Customer acquisition cost: how to calculate CAC

The CAC formula, which costs to include, a worked example, the link to LTV and ways to reduce it.

March

2021

Customer acquisition cost: how to calculate CAC

CAC (customer acquisition cost) is what it costs to win one new customer. The basic formula divides marketing and sales costs for a period by the number of new customers who made their first purchase in that same period.

In short

CAC = (marketing + sales costs for a period) / new customers in that period.
Count paying customers; leads and clicks are CPL and CPC.
CAC only makes sense next to margin and LTV, the revenue a customer brings over time.
Data comes from ad accounts, GA4 and your CRM: KeyCRM, HubSpot or Pipedrive.
Lower CAC through tighter targeting, better site conversion and faster lead response.

What is CAC in marketing?

CAC shows how much one new buyer costs the company. It answers a simple question: do advertising and the sales team pay for themselves? If acquiring a customer costs more than the margin they bring, growing sales grows losses.

How to calculate customer acquisition cost

CAC = (marketing costs + sales costs) / number of new customers.

An illustrative example. In one month a company spent UAH 60,000 on Google Ads and Meta Ads, UAH 30,000 on contractors and UAH 40,000 on sales salaries. 65 new customers made their first payment. CAC = 130,000 / 65 = UAH 2,000. The figures are illustrative; use your own data.

Agree on the method

Write down which costs are included: advertising, team time, contractors, content production and tools. Allocate shared costs by a rule chosen in advance and keep it when comparing periods.

In the denominator, count new buyers by one consistent definition. Enquiries, sign-ups and clicks need their own cost metrics. Track refunds and cancellations to see the quality of acquisition.

How is CAC different from CPL, CPA and CPC?

Metric	What it measures
CPC	Cost per ad click
CPL	Cost per lead or enquiry
CPA	Cost per target action: enquiry, sign-up, purchase
CAC	Full cost of a new paying customer, including sales
LTV	Revenue or margin from a customer over the whole relationship

Account for the sales cycle

With long sales cycles, this month's spend and this month's new customers may belong to different campaigns. Add a cohort view by the date of first contact. Note which part of spend has not yet turned into closed deals.

How to use the metric

Compare channels only with the same cost scope and accounting rules.
Set CAC against margin and actual repeat purchases: the LTV to CAC ratio shows your safety margin.
Check the payback period and the working capital it requires.
Analyse losses between enquiry, proposal and payment.

A universal "good" number without business context is of little use. Work with your own costs and sales. Judge any drop in CAC together with customer quality and overall profit.

Where to get the data

Costs come from Google Ads, Meta Ads Manager, TikTok Ads and accounting. The enquiry source comes from GA4 via UTM tags and form submission events. Payment status lives in the CRM. The chain "ad → enquiry → payment" cannot be built without a CRM, which is why we set up CRM lead transfer and GA4 events first when launching ads.

How to reduce customer acquisition cost

Pause campaigns and keywords that bring enquiries without sales.
Raise landing page conversion: a clear offer, a short form, messenger buttons.
Answer enquiries within minutes: a late reply wastes demand you already paid for.
Add lower-cost channels: SEO, Google Business Profile, repeat sales and referrals.
Run remarketing for people who have already visited the site.

Frequently asked questions

What is CAC in simple terms?

It is the amount a company spends on marketing and sales to gain one new paying customer.

What is a good CAC?

One that the customer's margin pays back within an acceptable time. Many businesses aim for LTV at three or more times CAC, but the right benchmark depends on the niche, margin and repeat purchases.

Should salaries be included in CAC?

Yes, for full CAC: marketing and sales salaries are part of the cost. It is also useful to track a "paid media" CAC based on ad spend only.

How do I calculate CAC for a restaurant?

Divide spend on ads, delivery aggregators and promotions for a period by the number of new guests. New guests are identified through a loyalty programme, promo codes or bookings.

How is CAC different from CPA?

CPA is the price of one target action, such as an enquiry. CAC is the full price of a new customer who has paid, including the sales team's work.

Want to know the real cost of a customer from ads?

We set up Google Ads, GA4 and CRM lead transfer so you can see the path from click to payment. Campaigns launch within a few working days after we receive access.

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