Customer Acquisition Cost (CAC) Calculator

Customer acquisition cost (CAC) is what it costs, on average, to win one new customer. Enter your sales and marketing spend and the number of customers it brought in, and this free calculator returns your CAC — plus, if you add lifetime value and monthly revenue per customer, your LTV:CAC ratio and how many months it takes to earn that cost back.

What is customer acquisition cost?

Customer acquisition cost (CAC) is the average amount you spend to acquire one new customer. You calculate it by adding up everything spent on sales and marketing over a period — ads, salaries, tools, agency fees — and dividing by the number of new customers that spending produced.

CAC only becomes meaningful when you compare it to what a customer is worth. A $200 CAC is excellent if each customer brings $2,000 over their lifetime, and disastrous if they bring $150.

CAC formula

CAC = total sales & marketing spend ÷ new customers acquired

LTV : CAC ratio = customer lifetime value ÷ CAC

CAC payback (months) = CAC ÷ average monthly revenue per customer

The ratio tells you how many times over a customer repays their acquisition cost; the payback tells you how long you wait to get that cash back.

A worked example

A company spends $20,000 on sales and marketing in a quarter and signs 100 new customers. Each is worth $1,200 over their lifetime and pays $80/month.

• CAC: $20,000 ÷ 100 = $200
• LTV:CAC: $1,200 ÷ $200 = 6:1
• Payback: $200 ÷ $80 = 2.5 months

A 6:1 ratio with a 2.5-month payback is a healthy, fundable acquisition engine.

What is a healthy LTV:CAC ratio?

The widely used benchmark is 3:1 — each customer should be worth at least three times what it cost to acquire them. Below 1:1 you lose money on every customer. Far above 3:1 (say 8:1) often means you are under-investing in growth and could afford to spend more to acquire faster. For payback, under 12 months is generally considered strong for a subscription business.

How to lower your CAC

CAC drops when you either spend less to get the same customers or convert more of the traffic you already pay for. The highest-leverage moves are usually improving conversion rate, tightening targeting so spend reaches the right people, and adding referral or retention loops so existing customers bring new ones for free. Automating repetitive sales and follow-up work — qualifying leads, booking calls, answering common questions — also cuts the labour portion of CAC, which is often the largest and most overlooked piece.

Frequently asked questions