Customer Acquisition Cost Calculator

Customer Acquisition Cost (CAC) is the total cost your business spends, on average, to acquire one new paying customer. It is one of the most critical metrics in business because it directly determines whether your revenue model is sustainable.

Formula: CAC = Total Sales and Marketing Spend ÷ Number of New Customers Acquired

What to include in “Total Sales and Marketing Spend”:

• Advertising costs (Google Ads, Facebook Ads, print, radio)
• Sales team salaries and commissions
• Marketing team salaries
• Marketing software and tools (CRM, email platforms, analytics)
• Agency fees and contractor costs
• Event and sponsorship costs
• Content creation and SEO investment

Related formulas: CAC Payback Period = CAC ÷ Monthly Gross Profit per Customer LTV:CAC Ratio = Customer Lifetime Value ÷ CAC

Healthy benchmarks:

• LTV:CAC ratio of 3:1 or better is generally considered healthy
• LTV:CAC below 1:1 means you are losing money on every customer
• CAC payback under 12 months is strong. Over 18 months is concerning
• Above 5:1 usually means you are under-spending on growth rather than doing brilliantly

What each variable means:

• New customers: count only net-new ones, not returning or reactivated accounts.
• Period: CAC has to be worked out over the same window as the spend, whether that is a month, a quarter or a year.
• Monthly gross profit per customer: revenue minus the cost of serving them, per month. This is what pays the acquisition cost back, and it is the input people leave out.

Worked example: Q3 spend: $45,000 on ads, $30,000 in sales salaries, $5,000 in tools = $80,000 total. New customers acquired in Q3: 320.

CAC = $80,000 ÷ 320 = $250 per customer

Say the average customer spends $750 over their lifetime at a 50% gross margin, so LTV is $375. LTV:CAC = $375 ÷ $250 = 1.5:1, and that business needs to cut CAC or raise LTV fairly urgently. If those customers throw off $30 a month in gross profit, payback takes $250 ÷ $30 = 8.3 months, which is comfortable. The two numbers can disagree like that, and both are worth knowing: the ratio says whether the customer is worth buying at all, payback says how long your cash is tied up.

Industry CAC benchmarks: SaaS ~$200–$700 | E-commerce ~$10–$90 | Financial services ~$200–$900.