How to Calculate CAC (Customer Acquisition Cost)

The formula, and what actually counts as spend

CAC equals total sales and marketing spend for a period divided by new customers acquired in that same period. Spend $3,000 in a month and win 25 new customers, and CAC is $120.

• Ad spend and paid placements
• Content, SEO, and tool subscriptions used for marketing
• Affiliate and referral payouts
• Sales and marketing salaries, loaded for taxes and benefits
• Your own time, priced honestly, if you are a solo founder doing the marketing yourself

That last one is the mistake most solo founders make: treating their own hours as free just because no invoice was issued. Twenty hours a month spent on content or outreach is not free, and skipping it makes organic channels look artificially cheap next to paid ones.

Judging whether a CAC is healthy

CAC by itself is not good or bad, it only means something next to what a customer is worth. The two portable benchmarks: LTV to CAC of roughly 3 to 1 or better, and a payback period (CAC divided by monthly gross profit per customer) under about 12 months if you are funding growth from revenue rather than outside capital.

Calculate CAC per channel, not just blended

A single blended CAC can hide a lot: one channel might be profitable while another is quietly underwater. Once you have more than one acquisition channel running, compute CAC separately for each so you know where the next dollar or the next hour should go.