Customer acquisition cost is the total cost of acquiring a new customer, including all marketing and sales expenses. Understanding CAC is essential for sustainable growth.

CAC Calculation

CAC = Total Marketing and Sales Costs / Number of New Customers Acquired

View Example

Monthly Ad Spend: £5,000
Agency Fees: £1,500
Software: £500
Total: £7,000
New Customers: 100
CAC = £70

What to Include in CAC

  • Advertising spend
  • Agency or contractor fees
  • Marketing software costs
  • Sales team costs (if applicable)
  • Creative production

CAC by Channel

Calculate CAC per channel to understand which sources deliver customers most efficiently. Some channels may have higher CAC but better quality customers.

Reducing CAC

  • Improve conversion rates (better landing pages, checkout)
  • Optimise ad targeting and creative
  • Invest in organic channels (SEO, content)
  • Increase referrals and word-of-mouth
  • Improve retention (reduces need for constant acquisition)