How to calculate CAC
CAC = Total acquisition spend ÷ New customers acquired
Take both figures from the same period. Spend should include paid media and, ideally, the agency fees and tools that support it. The new-customer count should come from your order system or CRM, not from an ad platform’s “new customer” report, which is attributed and usually flattering.
Example: A brand spends £95,000 on acquisition in a month and its order system shows 800 first-time buyers.
£95,000 ÷ 800 = £118.75 CAC
Blended CAC vs paid CAC
Blended CAC divides all marketing spend by all new customers, including those who arrived through organic search, referrals or word of mouth. Paid CAC divides paid spend by customers attributed to paid channels. Blended CAC is more honest for budgeting, because paid media influences customers who convert elsewhere. Paid CAC is useful for comparing channels, with the attribution caveat.
CAC payback: the number to tell the board
CAC becomes powerful when you pair it with margin. If your average order is £60 at a 55% gross margin, each order contributes £33. With a CAC of £40, the first order recovers £33 and the second clears the rest. If second orders typically land around month four, your CAC payback is four months: the time your acquisition capital is tied up before it starts earning. Boards understand a duration far better than a ratio.
What is a good CAC?
A good CAC is one you recover quickly. Payback inside twelve months and lifetime value of at least three times CAC are common rules of thumb; your margin and repeat rate set the real target.
Is CAC the same as cost per acquisition (CPA)?
No. CPA usually refers to any conversion, such as a lead or a sale, and often includes existing customers. CAC counts only new customers and is a business metric, not a campaign metric.
Does CAC include salaries and agency fees?
Fully loaded CAC does; media-only CAC doesn’t. Pick one definition, label it, and use it consistently so trends are comparable.
How does CAC work for lead-generation businesses?
Replace “new customers” with closed deals, and calculate cost per closed customer rather than cost per lead. Payback then depends on deal value and margin.