Customer Acquisition Cost Calculator

What Is a Customer Acquisition Cost Calculator?

A Customer Acquisition Cost Calculator calculates the average amount a business spends to acquire one new customer. Customer acquisition cost, commonly abbreviated as CAC, is a useful business metric for evaluating the efficiency of marketing and sales activities.

The calculation divides the total costs associated with acquiring customers by the number of new customers acquired during the same period. This provides an average acquisition cost that can be compared with revenue, customer lifetime value, margins and other business metrics.

Why Use a Customer Acquisition Cost Calculator?

Calculating CAC manually is straightforward, but a dedicated calculator makes it easier to obtain a consistent result when reviewing marketing and sales performance. It can be used for individual campaigns, monthly reporting, quarterly analysis or other defined measurement periods.

How to Use the Customer Acquisition Cost Calculator

Use the calculator with figures covering the same period and acquisition activity for the most meaningful result.

1. Enter your total acquisition costs — Enter the total marketing, advertising, sales and other relevant costs associated with acquiring customers.
2. Enter the number of new customers — Enter the number of new customers acquired during the same measurement period.
3. Select Calculate CAC — The calculator divides the total acquisition costs by the number of new customers.
4. Review the result — The resulting figure represents the average cost of acquiring one new customer.

How to Calculate Customer Acquisition Cost

The standard customer acquisition cost formula is simple: divide the total costs incurred to acquire customers by the number of new customers acquired during the same period. For example, if a business spends £5,000 on customer acquisition and gains 100 new customers, its CAC is £50 per customer.

The figures used should cover a consistent period. If the costs represent one month of marketing and sales activity, the number of new customers should also represent customers acquired during that month. Using mismatched periods can produce a misleading CAC.

What Costs Should Be Included in CAC?

The costs included in CAC depend on how a business defines and measures customer acquisition. Common inputs can include advertising expenditure, marketing campaign costs, sales commissions, promotional expenses, relevant marketing software, sales software, agency fees and other direct acquisition expenses.

CAC Example

Suppose a business spends £12,000 on marketing and sales activities during a month and acquires 200 new customers. The calculation is £12,000 ÷ 200, resulting in a customer acquisition cost of £60 per new customer.

Understanding Your Customer Acquisition Cost

A lower CAC is not automatically better if it results in lower-quality customers, reduced retention or lower revenue. CAC should be considered alongside customer lifetime value, gross margin, retention, conversion rates and other relevant business metrics.

There is no single CAC value that is appropriate for every business. A subscription software company, ecommerce retailer and professional services business can have very different acquisition economics. Comparing CAC against your own historical performance and the value generated by acquired customers can provide more useful insight than relying on a universal benchmark.

Frequently Asked Questions