CAC Calculator - Customer Acquisition Cost

Acquisition Details

Calculate Customer Acquisition Cost (CAC) from your sales and marketing spend, then pair it with lifetime value to check your LTV:CAC ratio.

Enter Total Sales & Marketing Cost

Enter New Customers Acquired

View CAC

Add Customer Lifetime Value (Optional)

CAC is only as complete as the costs you include, and leaving out salaries, tools, or agency fees gives a lower figure than this calculator's. Reconcile against your actual marketing and sales spend before setting an acquisition budget.

Formulas and sources

Each formula this calculator uses, where it comes from, and what it leaves out. "How it works" shows the same formula with your own numbers.

Customer acquisition cost

CAC = Cost ÷ N
CAC
customer acquisition cost
Cost
the total sales and marketing spend for the period
N
the new customers gained in the same period

Source: Based on the acquisition cost in Gupta, Lehmann and Stuart (2004) [1], who divide marketing cost by the customers newly acquired; this calculator counts sales spend as well.

LTV:CAC ratio and the most to spend at 3:1

With an LTV and a gross margin

Gross-margin LTV = LTV × GM ÷ 100 LTV:CAC Ratio = Gross-margin LTV ÷ CAC Max CAC at 3:1 = Gross-margin LTV ÷ 3
LTV
customer lifetime value, as entered
GM
gross margin, as a percentage of revenue
Gross-margin LTV
the gross profit a customer brings over its lifetime
LTV:CAC Ratio
how many times a customer's gross profit covers the CAC, shown as 4.0:1
CAC
customer acquisition cost, from above

The card is green at 3.0:1 or more, amber from 1.0:1 to below 3.0:1 and red below 1.0:1, read from the ratio as shown. These colors are CalcTrail's own.

Source: Standard arithmetic; no single publisher. The 3:1 ratio is widely used; no primary source found (searched: the Interactive Advertising Bureau glossary, the Media Rating Council and Interactive Advertising Bureau guidelines, and the customer-value papers by Gupta and colleagues).

LTV:CAC ratio on the LTV as entered

With an LTV and no gross margin

LTV:CAC Ratio = LTV ÷ CAC Max CAC at 3:1 = LTV ÷ 3

With no gross margin the LTV is graded as entered, as if it were already gross profit. If your LTV is revenue, enter your margin.

Source: Standard arithmetic; no single publisher.

Sources

  1. Gupta S, Lehmann DR, Stuart JA. Valuing Customers, section "Acquisition Cost". Journal of Marketing Research, February 2004; 41(1): 7-18.

What this calculator does not cover

  • It is one blended CAC across all channels and customers, not broken down by channel or cohort.
  • Which costs count differs by company, and some marketing spend goes to keeping existing customers rather than winning new ones. This calculator does not split that out.
  • Spend and the customers it wins can fall in different periods; the count covers only the period you enter.
  • CAC payback is not worked out here. The CLV Calculator shows it from a gross margin and a CAC.

Sources checked on .

Help

Quick Start Guide

  1. Enter Total Sales & Marketing Cost: Input the total amount spent on sales and marketing over the period.
  2. Enter New Customers Acquired: Input the number of new customers gained during that same period.
  3. View CAC: See your customer acquisition cost: total spend divided by new customers.
  4. Add Customer Lifetime Value (Optional): Enter a CLV figure (from the CLV calculator or your own data) to see the LTV:CAC ratio. If it is revenue, as CLV from the CLV Calculator is, add your gross margin.
  5. Evaluate the LTV:CAC Ratio: See whether the ratio reaches 3:1, the rule of thumb the card is graded against.
  6. Export Analysis: Export your CAC analysis as JSON, CSV or PDF for reporting.

Frequently Asked Questions

CAC is the average cost to acquire one new customer: total sales and marketing spend for a period, divided by the number of new customers gained in that same period. It is the cost side of the LTV:CAC ratio. The CAC formula is total sales and marketing spend for a period divided by the new customers won in it, so $50,000 that wins 200 customers is a $250 CAC. CAC is the cost per acquisition when each acquisition is a new customer; an ad platform's cost per acquisition counts conversions, which may be leads or sign-ups, so its figure can differ.

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