How to Calculate Customer Acquisition Cost
What is Customer Acquisition Cost?
Calculates the cost to acquire one new customer across all marketing channels. Essential for evaluating marketing efficiency and ROI.
Step-by-Step Guide
- 1Sum all marketing expenses (advertising, content, sales staff)
- 2Count total new customers acquired in period
- 3Divide: total spend ÷ new customers
- 4Analyze by channel for optimization
Worked Examples
Input
$5000, 50 cust
Result
$100CAC
Common Mistakes to Avoid
- ✕Including overhead in CAC instead of direct marketing expenses
- ✕Not excluding retained customers from new customer count
Frequently Asked Questions
What's a reasonable CAC?
Varies by industry; typically CAC should be recovered within 3-12 months of customer revenue.
How do I reduce CAC?
Improve conversion rates, focus on high-ROI channels, leverage referrals and organic growth.