Acquisition & ConversionCAC

Customer Acquisition Cost

CAC measures the total cost of acquiring a new customer, including all sales and marketing expenses divided by the number of new customers.

Key Takeaways
  • CAC is the average amount spent on sales and marketing to acquire one new customer over a specific period.
  • Common Mistakes:
  • Only counting ad spend and ignoring salaries, tools, and overhead.
  • Using different time periods for expenses vs new customer count (e.g., Jan expenses with Feb customers).
  • Including customer success or support costs in CAC (those are retention costs, not acquisition).
  • Not accounting for lag time between marketing spend and customer conversion.
  • Mixing CAC for different customer segments without separate analysis.
  • Forgetting to include allocated overhead like office space or software tools.

Definition

CAC is the average amount spent on sales and marketing to acquire one new customer over a specific period.

Low CAC

Efficient customer acquisition; strong product-market fit or effective channels.

High CAC

Expensive acquisition; may need better targeting, messaging, or conversion optimization.

CAC > LTV

Unsustainable unit economics; losing money on each customer.

Formula

CAC = (Sales + Marketing Expenses) / Number of New Customers Acquired

Variables

Sales Expenses

Salaries, commissions, tools, and overhead for sales team.

Marketing Expenses

Ad spend, content, events, tools, salaries for marketing team.

New Customers

Number of customers acquired in the period.

Examples

Quarterly CAC calculation

Expense CategoryQ1 Amount
Sales salaries$60,000
Marketing salaries$40,000
Paid ads$25,000
Marketing tools$5,000
Events$10,000
  1. 1Total S&M expenses = $60k + $40k + $25k + $5k + $10k = $140,000
  2. 2New customers acquired in Q1 = 70
  3. 3CAC = $140,000 / 70 = $2,000
→ CAC = $2,000 per customer

Track in Daymark

Data Sources

CSVgoogle sheetspostgreSQL

Required Fields

Sales & marketing expenses + customer data
  • date
  • expense_category
  • amount
  • new_customer_count

Sample Questions

  • What is the current CAC?
  • Show CAC trend over the last 12 months
  • Calculate CAC by acquisition channel (organic, paid, referral)
  • What is CAC by customer segment or plan tier?
  • Compare CAC to LTV for unit economics analysis
  • Show CAC payback period month by month
Calculate your CAC

Dashboard Template

1. line
CAC over time

Monthly or quarterly CAC trend

2. bar
CAC by channel

Compare acquisition costs across channels

3. metric
LTV:CAC ratio

Unit economics health check

4. pie
S&M expense breakdown

Where acquisition budget goes

Common Mistakes

  • •Only counting ad spend and ignoring salaries, tools, and overhead.
  • •Using different time periods for expenses vs new customer count (e.g., Jan expenses with Feb customers).
  • •Including customer success or support costs in CAC (those are retention costs, not acquisition).
  • •Not accounting for lag time between marketing spend and customer conversion.
  • •Mixing CAC for different customer segments without separate analysis.
  • •Forgetting to include allocated overhead like office space or software tools.

FAQ

Q: What's a good CAC benchmark?

It depends on LTV. A healthy LTV:CAC ratio is 3:1 or higher, meaning LTV should be at least 3x CAC.

Q: Should I include salaries in CAC?

Yes, fully-loaded CAC includes all sales and marketing salaries, not just direct ad spend.

Q: How do I handle attribution lag?

Use cohort-based CAC where you match spend in one period to customers acquired from that cohort over time.

Start Tracking Customer Acquisition Cost

Get Started Free