variables
CAC
CAC
The average cost to acquire one new paying customer, in currency units. Compare it against customer lifetime value and payback period to judge whether a channel is sustainable.
SMS
Sales And Marketing Spend
Total sales and marketing spend for the period in currency units: ad budget, salaries, tooling, and commissions attributable to acquisition. The numerator.
NC
New Customers
The count of new paying customers won in the same period. Use only genuinely new customers, not renewals or expansions.
Step By Step
- 1
Set the baseline case with the real calculator inputs.
Sales Marketing Spend = $32,000, New Customers = 40, Monthly ARPU = 129, Gross Margin Percent = 78.0%
- 2
Add up every sales and marketing cost for the window (ad spend, salaries, tools, agency fees) so the numerator is complete.
Ads 20,000 plus salaries 10,000 plus tools 2,000 gives 32,000 total spend.
- 3
Apply the formula and read the first calculator outputs, not just the headline assumption.
The calculator lands with customer acquisition cost at $800 and payback period at 7.95.
- 4
Re-run per channel rather than blended, since a healthy average can hide one channel acquiring customers far above its payback ceiling.
Blended CAC of 800 may split into 400 for organic and 1,500 for paid search.
Worked Example
CAC sample case
Sales Marketing Spend
$32,000
New Customers
40
Monthly ARPU
129
Gross Margin Percent
78.0%
CAC = Sales And Marketing Spend / New Customers using sales marketing spend $32,000, new customers 40, monthly ARPU 129, gross margin percent 78.0%.
The calculator lands with customer acquisition cost at $800 and payback period at 7.95.
Common Variations
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Sources & References
- Customer Acquisition Cost (CAC) — Investopedia
- Customer Acquisition Cost: The Ultimate Guide — HubSpot Blog
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