Customer Acquisition Cost (CAC) Calculator

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How this is calculated

Customer Acquisition Cost measures the average amount spent to bring one new paying customer to your business in a given period (a month, quarter or year). The numerator is every dollar your company spent on marketing and sales during that period: marketing covers paid ads, content creation, SEO tools, events, and marketing team salaries; sales covers salaries, commissions, CRM subscriptions and sales-team overhead. The denominator is the number of genuinely new customers gained during that same window.

The formula divides the combined spend by the customer count. A common and important health check is the LTV:CAC ratio — customer lifetime value divided by CAC. A ratio of 3:1 or higher is typically considered healthy, meaning each customer earns back three times what it cost to acquire them. If the ratio is below 1:1 the business is losing money on each customer before it can recover costs.

One important limitation: the formula matches costs and customers in the same calendar period, which ignores the marketing lag — spend this quarter may win customers next quarter. For businesses with long sales cycles, a cohort-based or payback-period approach gives a more accurate picture. The calculator also does not account for taxes, discounts on sales team costs, or the share of costs attributable to retaining (versus acquiring) customers.