01
What is customer acquisition cost?
Customer acquisition cost, commonly shortened to CAC, shows the average marketing and sales expense used to acquire one new customer. It gives a small business, SaaS company, online store, or service business a consistent way to compare acquisition performance across periods or channels.
CAC is an average, not the exact cost of winning each customer. Every expense and every new customer in the calculation must belong to the same measurement period.
02
How to calculate CAC
Add attributable Marketing Costs and Sales Costs for the selected period. Divide that total by the number of new customers acquired during that same period.
Total Acquisition Costs = Marketing Costs + Sales Costs
Customer Acquisition Cost = Total Acquisition Costs ÷ New Customers Acquired
Marketing Cost per Customer = Marketing Costs ÷ New Customers Acquired
Sales Cost per Customer = Sales Costs ÷ New Customers Acquired
Use new customers rather than all orders, leads, visitors, or existing customers. A repeat purchase by an existing customer is not a new acquisition.
03
What costs should be included in CAC?
Marketing Costs can include paid advertising, campaigns, marketing tools, agency or contractor fees, attributable marketing team costs, content, and promotional expenses. Sales Costs can include sales salaries and commissions, sales tools, prospecting, demos, travel, and other costs attributable to acquiring customers.
Include only costs connected to acquisition for the period being measured. This calculator accepts aggregated totals; it does not decide accounting rules or how your business should allocate salaries, software, or shared overhead.
04
Marketing costs vs sales costs
Marketing costs generally create awareness and demand, while sales costs move prospects through conversations, demos, proposals, and closing. The boundary can vary between businesses, especially where the same team or software supports both activities.
Choose a documented, repeatable allocation method. The marketing and sales shares in the results show how the total acquisition spend is divided; they do not grade either category's effectiveness.
05
Why sales costs belong in CAC
A customer may first respond to marketing but still require prospecting, demos, follow-up, negotiation, or commissions before buying. Those attributable sales resources are part of the cost of acquiring the customer.
Calculating CAC from advertising or marketing spend alone can materially understate acquisition cost for a sales-led SaaS company, service business, or any company with a substantial sales process.
06
How to choose the correct measurement period
A month can suit a business with short buying cycles and stable activity. A quarter or year may be more representative when campaigns, seasonality, or sales cycles span several weeks. Use the same definition consistently when comparing periods.
Never divide one month's spending by customers from a different month. If acquisition has a material time lag, choose a longer aligned period or use a documented cohort method outside this simple aggregate calculation.
07
Customer acquisition cost calculation example
Suppose a business spends $12,000 on marketing and $8,000 on sales and acquires 100 new customers during the same period.
- Total Acquisition Costs: $12,000 + $8,000 = $20,000.
- Customer Acquisition Cost: $20,000 ÷ 100 = $200.
- Marketing Cost per Customer: $12,000 ÷ 100 = $120.
- Sales Cost per Customer: $8,000 ÷ 100 = $80.
- Marketing Share: $12,000 ÷ $20,000 × 100 = 60%.
- Sales Share: $8,000 ÷ $20,000 × 100 = 40%.
08
How to interpret your CAC
There is no universal good CAC. An acceptable cost depends on customer lifetime value, gross margin, repeat purchases, churn, payback period, the business model, and the measurement method used.
A low CAC alone does not prove profitability. Compare CAC with the value and marginal profit a customer produces, how long that value takes to arrive, and whether the same cost definitions were used in every comparison.
09
Common CAC calculation mistakes
- Counting leads, visitors, orders, or existing customers instead of newly acquired customers.
- Counting repeat purchases as additional customer acquisitions.
- Combining costs from one period with customers from another.
- Omitting attributable sales salaries, commissions, tools, or other sales-process costs.
- Changing allocation rules between periods without documenting the change.
10
Limitations of a CAC calculation
Aggregate CAC can hide differences among channels, customer segments, locations, or cohorts. Allocation methods for salaries, software, and shared expenses can also differ between companies, so figures may not be directly comparable.
This calculator uses the aggregated costs you provide and does not define accounting treatment, model acquisition timing, or measure customer value and profit. Its result is a reference for analysis, not a guarantee of efficiency.
11
Frequently asked questions
What is customer acquisition cost?
Customer acquisition cost, or CAC, is the average attributable marketing and sales cost required to acquire one new customer during a defined period.
What is the formula for CAC?
Add Marketing Costs and Sales Costs for one period, then divide that Total Acquisition Cost by the number of new customers acquired in the same period.
Should sales costs be included in CAC?
Yes, when they are attributable to customer acquisition. Sales salaries and commissions, sales tools, prospecting, demos, and related travel can all contribute to winning new customers and should not be omitted simply because they are not advertising costs.
What marketing costs should be included?
Include acquisition-related paid advertising, campaigns, marketing tools, agency or contractor costs, attributable marketing team costs, content, and promotional expenses for the selected period. Apply one consistent allocation method.
Should I count leads or paying customers?
Count new customers, not leads, visitors, all orders, or existing customers. A repeat purchase by an existing customer is not another acquired customer.
What period should I use to calculate CAC?
Use a period long enough to represent your sales cycle and normal spending, such as a month, quarter, or year. Most importantly, every cost and every new customer in the calculation must come from that same period.
What happens when no new customers are acquired?
CAC and the marketing and sales cost per customer are unavailable because they would require division by zero. Total costs and the marketing and sales cost shares can still be calculated when total costs are positive.
Is a lower CAC always better?
No. A lower CAC does not by itself prove profitability or sustainable growth. Compare it with customer lifetime value, gross margin, repeat purchases, churn, payback period, your business model, and a consistent measurement method.
What is the difference between CAC and cost per lead?
Cost per lead divides relevant spending by the number of leads generated. CAC divides attributable marketing and sales spending by new customers acquired, so it measures a later outcome in the acquisition process.
Does CAC show whether a customer is profitable?
No. CAC measures average acquisition cost, not customer profitability. Profitability also depends on customer value, gross margin, retention, repeat purchases, servicing costs, and the time required to recover the acquisition spend.
Does changing Currency convert acquisition costs?
No. Currency changes the symbol and display formatting only. Enter marketing and sales costs in one consistent currency.