Last updated: Jun 10, 2024

Customer Acquisition Cost Calculator – CAC Calculator

Q: Can customer acquisition cost be negative?

No , the customer acquisition cost cannot be negative. This is because a negative customer acquisition cost means that you are getting paid to acquire customers.

Q: What is the customer acquisition cost if the number of new customer is zero?

The customer acquisition cost will be ∞ (infinite!) . This is because you pay the cost of marketing and the cost of sales without acquiring any customers.

Q: How do I understand the customer acquisition cost?

The higher the customer acquisition cost , the more money the business is spending to acquire a single customer . It means that the business is less efficient in growing and should look for ways to lower its customer acquisition cost.

Created by Wei Bin Loo

Wei Bin Loo

A strategy consultant graduated from Imperial College London with abundant experience advising companies on analytics strategy and transformation projects. Having passed his CFA Level 2 with his results ranked above the 90th percentile, he possesses a broad expertise in the finance and investment space. He is also passionate about product management and is currently a Certified Scrum Product Owner (CSPO). He is a Harry Potter fanatic and a chess and basketball enthusiast. See full profile

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Reviewed by Tibor Pál, PhD candidate

Tibor Pál

PhD candidate

Tibor is pursuing a Ph.D. in Statistical Methods in Economics at the University of Salerno. His main research activity is developing econometric models applied in macroeconomics with a primary focus on the interrelationship between finance and the real economy. His professional experience includes working as a general ledger (GL) accountant and a financial analyst. At Omni, he translates financial queries and regulations into calculators through JS coding with clear and user-friendly content. He spends the academic year in Italy but is keen to travel to Hungary, Poland, and Malaysia in his free time. Interested in gastronomy and vinery, he is able to feed the whole team with pörkölt - a delicious dish from his homeland. See full profile

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and Steven Wooding

Steven Wooding

Physicist holding a 1st class degree and a member of the Institute of Physics. Creator of the UK vaccine queue calculator, and featured in many publications, including The Sun, Daily Mail, Express, and Independent. Tenacious in researching answers to questions and has an affection for coding. Hobbies include cycling, walking, and birdwatching. You can find him on Twitter @OmniSteve. See full profile

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Table of contents

What is the customer acquisition cost?How to calculate CAC? Customer acquisition cost formula FAQs

With this customer acquisition cost calculator (or CAC calculator), we aim to help you calculate the cost you need to acquire a customer. The customer acquisition cost enables you to calculate the efficiency of your business in attaining customers.

We have written this article to help you understand what the customer acquisition cost is and how to calculate the customer acquisition cost (CAC). We will also demonstrate some CAC examples to help you understand the concept.

What is the customer acquisition cost?

The customer acquisition cost, or CAC, is the money needed to acquire a single customer. In general, the cost required for a business to serve a customer is the cost necessary to deliver the service or product, which is the cost of sales and marketing. The higher the customer acquisition cost, the less efficient the business is.

Now, let's look at how to calculate the CAC.

How to calculate CAC? Customer acquisition cost formula

To understand the CAC calculation, let's look at the company Alpha with the information below:

Cost of marketing: $1,000;
Cost of sales: $12,000; and
Number of new customers: 1,000.

There are three steps you need to take to calculate the customer acquisition cost:

Determine the cost of marketing.

The first step is to determine the cost of marketing. In this example, the cost of marketing is $1,000.

To understand more about marketing, please check out our online marketing conversion calculator.
Determine the cost of sales.

Next, you need to compute the cost of sales. This is the cost required to deliver the service or products. The cost of sales for Alpha is $12,000.
Determine the number of new customers.

Then, we need to determine the number of new customers acquired during the period. For this example, the number of new customers is 1,000.
Calculate the customer acquisition cost.

The last step is to calculate the CAC using the customer acquisition cost formula below:

CAC = (cost of marketing + cost of sales) / number of new customers

For Alpha, the CAC is ($1,000 + $12,000) / 1,000 = $13.

FAQs

Can customer acquisition cost be negative?

No, the customer acquisition cost cannot be negative. This is because a negative customer acquisition cost means that you are getting paid to acquire customers.

How can I calculate the customer acquisition cost?

You can calculate the customer acquisition cost in four steps:

Determine the cost of marketing.
Determine the cost of sales.
Determine the number of new customers.
Apply the customer acquisition cost (CAC) formula:

CAC = (cost of marketing + cost of sales) / number of new customers.

What is the customer acquisition cost if the number of new customer is zero?

The customer acquisition cost will be ∞ (infinite!). This is because you pay the cost of marketing and the cost of sales without acquiring any customers.

How do I understand the customer acquisition cost?

The higher the customer acquisition cost, the more money the business is spending to acquire a single customer. It means that the business is less efficient in growing and should look for ways to lower its customer acquisition cost.

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