CAC Calculator
Calculate customer acquisition cost and measure unit economics health.
How to Use This CAC Calculator
Formula: CAC = Total Marketing Spend ÷ New Customers Acquired
Include all marketing costs—ad spend, salaries, tools, agencies. Optionally add your LTV to calculate the LTV:CAC ratio, which shows unit economics health. A ratio of 3:1 or higher is considered healthy.
Why CAC Matters
CAC is your business's most critical efficiency metric. It tells you how much it costs to acquire each new customer. If CAC is too high relative to what those customers are worth (LTV), your business can't scale profitably.
The LTV:CAC ratio is the north star metric for sustainable growth. A ratio of 3:1 means customers are worth 3x what you paid to acquire them, leaving room for profit. Below 3:1 and you're spending too much. Above 5:1 and you're probably underinvesting in growth.
CAC should be measured over time and by channel. Some channels have higher CAC but bring better customers. Organic and referral typically have lowest CAC, while paid search and display are higher but more scalable.
Tips for Improving Your CAC
- Optimize conversion rates: Better landing pages and checkout flow directly reduce CAC.
- Improve targeting: Focus on high-intent audiences to reduce wasted ad spend.
- Build organic channels: SEO, content, and community have much lower CAC long-term.
- Leverage referrals: Customer referral programs have exceptionally low CAC.
- Refine your ICP: Stop targeting everyone. Focus on ideal customer profiles with higher conversion rates.
Want to learn more?
Read the full CAC glossary entry →