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Customer Acquisition Cost Calculator
Use this free customer acquisition cost calculator to find out exactly what each new customer costs you. Enter your total sales and marketing spend and the number of new customers you gained, and it works out your CAC, how many months it takes to earn that cost back, and your LTV:CAC ratio — the three numbers that tell you whether your marketing is actually making money.
| Metric | Amount |
|---|---|
| Customer acquisition cost (CAC) | $200.00 |
| CAC payback period | 4.0 months |
| LTV:CAC ratio | 4.5 : 1 |
| Spend per period | $12,000.00 |
| Monthly spend (annualized basis) | $12,000.00 |
| LTV minus CAC | $700.00 |
How it works
Customer acquisition cost, or CAC, is the average amount a business spends to win one new customer. It answers a simple question: for every customer who signs up or buys, how much did marketing and sales cost us? Add up everything spent to attract customers in a period — ads, sales salaries and commissions, marketing software, events, and agency fees — then divide by the number of new customers gained in that same period. If the two numbers come from different periods, the result is meaningless, so always match them: January spend with January customers, a quarter with that quarter, and so on.
The period selector matters because businesses report CAC monthly, quarterly, or yearly. A monthly CAC of $200 and a quarterly CAC of $600 can describe the same business, so compare like with like. This calculator also converts your spend to a monthly figure so you can sanity-check it against your monthly marketing budget.
CAC payback = CAC ÷ monthly gross profit per customer
LTV:CAC ratio = customer lifetime value ÷ CAC
CAC on its own is only half the story. A $200 CAC is fine if each customer is worth $900 over their lifetime, and terrible if each customer is worth $120. That is why the calculator asks for lifetime value (LTV) and monthly gross profit per customer. The LTV:CAC ratio is the headline health check: 3 to 1 or better is generally considered healthy, 1 to 1 means you break even on acquisition, and below 1 to 1 means you lose money on every customer you win. The payback period tells you how many months of gross profit it takes to recover the acquisition cost — the shorter, the better for cash flow, because money spent on ads today is only earned back over those months.
To use the tool well, keep your inputs honest. Include fully loaded sales and marketing costs, not just ad spend — salaries are usually the biggest part. Count only genuinely new customers, not renewals or returning buyers. And use gross profit per customer (revenue minus the direct cost of serving them), not revenue, for the payback calculation, because revenue that goes straight out again as product cost does not repay anything.
Worked example
A small online shop spends $12,000 on sales and marketing in one month — $7,000 on ads, $4,000 on a part-time sales assistant, and $1,000 on marketing software — and gains 60 new customers that month.
Step 1: CAC — $12,000 ÷ 60 = $200 per customer.
Step 2: The shop knows each customer is worth $900 in lifetime value, so the LTV:CAC ratio is $900 ÷ $200 = 4.5 : 1, comfortably above the 3 : 1 healthy benchmark.
Step 3: Each customer brings $50 of gross profit per month, so the payback period is $200 ÷ $50 = 4.0 months.
Step 4: LTV minus CAC is $900 − $200 = $700 of value left after acquisition cost.
The result is a CAC of $200 per customer, a 4.0-month payback, and a 4.5 : 1 LTV:CAC ratio. The shop can afford to keep spending at this level — and could even spend more per customer — as long as the lifetime value and monthly profit figures hold up.
FAQ
What is a good customer acquisition cost?
There is no single good number, because CAC only makes sense next to lifetime value. A $200 CAC is excellent if each customer is worth $900, and poor if each customer is worth $150. The usual benchmark is an LTV:CAC ratio of 3 to 1 or better, with a payback period of under 12 months.
How do I calculate CAC payback period?
Divide your CAC by the monthly gross profit each customer brings in. If CAC is $200 and monthly gross profit per customer is $50, the payback period is $200 divided by $50, which is 4 months. Use gross profit, not revenue, because product and service costs do not repay acquisition spend.
What costs should I include in CAC?
Include all sales and marketing spending for the period: advertising, sales salaries and commissions, marketing software, events, content, and agency fees. Do not include product costs, rent, or general admin, which are not about winning customers. The most common mistake is counting only ad spend and forgetting salaries.
What is the difference between CAC and cost per lead?
Cost per lead is what you pay for one enquiry or sign-up, while CAC is what you pay for one customer who actually buys. If 10 leads cost $100 and only 2 become customers, cost per lead is $10 but CAC is $50. CAC is the number that matters for profitability, because leads that never buy earn nothing.
Why is my LTV:CAC ratio below 1?
A ratio below 1 means you spend more to win a customer than that customer is ever worth to you. Either acquisition is too expensive, lifetime value is too low, or both. Fix it by cutting the least effective spend, raising prices or repeat purchases, or improving retention so customers stay longer and buy more.