CAC (Customer Acquisition Cost) is the average amount spent on marketing and sales to acquire a single new customer.
Formula: CAC = Total Marketing & Sales Spend ÷ Number of New Customers Acquired
Example: If you spent $10,000 on ads last month and gained 200 new customers, your CAC is $50.
What to Include in the Spend Numerator
A fully-loaded CAC calculation includes:
- Paid advertising (Google Ads, Meta Ads, Amazon PPC, TikTok)
- Agency or freelancer fees
- Content production costs (creative, photography, copywriting)
- Email and CRM platform costs allocated to acquisition campaigns
- Salesperson commissions on new accounts (B2B)
A common mistake is counting only ad spend and missing platform fees, creative costs, and labor.
CAC vs. ACOS / ROAS
On Amazon, ACOS measures advertising efficiency at the SKU level. CAC is a broader business metric that considers all acquisition channels and usually applies at the brand or store level rather than per product.
| ACOS | CAC | |
|---|---|---|
| Scope | Single ad channel, single product | All channels, business-level |
| Denominator | Ad-attributed revenue | Number of new customers |
| Used by | Amazon sellers | Ecommerce brand operators |
The CAC:LTV Ratio
CAC only makes sense next to CLV (Customer Lifetime Value). If a customer will generate $300 in gross profit over their lifetime, a $60 CAC is excellent; if they buy once and churn, that same $60 CAC may be unprofitable.
Industry benchmarks: a healthy CAC:LTV ratio is 1:3 or better. Below 1:2 means you are spending too much to acquire customers relative to what they are worth.
Reducing CAC
- Improve conversion rates on landing pages and product listings (same spend, more customers)
- Invest in organic SEO to offset paid acquisition
- Add referral or loyalty programs to shift acquisition cost to customers
- Test and reallocate budget from high-CAC channels to low-CAC channels
- Retargeting typically has 2–5× lower CAC than cold prospecting