BizFormula

Marketing formula

Customer Acquisition Cost Formula

Calculate the average customer acquisition spend required to acquire one new customer.

The equation

How the formula works

Formula

CAC = Customer acquisition spend ÷ New customers acquired

What each term means

Customer acquisition spend
The sales and marketing acquisition costs selected for the measured period.
New customers
Customers first acquired during that same period under a consistent definition.
CAC
Average acquisition cost per new customer for the chosen scope.

How to calculate it

  1. 1

    Choose a period and define which acquisition costs are included.

  2. 2

    Count only new customers acquired in that period.

  3. 3

    Divide the included costs by the new-customer count.

How to interpret the result

CAC is meaningful only alongside the value and gross profit generated by acquired customers.

A blended figure is useful for company-level planning, while channel CAC can support allocation decisions when cost and customer attribution are consistent.

Blended CAC versus paid CAC

Blended CAC uses acquisition costs and customers across included channels. Paid CAC narrows the scope to paid acquisition. Label the scope so the number can be interpreted correctly.

Assumptions and limitations

  • Costs and customer counts use the same period and scope.
  • The customer count excludes repeat buyers unless the business explicitly defines reacquisition.
  • The selected cost basis is documented and applied consistently.

Common mistakes

  • Dividing by leads, orders, or conversions instead of new customers.
  • Including salaries in one period but excluding them in another.
  • Comparing channel CAC figures built with incompatible attribution methods.

Frequently asked questions

A broad CAC can include advertising, agencies, sales and marketing payroll, tools, creative production, and other acquisition overhead. The right scope depends on the decision, but it should be documented.

CAC is undefined because division by zero has no valid result. Report the spend and zero acquisitions rather than an infinite CAC.

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