blog · May 23, 2026

What is customer acquisition cost (CAC)?

CAC = total marketing + sales spend / new customers acquired in the same period. The most-cited DTC metric and the most-frequently miscalculated.

The formula

CAC = total marketing + sales spend in period / new customers acquired in same period.

'Total spend' should include: ad spend, agency/freelance fees, tool subscriptions, affiliate payouts, influencer fees, sales-team salaries (if applicable). Most operators only count ad spend — that's not CAC, that's MER inverse.

The variants

Blended CAC: all customers / all spend (most accurate, hardest to game). Paid CAC: paid-channel customers / paid-channel spend (useful for paid optimization). Contribution CAC: same as blended but spend excludes 'always-on' costs like brand/SEO — more useful when comparing campaigns.

Common mistakes

(1) Counting subscription-renewal customers as new (they're not). (2) Not counting tool spend (it's part of acquisition cost). (3) Comparing one period's CAC to another period's revenue (lag matters). (4) Reporting paid CAC as 'our CAC' to investors (they'll ask blended; have it ready).

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