Customer Acquisition Cost (CAC) Calculator
Calculate your customer acquisition cost across channels. Compare CAC to lifetime value and optimize your marketing spend for sustainable growth.
Industry standard: 3:1
Total Marketing Spend
$11,500
Total Customers Acquired
140
Blended CAC
$82
LTV:CAC Ratio
30.4:1
Healthy Unit Economics
Your LTV:CAC ratio exceeds your 3:1 target. You can afford to spend up to $833 per customer.
How to Use This Calculator
Enter your customer lifetime value and target LTV:CAC ratio.
Add your marketing channels with spend and customers acquired.
Review per-channel CAC and LTV:CAC ratios.
Get recommendations on which channels to scale or cut.
Frequently Asked Questions
What is a good LTV:CAC ratio?
A 3:1 LTV:CAC ratio is generally considered healthy for most businesses. This means you earn $3 in lifetime value for every $1 spent acquiring a customer. Ratios below 3:1 may indicate unsustainable unit economics, while ratios above 5:1 might mean you're underinvesting in growth.
Should I include all marketing costs in CAC?
Yes, include all costs directly related to customer acquisition: ad spend, marketing team salaries, tools, agency fees, and content production costs. Some companies also include a portion of sales costs. The key is consistency—use the same methodology over time to track trends.
How do I calculate customer lifetime value?
The simplest formula is: LTV = Average Order Value × Purchase Frequency × Customer Lifespan. For subscription businesses, use: Monthly Revenue per Customer × Average Customer Lifespan in Months. Include gross margin if you want to calculate contribution-based LTV.
Why does CAC vary so much between channels?
Each channel has different audience quality, competition levels, and conversion efficiency. Paid search often has higher intent but more competition. Referral programs typically have the lowest CAC because customers are pre-qualified. Content marketing has high upfront costs but compounds over time.
How can I reduce my CAC?
Focus on improving conversion rates at each funnel stage, invest in channels with proven unit economics, build referral programs, improve ad targeting, create content that compounds, and reduce churn (higher LTV means you can afford higher CAC). Test aggressively and cut underperforming channels.
Why Use This Calculator
- Calculate CAC for each marketing channel individually
- Compare your LTV:CAC ratio to industry benchmarks
- Identify which channels deliver the best unit economics
- Set sustainable CAC targets based on customer lifetime value
- Optimize budget allocation for profitable growth
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"The budget breakdown helped us identify where we were overspending. We reallocated 20% of our budget to higher-performing channels."
Marketing Manager, E-commerce Brand