CAC is one of the most important metrics for a growing business. A healthy business earns at least three times its CAC over a customer’s lifetime and recovers the CAC within about 12 months.
How to use the Customer Acquisition Cost Calculator
- Cost of marketing
- Cost of sales
- Number of new customers
- Customer lifetime value
- Monthly gross profit per customer
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter your marketing and sales costs for the period, the new customers acquired, and the lifetime value and monthly gross profit of a customer.
Tips
- Use figures for the same period (a month, a quarter or a year) for every input so ratios compare like with like.
- Track the metric over time – the trend usually tells you more than a single value.
- Compare your result with industry benchmarks, which vary a lot between sectors.
- Treat the result as a starting point for a decision, then check the assumptions behind each input.
Common mistakes to avoid
- Mixing monthly and yearly numbers in the same calculation.
- Using revenue where the formula needs profit (or the other way round).
- Forgetting hidden costs such as taxes, fees, overheads or your own time.
Inputs explained
| Field | What to enter |
|---|---|
| Cost of marketing | Amount in your currency |
| Cost of sales | Amount in your currency |
| Number of new customers | A number |
| Customer lifetime value | Amount in your currency |
| Monthly gross profit per customer | Amount in your currency |
What each result means
- Customer acquisition cost = ([Cost of marketing] + [Cost of sales])÷[Number of new customers]
- LTV:CAC ratio = [Customer lifetime value]÷[Customer acquisition cost]
- CAC payback period = [Customer acquisition cost]÷[Monthly gross profit per customer]
Example values
How the main result changes when Cost of marketing changes and everything else stays at the example values above:
| Cost of marketing | Customer acquisition cost |
|---|---|
| 5,000 | 17 |
| 7,500 | 19.5 |
| 10,000 | 22 |
| 12,500 | 24.5 |
| 15,000 | 27 |
| 20,000 | 32 |
Formula
CAC = (marketing costs + sales costs) ÷ new customersLTV:CAC = customer lifetime value ÷ CACCAC payback (months) = CAC ÷ monthly gross profit per customerWorked example
Inputs — Cost of marketing: $10,000; Cost of sales: $12,000; Number of new customers: 1,000; Customer lifetime value: $90; Monthly gross profit per customer: $6.
Results — Customer acquisition cost = $22.00; LTV:CAC ratio = 4.09 : 1; CAC payback period = 3.7 months; Verdict = Healthy.
Frequently asked questions
What is a good CAC?
One that is a third or less of customer lifetime value and paid back within 12 months.
What costs go into CAC?
Advertising, marketing staff and tools, sales salaries and commissions.
How can I reduce CAC?
Improve conversion, referrals and organic channels.
What formula does the Customer Acquisition Cost Calculator use?
CAC = (marketing costs + sales costs) ÷ new customers.