CAC (Customer Acquisition Cost)

Short answer

Customer acquisition cost (CAC) is what it costs you, on average, to get one new paying customer.

CAC = total sales and marketing costs ÷ new customers acquired

Both numbers cover the same period, usually a month or a quarter.

Why it matters

CAC is half of the most important question in a store's economics: does a new customer make you more money than they cost to get? The other half is LTV.

A rising CAC is often the first sign that something changed: ads got more expensive, a channel stopped working, or tracking broke and you're spending without knowing it. It's also the number that quietly decides whether growth is healthy or just expensive.

Example

Illustrative numbers. A store spends this in one quarter:

It gains 800 new customers in the same quarter.

CAC = $40,000 ÷ 800 = $50

If the average first order brings in $35 of gross profit, every new customer starts $15 in the red. That's fine only if they come back.

Often confused with

• CPA (cost per acquisition): usually ad spend only, divided by conversions an ad platform reports. In the example, Meta might report a $25 CPA. Your real CAC is double that once everything else is counted. This is the most common way CAC gets understated.
• Blended vs paid CAC: blended CAC divides total spend by all new customers, including the ones who found you through word of mouth. Paid CAC only counts customers from paid channels. Blended looks better; paid tells you whether the ads work.
• Cost per order: includes repeat orders from existing customers. CAC only counts new customers. Mixing them makes acquisition look cheaper than it is.