How to calculate customer acquisition cost?
Customer acquisition cost (CAC) is calculated using the formula: CAC = total marketing and sales spend / number of new customers acquired in the same period. For example, spending €5,000 to acquire 200 customers gives a CAC of €25. It is the key metric to measure the profitability of your acquisition channels.
Detailed explanation
Customer acquisition cost (CAC) measures the average amount invested to convert a prospect into a paying customer. In e-commerce, it is a fundamental indicator because it directly determines the profitability of your business. Poor CAC management can turn a growing store into a loss-making operation, even with high sales volumes.
To calculate your CAC accurately, add up all acquisition-related expenses: advertising budget (Google Ads, Meta Ads, TikTok Ads), agency fees, marketing tool costs, salaries of the acquisition team, and affiliate costs. Then divide this total by the number of new customers generated in the same period. Make sure to align the spending period with the acquisition period to avoid calculation biases.
CAC benchmarks vary widely by e-commerce sector. In fashion and apparel, a CAC between €30 and €50 is common. In food and online grocery, it ranges from €15 to €25. In tech and electronics, it can reach €40 to €80. These ranges serve as a reference, but the key is that your CAC remains consistent with your customer lifetime value (LTV): an LTV/CAC ratio above 3 is generally considered healthy.
Fullmetrix automatically centralizes your CAC calculation by aggregating your PrestaShop, WooCommerce or Shopify sales data with your advertising spend. The integrated P&L dashboard gives you a clear view of your profitability by channel, while ROAS/POAS tracking helps you identify your most effective acquisition sources. RFM segmentation completes the picture by revealing which acquired customers generate the best LTV, guiding your marketing investment decisions.
Concrete example
Imagine a WooCommerce store spending €5,000 per month on advertising (€3,000 Google Ads + €2,000 Meta Ads) and acquiring 200 new customers in the same period. CAC = €5,000 / 200 = €25. If the average order value is €80 and the gross margin is 40%, the margin per order is €32. With a CAC of €25, the first order is profitable by €7. Calculating LTV over 12 months (e.g. an average of 2.5 orders), the LTV reaches €80 and the LTV/CAC ratio is 3.2 — a healthy level that justifies investing more to accelerate growth.
Related questions
What is a good customer acquisition cost in e-commerce?
A good CAC is relative to your LTV. The LTV/CAC ratio should ideally exceed 3 to ensure long-term profitability. In practice, a CAC below 30-40% of the first order value is a good starting point for general e-commerce stores.
How to reduce customer acquisition cost?
To reduce CAC, optimize your ad campaigns by cutting unprofitable segments, invest in organic SEO to generate free traffic, and activate retention to increase revenue from existing customers. Targeted retargeting on your most engaged RFM segments is also a highly effective lever.
What is the difference between CAC and CPA?
CPA (cost per action) measures the cost of a specific conversion — often a first order or sign-up — on a given advertising channel. CAC is broader: it includes all marketing and sales expenses to acquire a new customer, across all channels. CPA is a component of CAC.
How to calculate LTV compared to CAC?
LTV (lifetime value) is calculated by multiplying the average order value by the gross margin and by the average number of orders over the customer's lifetime. The LTV/CAC ratio is obtained by dividing LTV by CAC. Fullmetrix calculates these metrics automatically from your sales data and cross-references them with your acquisition costs.
What LTV/CAC ratio should you aim for in e-commerce?
An LTV/CAC ratio of 3 is the recommended minimum threshold: it means that every euro invested in acquisition returns three euros in customer lifetime value. Below 2, the business is generally unprofitable. Above 5, you can accelerate marketing investments to drive faster growth.
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