Calculate customer acquisition cost

Customer acquisition cost (CAC) is what you spend to win one customer. Knowing it tells you which channels are worth it and how much you can afford to spend to grow profitably.

Do this

1. Add up all sales and marketing spend for a period.
2. Divide by the number of new customers won in that period.
3. Calculate it per channel where you can.
4. Compare CAC to what a customer is worth (lifetime value).

CAC Formula

CAC = Total Sales & Marketing Spend ÷ New Customers Won

Example: Spent on marketing: $2,000 New customers: 20 CAC = $100 per customer

The key comparison: CAC vs. Customer Lifetime Value (LTV). A healthy business earns at least 3× its CAC in LTV. If a customer is worth $900 and costs $100 to acquire, spend more on that channel.