Customer Acquisition Cost Calculator – CAC Calculator

Created by Wei Bin Loo
Reviewed by Tibor Pal, PhD candidate and Steven Wooding
Last updated: Oct 19, 2022

With this customer acquisition cost calculator (or CAC calculator), we aim to help you to calculate the cost you need to acquire a customer. The customer acquisition cost enables you to calculate the efficiency of your business in attaining customers.

We have written this article to help you understand what the customer acquisition cost is and how to calculate the customer acquisition cost (CAC). We will also demonstrate some CAC examples to help you understand the concept.

What is the customer acquisition cost?

The customer acquisition cost, or CAC, is the money needed to acquire a single customer. In general, the cost required for a business to serve a customer is the cost necessary to deliver the service or product, which is the cost of sales and marketing. The higher the customer acquisition cost, the less efficient the business is.

Now, let's look at how to calculate the CAC.

How to calculate CAC? Customer acquisition cost formula

To understand the CAC calculation, let's look at the company Alpha with the information below:

  • Cost of marketing: $1,000;
  • Cost of sales: $12,000; and
  • Number of new customers: 1,000.

There are three steps you need to take to calculate the customer acquisition cost:

  1. Determine the cost of marketing.

    The first step is to determine the cost of marketing. In this example, the cost of marketing is $1,000.

    To understand more about marketing, please check out our online marketing conversion calculator.

  2. Determine the cost of sales.

    Next, you need to compute the cost of sales. This is the cost required to deliver the service or products. The cost of sales for Alpha is $12,000.

  3. Determine the number of new customers.

    Then, we need to determine the number of new customers acquired during the period. For this example, the number of new customers is 1,000.

  4. Calculate the customer acquisition cost.

    The last step is to calculate the CAC using the customer acquisition cost formula below:

    CAC = (cost of marketing + cost of sales) / number of new customers

    For Alpha, the CAC is ($1,000 + $12,000) / 1,000 = $13.

FAQ

Can customer acquisition cost be negative?

No, the customer acquisition cost cannot be negative. This is because a negative customer acquisition cost means that you are getting paid to acquire customers.

How can I calculate the customer acquisition cost?

You can calculate the customer acquisition cost in four steps:

  1. Determine the cost of marketing.

  2. Determine the cost of sales.

  3. Determine the number of new customers.

  4. Apply the customer acquisition cost (CAC) formula:

    CAC = (cost of marketing + cost of sales) / number of new customers.

What is the customer acquisition cost if the number of new customer is zero?

The customer acquisition cost will be (infinite!). This is because you pay the cost of marketing and the cost of sales without acquiring any customers.

How do I understand the customer acquisition cost?

The higher the customer acquisition cost, the more money the business is spending to acquire a single customer. It means that the business is less efficient in growing and should look for ways to lower its customer acquisition cost.

Wei Bin Loo
Cost of marketing
$
Cost of sales
$
Number of new customers
Customer acquisition cost
$
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