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What Is Customer Acquisition Cost (CAC)? Formula and Tips

Customer acquisition cost is the total cost of winning one new customer. Formula, what to include and why it only means something next to retention.

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Customer Acquisition Cost

Customer acquisition cost (CAC) is the total sales and marketing cost of winning one new customer in a period, calculated as total acquisition spend divided by the number of new customers acquired.

What to include

Ad spend, agency and freelancer fees, software, content and creative production, and the share of sales and marketing salaries spent on new business. Counting only ad spend makes CAC look much lower than it really is.

Customer Acquisition Cost: open marketing guide with a chart, checklist and reading time

Why it needs context

CAC only means something next to customer value. Bain’s research found acquiring a customer can cost five to 25 times more than keeping one, and a 5% increase in retention can raise profits by 25% to 95% (Harvard Business Review, 2014). Compare CAC with gross margin per customer over their lifetime, and track payback period.

Formula

CAC = total acquisition costs / new customers acquired

See how to calculate a realistic CAC.

FAQ

What is a good CAC?
One that pays back within a period your cash flow can support, relative to customer lifetime value.
Should organic channels be included?
Yes. SEO and content have real costs, and including them shows their true efficiency.
Published Sep 30, 2026 · Last updated Sep 30, 2026