What is CAC (Customer Acquisition Cost)?

CAC (Customer Acquisition Cost) measures how much you spend on average to acquire a new customer. It's one of the most critical metrics in e-commerce because it determines the economic viability of your acquisition. If your CAC is too high compared to the value a customer generates, your business loses money on every new sale, even if revenue grows.

The simple formula is: CAC = Total marketing spend / Number of new customers acquired during the period. However, several variants exist. CAC per channel isolates the acquisition cost per source (Meta Ads, Google Ads, SEO). Blended CAC considers all marketing spend divided by all new customers, offering a global view. Paid CAC only includes direct ad spend, excluding salaries or tools.

To calculate a reliable CAC, first distinguish new customers from recurring ones. Only first orders count in the denominator. Then integrate all relevant marketing spend: paid advertising, marketing team salaries, SaaS tools, agencies, content. Choose a representative period (month or quarter) to smooth out seasonal variations.

CAC alone is meaningless: it must be compared with LTV (Lifetime Value). The LTV:CAC ratio is the key health metric of your acquisition. A 3:1 ratio means a customer returns 3 EUR for every 1 EUR invested in acquisition, leaving room to cover operational costs and generate profit. Below 1:1, every new customer worsens your losses.