The CAC formula
CAC = sales and marketing cost / new customers. Include ad spend, creator fees, sales activity, tooling and agency costs when they directly support acquisition. Keep the date range consistent: costs and customers should come from the same period.
CAC calculation example
If you spend $5,000 on marketing, $1,500 on sales activity and acquire 65 customers, CAC is $100. If each order creates $48 of gross profit, you need just over two orders to recover that acquisition cost.
CAC vs CPA
CPA is usually the ad-platform cost per conversion. CAC is the all-in business cost to acquire a customer. Use CPA to optimize a channel, then use CAC to decide whether acquisition is profitable after all costs.
How CAC connects to LTV and ROAS
CAC needs context. Compare it with customer LTV, gross margin and ROAS. A high CAC can be healthy for a repeat-purchase brand, but dangerous for a one-time product with thin margins.
Frequently asked questions
How do you calculate CAC?
CAC = total sales and marketing cost divided by new customers acquired. If you spend $6,500 across ads, tools, creators and sales activity and acquire 65 new customers, CAC is $100. Include only the costs tied to acquiring those customers in the same period.
What is a good CAC?
A good CAC is one that is meaningfully lower than the gross profit a customer creates over their lifetime. For ecommerce, compare CAC to first-order gross profit, repeat purchase rate and LTV. For SaaS, compare CAC to gross-margin-adjusted LTV and payback period.
Is CAC the same as CPA?
Not exactly. CPA usually measures media cost per conversion inside an ad platform. CAC is broader: it can include sales salaries, creator fees, tools, agency costs and other acquisition expenses. CPA is a channel metric; CAC is a business metric.
How do I reduce CAC?
Reduce wasted spend, improve creative so more people click, improve conversion rate so more visitors buy, and raise AOV or retention so each customer can support a higher acquisition cost. Better creative often helps twice: it lowers CPC and raises conversion quality.