How to Calculate Customer Acquisition Cost (2026): CAC Formula and Examples

To calculate customer acquisition cost (CAC), divide what you spent on marketing in a period by the number of new customers you gained in that period. If you spent $2,100 on ads, influencer samples and marketing tools in a month and won 70 new customers, CAC = 2,100 ÷ 70 = $30. Count only new customers, not repeat buyers.

CAC tells you what a new customer costs. On its own it can't tell you whether that's cheap or expensive: for that, compare it with the profit a customer brings, on the first order and over time. This guide covers the formula, blended vs paid CAC, how to compare CAC with lifetime value without over-trusting rules of thumb, and examples for small online shops.

What is the customer acquisition cost formula?

CAC = total acquisition costs ÷ number of new customers acquired, both for the same period.

Acquisition costs are what you spend to win customers you didn't have before. For a small shop that usually means:

• Ad spend: Meta, Google, TikTok, marketplace ads such as Etsy Ads or Amazon Sponsored Products.
• Influencer fees and the cost of free products sent to creators.
• Affiliate commissions and discounts given only to first-time buyers (for example a welcome code).
• Marketing tools and creative costs: email software, design tools, photo or video production.
• Optional: freelancer or staff time spent on marketing. Including it gives a “fully loaded” CAC.

Leave out costs that serve existing customers only, such as a loyalty program, and costs of making and shipping the product. Whatever you include, keep it the same every month so the trend is meaningful.

How to calculate customer acquisition cost step by step

1. Pick a period, usually a month or a quarter. A quarter smooths out small numbers.
2. Add up acquisition costs for that period from your ad accounts, invoices and subscriptions.
3. Count new customers: buyers whose first order fell in the period. Most store platforms can filter orders or customers by first order date; on marketplaces, use your order export and look for buyers you haven't sold to before.
4. Divide costs by new customers.
5. Split by channel if you can: CAC from paid ads, from influencers, from organic.

Worked example: one month in a small online shop

A common error is dividing by all 120 orders, which gives $17.50 and makes acquisition look 42% cheaper than it is. Repeat buyers didn't cost you a new acquisition, so they don't belong in the denominator.

Blended CAC vs paid CAC: which should I use?

Use both: blended CAC tells you what growth costs overall, paid CAC tells you whether your ads are worth scaling.

In the example, 45 of the 70 new customers came through ads and 25 found the shop on their own. Blended CAC ($30) looks better than paid CAC ($40) because organic customers cost little. If you only watch blended CAC, rising ad costs can hide behind good organic months.

How does CAC relate to ROAS?

If you look only at new customers' first orders, CAC is roughly average order value ÷ ROAS. A $45 first order at a 1.5 ROAS means about $30 of ads per new customer.

That also explains why ad results can look poor while the business is fine: a first-order ROAS below break-even can still work if those customers come back. And it explains the opposite case: a high ROAS built mostly on returning customers can hide a high CAC. If ROAS is new to you, start with how to calculate ROAS and break-even ROAS.

What is a good LTV to CAC ratio?

You'll often see 3:1 quoted as a healthy LTV:CAC ratio. Treat it as a rough rule from subscription businesses, not a target that fits every shop; the safer test is whether a customer's profit pays back CAC within a time you can afford.

Customer lifetime value (LTV) here should be profit, not revenue: average order value × margin before marketing × average number of orders per customer. Using revenue makes LTV look several times bigger than the money you actually keep.

A ratio above 1 means customers eventually pay back what they cost; below 1, you lose money on every new customer. How far above 1 you need to be depends on things the rule of thumb ignores: how long repeat orders take to arrive, how much cash you have to wait, and how sure you are about the 2.5 orders. For a new shop without repeat-order history, the cautious approach is to keep CAC below the profit on the first order and treat repeat orders as a bonus.

Small shop CAC examples

Two simplified monthly examples show why the same CAC question has different answers.

The reseller would need more than four orders per customer just to recover a $40 CAC at $9 profit per order. Cheaper creative won't fix that; higher margin, bundles that lift order value (see how to increase average order value), or cheaper channels such as email and organic social will.

How can I lower my customer acquisition cost?

• Improve conversion rate: clear photos, honest descriptions and visible shipping costs mean more of the clicks you pay for turn into buyers.
• Raise first-order profit: bundles and free-shipping thresholds make each new customer worth more, so the same CAC pays back faster.
• Refresh ad creative before it fatigues; tired ads cost more per click.
• Build free channels: email sign-ups, organic social, marketplace SEO and referrals bring customers at a much lower cost.
• Cut channels whose CAC is above first-order profit unless your repeat data says they pay back later.

To know your first-order profit, use how to calculate profit margin or our free profit margin calculator. This guide isn't financial advice; it's a way to read your own numbers.

Frequently asked questions

How do you calculate customer acquisition cost?

Divide total marketing and sales costs for a period by the number of new customers acquired in that period. $2,100 of marketing that wins 70 new customers is a CAC of $30. Don't count repeat buyers.

What should be included in CAC?

Include ad spend, influencer fees and free samples, affiliate commissions, first-order discounts, marketing tools and creative costs. Optionally include staff or freelancer time for a fully loaded CAC. Leave out product, shipping and costs aimed only at existing customers.

What is the difference between blended CAC and paid CAC?

Blended CAC divides all marketing costs by all new customers, including those who found you organically. Paid CAC divides ad spend by only the new customers the ads brought. Paid CAC is usually higher and is the better guide for ad budgets.

What is a good customer acquisition cost for ecommerce?

There's no single good number; a good CAC is one your customers pay back in profit. A cautious test is a CAC below the profit on a customer's first order. If your data shows reliable repeat orders, you can afford a higher CAC.

What is a good LTV to CAC ratio?

3:1 is a commonly quoted rule of thumb, mostly from subscription businesses. Anything above 1:1 means customers eventually pay back their cost, but how much higher you need depends on how quickly repeat orders come and how much cash you can tie up. Calculate LTV in profit, not revenue.

Is CAC the same as cost per acquisition (CPA)?

Not quite. CPA in ad platforms is cost per attributed purchase or action, which can include repeat buyers. CAC counts only new customers and often includes more than ad spend, so it's usually higher.