Marketing

CAC

What it costs to win one new customer.

Updated

Formula small numbers are statement lines

CAC = Total marketing spend (line 27) ÷ new customers
The short answer

CAC, customer acquisition cost, is total marketing spend divided by the number of new customers won in the same period. Blended CAC counts every euro and every new customer rather than only what a platform claims, and it is judged against what a first order contributes, not against revenue.

Compare it against what a first order actually contributes, not against revenue. If the first order's CM2 is below CAC, you are buying customers at a loss and betting on the second order, which is a legitimate bet exactly as long as you know you are making it.

Worked through on the example store the calculators use: €15.000 of advertising in a month and 706 orders, 62% of them from first-time customers, is 438 new customers and a blended CAC of €34,25. An average order leaves €44,68 of CM2, so the first order pays for its customer and keeps €10,43, and every repeat order after that arrives with no acquisition cost at all.

It moves with your product mix as well as your ad efficiency, which is why it belongs beside CM2 rather than on its own. A cheaper CAC that brings buyers of your thinnest product can be worse than an expensive one that does not.

Blended means every euro of marketing over every new customer, whichever channel won them, customers who arrived without any ad included. It is not a platform's cost per acquisition, which divides one platform's spend by the conversions that platform claims, and so inherits the same double counting as ROAS.

The blended CAC calculator works it out beside MER and POAS, so the three ratios that belong together are read together. How much acquisition the margin can pay for in total is what the marketing budget planner works out.

In nouz, blended CAC sits on Insights, Marketing, and the LTV tab draws it as the line the average customer's cumulative contribution has to cross: the month it does is the payback, said in words beside the chart.

Where you see it in nouz

Insights, the Marketing and Customers tabs.

app.nouz.co/insights
Blended CAC on the Insights Customers tab, beside the new customers it is divided by.
Blended CAC on the Insights Customers tab, beside the new customers it is divided by.

Questions

CAC, answered.

How do you calculate customer acquisition cost?
Divide all marketing spend in a period by the number of new customers won in the same period. €15.000 of spend and 438 first-time customers is a blended CAC of €34,25.
What is a good CAC for an online store?
One that a first order's CM2 covers, or that repeat orders cover soon enough for your cash. Judge it against what an order leaves after goods, shipping and payment fees, never against revenue or another store's figure.
What is the difference between CAC and cost per acquisition?
CAC counts customers: new buyers, won by all of your marketing together. A platform's cost per acquisition counts the conversions that platform claims for its own spend, repeat buyers included, so it cannot be added across platforms or compared with your books.

Calculators that use CAC

Work it out with your own numbers.

Related terms

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