Customer Acquisition Cost Calculator: CAC Per Customer

What does a CAC of $300.00 mean?

On the defaults — $120,000 of sales & marketing costs and 400 new customers — the customer acquisition cost is $300.00 per customer, which means every new customer costs $300.00 to win. The CAC is the total sales & marketing costs divided by the number of new customers acquired: $120,000.00 ÷ 400 = $300.00. A CAC of $300.00 means each new customer arrived at a price of three hundred dollars of ads, salaries, software and campaigns. Whether that is cheap or ruinous depends on what the customer is worth over their lifetime — a $300.00 CAC against a $3,000 lifetime value is a bargain, and the same $300.00 against a $200 lifetime value is a loss on every sale.

Three things about the model are worth stating plainly.

First, the division is $120,000.00 ÷ 400 = $300.00. Second, the meaning is three hundred dollars of sales & marketing spend per new customer won — the cost of winning the customer, not the profit on them. And third, the CAC is displayed to two decimals, half-up, and a CAC that displays as $300.00 can sit a hair below or above the displayed figure: $119,999.50 of costs and 400 new customers gives 299.998750, which displays as $300.00, and $99,999.99 of costs and 333.33 new customers gives 300.002970, which also displays as $300.00 — all listed in Accuracy & limitations.

The worked example, line by line

Setup: sales & marketing costs $120,000, new customers 400.

Line 1 — the sales & marketing costs. The ads, the sales salaries, the marketing software and the campaigns add up to $120,000.

Line 2 — the CAC. $120,000.00 ÷ 400 = $300.00.

Line 3 — the check. At $150,000 of sales & marketing costs the CAC is $375.00; and at $149,999 it is 374.997500 — below $375.00.

Every branch, checked

Sales & marketing costs $150,000: sales & marketing costs $150,000.00; new customers 400; CAC $375.00 — With $150,000 of sales & marketing costs the CAC rises to $375.00.

Sales & marketing costs $90,000: sales & marketing costs $90,000.00; new customers 400; CAC $225.00 — With $90,000 of sales & marketing costs the CAC falls to $225.00.

New customers 500: sales & marketing costs $120,000.00; new customers 500; CAC $240.00 — With 500 new customers the CAC falls to $240.00.

New customers 300: sales & marketing costs $120,000.00; new customers 300; CAC $400.00 — With 300 new customers the CAC rises to $400.00.

Sales & marketing costs $180,000: sales & marketing costs $180,000.00; new customers 400; CAC $450.00 — With $180,000 of sales & marketing costs the CAC rises to $450.00.

New customers 600: sales & marketing costs $120,000.00; new customers 600; CAC $200.00 — With 600 new customers the CAC falls to $200.00.

Sales & marketing costs $60,000: sales & marketing costs $60,000.00; new customers 400; CAC $150.00 — With $60,000 of sales & marketing costs the CAC falls to $150.00.

New customers 200: sales & marketing costs $120,000.00; new customers 200; CAC $600.00 — With 200 new customers the CAC rises to $600.00.

The reverses, worked backwards

Smallest sales & marketing costs for the CAC to REACH $375: At the displayed $150,000 the figures are sales & marketing costs $150,000.00; new customers 400; CAC $375.00 (unrounded 375.000000). At $149,999 the CAC is 374.997500 unrounded — below the target, though it displays as $375.00 — so $150,000 is the smallest sales & marketing costs for the CAC to REACH $375.

Largest new customers for the CAC to STAY at or above $375: At the displayed 320 customers the figures are sales & marketing costs $120,000.00; new customers 320; CAC $375.00 (unrounded 375.000000). At 321 customers the CAC is 373.831776 unrounded — below the target — so 320 customers is the largest new customers for the CAC to STAY at or above $375.

Smallest sales & marketing costs for the CAC to REACH $500: At the displayed $200,000 the figures are sales & marketing costs $200,000.00; new customers 400; CAC $500.00 (unrounded 500.000000). At $199,999 the CAC is 499.997500 unrounded — below the target, though it displays as $500.00 — so $200,000 is the smallest sales & marketing costs for the CAC to REACH $500.

Largest sales & marketing costs for the CAC to STAY at or below $250: At the displayed $100,000 the figures are sales & marketing costs $100,000.00; new customers 400; CAC $250.00 (unrounded 250.000000). At $100,001 the CAC is 250.002500 unrounded — above the target, though it displays as $250.00 — so $100,000 is the largest sales & marketing costs for the CAC to STAY at or below $250.

Smallest new customers for the CAC to STAY at or below $300: At the displayed 400 customers the figures are sales & marketing costs $120,000.00; new customers 400; CAC $300.00 (unrounded 300.000000). At 399 customers the CAC is 300.751880 unrounded — above the target — so 400 customers is the smallest new customers for the CAC to STAY at or below $300.

Largest new customers for the CAC to STAY at or above $200: At the displayed 600 customers the figures are sales & marketing costs $120,000.00; new customers 600; CAC $200.00 (unrounded 200.000000). At 601 customers the CAC is 199.667221 unrounded — below the target — so 600 customers is the largest new customers for the CAC to STAY at or above $200.

A warning about the neighbours: every neighbour above sits one dollar or one customer from the star, and every neighbour CAC is a hair below or above the target even though it displays as the target — a one-dollar move in costs moves the CAC by $0.0025, so the displayed two-decimal figure cannot tell the star from its neighbour. The page prints the unrounded six-decimal value in full so the rounding does not mislead you: 375.000000, 374.997500, 375.002500, 373.831776, 376.175549, 500.000000, 499.997500, 500.002500, 250.000000, 249.997500, 250.002500, 300.000000, 300.751880, 299.251870, 200.000000, 200.333890, 199.667221.

What the defaults assume

The defaults are $120,000 of sales & marketing costs and 400 new customers — sales & marketing costs $120,000.00; new customers 400; CAC $300.00. With Sales & marketing costs $150,000, sales & marketing costs $150,000.00; new customers 400; CAC $375.00. With Sales & marketing costs $90,000, sales & marketing costs $90,000.00; new customers 400; CAC $225.00. With New customers 500, sales & marketing costs $120,000.00; new customers 500; CAC $240.00. With New customers 300, sales & marketing costs $120,000.00; new customers 300; CAC $400.00. With Sales & marketing costs $180,000, sales & marketing costs $180,000.00; new customers 400; CAC $450.00. With New customers 600, sales & marketing costs $120,000.00; new customers 600; CAC $200.00. With Sales & marketing costs $60,000, sales & marketing costs $60,000.00; new customers 400; CAC $150.00. With New customers 200, sales & marketing costs $120,000.00; new customers 200; CAC $600.00. With All zero, sales & marketing costs $0.00; new customers 0; CAC undefined — no customers, no costs, and the CAC is undefined. With Sales & marketing costs $200,000, new customers 250, sales & marketing costs $200,000.00; new customers 250; CAC $800.00 — eight hundred dollars per customer — a pricey win. With Fractional inputs (CAC unrounded 299.998750), sales & marketing costs $119,999.50; new customers 400; CAC $300.00 (unrounded 299.998750) — the CAC displays as $300.00. With Sales & marketing costs $1,200,000, new customers 2,000, sales & marketing costs $1,200,000.00; new customers 2,000; CAC $600.00 — the same CAC at ten times the size. With New customers 0, sales & marketing costs $120,000.00; new customers 0; CAC undefined — division by zero, no customers to divide by. With Sales & marketing costs $0, sales & marketing costs $0.00; new customers 400; CAC $0.00 — no costs, a real figure, not undefined. With Negative sales & marketing costs, sales & marketing costs −$10,000.00; new customers 400; CAC −$25.00 — the CAC is negative, a real figure (unrounded −25.000000). With Small numbers, sales & marketing costs $50,000.00; new customers 100; CAC $500.00 — five hundred dollars per customer. With Fractional inputs (CAC unrounded 300.002970), sales & marketing costs $99,999.99; new customers 333.33; CAC $300.00 (unrounded 300.002970) — the CAC displays as $300.00 (full value 300.0029700297…). With High CAC, sales & marketing costs $350,000.00; new customers 400; CAC $875.00 — eight hundred and seventy-five dollars per customer. With Sales & marketing costs $145,000, new customers 290, sales & marketing costs $145,000.00; new customers 290; CAC $500.00 — five hundred dollars per customer.

A note on the rounding: the CAC is displayed to two decimals, half-up. With the fractional inputs the unrounded CAC is 299.998750 — it displays as $300.00. The page prints the unrounded value so the rounding does not mislead you.

Output · formula · meaning

Who uses this

• The founder checking ad spend: they learn $120,000 of sales & marketing costs against 400 new customers is a CAC of $300.00 — and they check the $150,000 reverse to see the spend that pushes the CAC to $375.00.
• The marketer comparing two channels: they learn a CAC of $300.00 means every new customer costs $300.00 to win — and they check the 320-customer reverse to see how many customers keep the CAC at or above $375.00.
• The finance lead pricing growth: they learn the CAC rises when the costs rise or the customer count falls — and they check the $200,000 reverse to see the spend that pushes the CAC to $500.00.
• The student learning marketing ratios: they learn the CAC is the sales & marketing costs divided by the new customers — and they check the 600-customer reverse to see how many customers keep the CAC at or above $200.00.

Accuracy & limitations

The math is first-principles: the CAC is the total sales & marketing costs divided by the number of new customers acquired — all in dollars and customers, the CAC displayed to two decimals half-up. There IS division in this calculator — at 0 new customers the CAC is UNDEFINED, division by zero, no customers to divide by — the calculator shows “CAC undefined” with a note, never hides it. At $0 of sales & marketing costs the CAC is $0.00 — a real figure, not undefined — and at negative sales & marketing costs the CAC is −$25.00 (unrounded −25.000000) — a refund or a bookkeeping credit, not a cost. At $350,000 of costs against 400 customers the CAC is $875.00. With the fractional inputs the unrounded CAC is 299.998750 — it displays as $300.00 — and with the other fractional inputs it is 300.002970 — it also displays as $300.00. What the model cannot do is say whether $300.00 is a good price: the CAC says nothing about what the customer is worth — a $300.00 CAC against a $3,000 lifetime value is a bargain and the same $300.00 against a $200 lifetime value is a loss on every sale. It also says nothing about which channel won the customer — the CAC lumps every ad, salary and campaign into one number. Use it to see what each new customer costs to win — then check the customer lifetime value, the gross margin return on investment and the operating expense ratio before you decide the growth pays.

Frequently asked questions