Cost Per New Customer Calculator
Easily calculate the Cost Per New Customer (CAC) for your business or marketing campaigns. This metric helps you understand how much you spend, on average, to acquire one new customer.
Enter the Total amount spent on acquiring new customers during a specific period and the Number of *new* customers acquired in that same period.
Enter Acquisition Data
Understanding Cost Per New Customer (CAC)
What is Cost Per New Customer (CAC)?
Cost Per New Customer (CAC), also known as Customer Acquisition Cost, is a key business metric that helps you understand the cost associated with convincing a prospective customer to buy a product or service. It includes all costs spent on acquiring new customers (marketing expenses, sales team salaries, commissions, bonuses, overhead) divided by the number of customers acquired in the period the money was spent.
A lower CAC generally indicates a more efficient sales and marketing process.
Cost Per New Customer Formula
The formula for CAC is straightforward:
CAC = Total Acquisition Cost / Number of New Customers
Ensure that the 'Total Acquisition Cost' only includes expenses directly related to acquiring *new* customers during the specific time period you are analyzing.
Example Calculation (Basic)
EX: A company spends $10,000 on marketing and sales efforts in a month and acquires 200 new customers during that same month.
CAC = $10,000 / 200 New Customers
Result: CAC = $50.
Conclusion: On average, it cost this company $50 to acquire one new customer in that month.
Real-Life Cost Per New Customer Examples
Click on an example to see the scenario and calculation:
Example 1: E-commerce Startup
Scenario: An online store spends $3,000 on digital ads (Facebook, Google) and coupon codes in a quarter.
Inputs: Total Acquisition Cost = $3,000, New Customers = 150.
Calculation: CAC = $3,000 / 150
Result: CAC = $20.
Conclusion: It cost the startup $20 to acquire each new customer this quarter.
Example 2: Software Subscription Service (SaaS)
Scenario: A SaaS company's sales and marketing expenses (salaries, software, ads) for a year total $150,000. They gained 500 new paying subscribers.
Inputs: Total Acquisition Cost = $150,000, New Customers = 500.
Calculation: CAC = $150,000 / 500
Result: CAC = $300.
Conclusion: Acquiring a new subscriber cost them $300 this year.
Example 3: Local Restaurant
Scenario: A new restaurant spent $500 on flyers and a local newspaper ad in its first month. They tracked 80 customers who mentioned the ad or used a flyer coupon.
Inputs: Total Acquisition Cost = $500, New Customers = 80.
Calculation: CAC = $500 / 80
Result: CAC = $6.25.
Conclusion: Their initial customer acquisition cost was relatively low at $6.25 per customer.
Example 4: Mobile App
Scenario: A mobile game developer spent $8,000 on app store ads and influencer marketing in a month. They saw 4,000 *first-time* in-app purchases (considered new customers for this analysis).
Inputs: Total Acquisition Cost = $8,000, New Customers = 4,000.
Calculation: CAC = $8,000 / 4,000
Result: CAC = $2.
Conclusion: Acquiring a customer making their first purchase cost $2.
Example 5: B2B Service
Scenario: A business consulting firm's Q3 marketing budget was $25,000 (conferences, content marketing). Their sales team closed 10 new client contracts.
Inputs: Total Acquisition Cost = $25,000, New Customers = 10.
Calculation: CAC = $25,000 / 10
Result: CAC = $2,500.
Conclusion: Acquiring a new B2B client had a higher cost of $2,500, typical for high-value B2B services.
Example 6: Non-Profit Organization
Scenario: A non-profit spent $1,500 on a direct mail campaign targeting potential new donors. They received donations from 75 first-time donors.
Inputs: Total Acquisition Cost = $1,500, New Customers (Donors) = 75.
Calculation: CAC = $1,500 / 75
Result: CAC = $20.
Conclusion: It cost $20 to acquire a new donor through this campaign.
Example 7: Subscription Box Service
Scenario: A company selling monthly subscription boxes spent $12,000 on influencer marketing and social media ads in a month. They signed up 300 new subscribers.
Inputs: Total Acquisition Cost = $12,000, New Customers = 300.
Calculation: CAC = $12,000 / 300
Result: CAC = $40.
Conclusion: Their cost to acquire a new subscriber was $40.
Example 8: Online Course Creator
Scenario: An online educator spent $600 on targeted ads for a new course launch. 50 students purchased the course for the first time.
Inputs: Total Acquisition Cost = $600, New Customers = 50.
Calculation: CAC = $600 / 50
Result: CAC = $12.
Conclusion: Acquiring a new student for this launch cost $12.
Example 9: Physical Retail Store
Scenario: A new boutique held a grand opening event, spending $2,000 on promotion and event costs. They estimated 100 attendees were first-time visitors who made a purchase.
Inputs: Total Acquisition Cost = $2,000, New Customers = 100.
Calculation: CAC = $2,000 / 100
Result: CAC = $20.
Conclusion: The grand opening promotion cost was $20 per new customer acquired.
Example 10: Professional Service (Lawyer/Consultant)
Scenario: A consultant's networking and lead generation activities over 6 months cost $7,500 (dues, travel, materials). They signed 3 new retainer clients in that period.
Inputs: Total Acquisition Cost = $7,500, New Customers = 3.
Calculation: CAC = $7,500 / 3
Result: CAC = $2,500.
Conclusion: The CAC for acquiring a new retainer client was $2,500.
Why is CAC Important?
Understanding your CAC is crucial for business sustainability and growth. It helps you:
- Evaluate the efficiency of your marketing channels.
- Determine if your business model is profitable (is the customer's lifetime value greater than their CAC?).
- Allocate marketing budget more effectively.
- Understand the scalability of your customer acquisition efforts.
Frequently Asked Questions about Cost Per New Customer (CAC)
1. What costs should be included in "Total Acquisition Cost"?
This should include *all* sales and marketing expenses directly related to acquiring new customers during your chosen period. This can include advertising spend, marketing team salaries, sales team salaries/commissions for new deals, creative costs, software/tools used for marketing and sales, landing page costs, etc.
2. How is "Number of New Customers" defined?
A "new customer" is typically someone who makes their *very first* purchase or becomes a paying client during the specific period you are measuring. Define this clearly for your business.
3. What is a good CAC?
A "good" CAC varies greatly by industry, business model, and customer Lifetime Value (LTV). Generally, your LTV needs to be significantly higher than your CAC (often LTV:CAC ratio of 3:1 or higher is considered healthy) for your business to be profitable long-term.
4. How often should I calculate CAC?
Most businesses calculate CAC monthly, quarterly, or annually to track trends and evaluate campaign performance. Consistency in the period and included costs is key.
5. Why might my CAC be increasing?
An increasing CAC could be due to rising ad costs, decreased marketing efficiency, increased competition, ineffective sales processes, or targeting the wrong audience.
6. How can I lower my CAC?
Strategies include optimizing conversion rates, improving lead quality, investing in organic channels (SEO, content marketing), building a strong referral program, and improving customer retention (retaining customers is cheaper than acquiring new ones).
7. Does CAC include the cost of goods sold?
No, CAC is specifically about the cost of *acquiring* the customer, not the cost of producing or delivering the product/service they bought. COGS is a separate cost metric.
8. What's the difference between CAC and CPA (Cost Per Acquisition)?
CPA is broader and can refer to the cost of acquiring any desired action (like a lead, a click, a download, or a sale). CAC is a specific type of CPA focused solely on acquiring a *paying new customer*.
9. What if I have zero new customers in a period?
If you spent money on acquisition efforts but acquired zero new customers, the calculator will show an error because you cannot divide by zero. This indicates an extremely inefficient or failed acquisition effort for that period, and your CAC is effectively undefined (or infinitely high). The tool's validation will prevent division by zero.
10. Can I calculate CAC for a specific marketing channel?
Yes, you can segment your costs and new customers by channel (e.g., Facebook Ads, Email Marketing, Referrals) to calculate a channel-specific CAC. This helps evaluate which channels are most efficient.
