What CAC is and how to calculate customer acquisition cost

CAC (Customer Acquisition Cost) is the cost of acquiring one customer. It's one of the key metrics for judging whether marketing is profitable or burning money. Let's break it down.

How to calculate

CAC = all acquisition spend ÷ number of acquired customers

Spend includes not just the ad budget but salaries, contractors, tools — everything that went into acquisition over a period. Divide by the number of NEW customers in the same period.

Example

You spent $4,000 on marketing in a month and got 100 new customers → CAC = $40.

What to compare it with: CAC and LTV

CAC alone says nothing — what matters is comparing it with how much a customer brings over their lifetime (LTV).

• LTV > CAC — the business earns on the customer.
• LTV < CAC — every customer is a loss; the model doesn't add up.

A healthy ratio is often cited as LTV/CAC ≈ 3:1 or higher, but it depends on the niche.

Why CAC grows

• Ads and auctions get pricier.
• A narrow audience burns out (high frequency).
• A weak funnel loses leads.

How to lower it

• Make the top of the funnel cheaper (seeding, organic, awareness) — a familiar brand is cheaper to sell.
• Improve funnel conversion.
• Grow LTV (repeat sales) so there's more headroom on CAC.

Takeaway

CAC is the price of a customer, but it only makes sense paired with LTV. Don't chase a minimal CAC — chase a healthy LTV/CAC ratio. We help build acquisition where the economics add up.