Customer Acquisition Cost Formula
Learn how to calculate blended customer acquisition cost from sales and marketing spending and new customers gained.
Customer acquisition cost, commonly called CAC, estimates the average sales and marketing cost required to gain one new customer in a reporting period. Calculating it consistently helps make spending and customer-growth comparisons more meaningful over time.
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Customer Acquisition Cost
Where:
Add the eligible marketing and sales costs for the same period, then divide the total by the number of genuinely new customers gained.
Variables Explained
| Variable | What It Means | Unit |
|---|---|---|
| CAC - Customer acquisition cost | The average combined acquisition cost for each new customer. | currency |
| marketingSpend - Marketing spend | Eligible marketing costs incurred during the selected reporting period. | currency |
| salesSpend - Sales spend | Eligible sales costs incurred during the selected reporting period. | currency |
| newCustomers - New customers acquired | The count of genuinely new paying customers gained in the same period. | number |
Step-by-Step Calculation
Set one reporting period
Use one consistent period for every cost and customer input so the numerator and denominator cover the same timeframe.
reportingPeriod = monthly, quarterly, or annually
Identify marketing spend
Include the marketing costs your business has chosen to treat as acquisition spending, such as advertising, campaigns, content, agencies, and marketing tools.
marketingSpend = sum(eligible marketing costs)
Identify sales spend
Include the sales costs covered by your internal methodology, such as payroll allocation, commissions, travel, and sales tools.
salesSpend = sum(eligible sales costs)
Calculate total acquisition spend
Combine the included sales and marketing costs for the selected period.
totalAcquisitionSpend = marketingSpend + salesSpend
Calculate customer acquisition cost
Divide total acquisition spend by the new-customer count to find the average cost per new customer.
customerAcquisitionCost = totalAcquisitionSpend / newCustomers
Quarterly blended CAC example
Combine marketing and sales spending
$24,000 + $12,000
$36,000
Divide total spend by new customers
$36,000 ÷ 180
$200
State the CAC result
CAC = $200 per new customer
$200 per new customer
Final Result
Estimated quarterly blended CAC: $200 per new customer, based on $36,000 of included acquisition spend and 180 new customers.
Assumptions
- ✓Sales spend, marketing spend, and new-customer counts all relate to the same monthly, quarterly, or annual period.
- ✓Only genuinely new customers are counted; renewals, upgrades, and purchases by existing customers are excluded.
- ✓The result is a blended average across all included sales activities, marketing channels, and campaigns.
- ✓Shared costs are allocated using a consistent internal approach.
- ✓Each new customer is treated as carrying an equal share of the total included spend.
Limitations
- !CAC does not show whether acquired customers will remain active, renew, or generate enough revenue to cover acquisition costs.
- !Long sales cycles can cause spending and customer wins to occur in different periods, which may distort a simple period calculation.
- !Attribution methods can change both the costs and customer counts assigned to a channel.
- !A blended figure can conceal large differences between channels, products, customer segments, or campaigns.
- !The calculation is an accounting estimate and not financial or business advice.
Common Mistakes to Avoid
Dividing monthly spending by quarterly or annual new-customer counts.
Counting renewals, upgrades, or returning customers as new acquisitions.
Including sales payroll but omitting related commissions, tools, or other costs without using the same policy in later periods.
Comparing a blended CAC with a channel CAC as though they measure the same thing.
Using booked leads, trials, or prospects instead of genuinely acquired customers.
Treating a lower CAC as automatically better without considering customer quality, retention, or revenue.
Related Formulas
Frequently Asked Questions
What is the formula for customer acquisition cost?
The basic blended CAC formula is: marketing spend plus sales spend, divided by new customers acquired during the same period.
How do I calculate total acquisition spend?
Add the marketing costs and sales costs that your business has consistently defined as acquisition-related for the reporting period.
Should CAC include sales salaries?
It can, if your chosen methodology includes sales payroll. The important point is to document the approach and apply it consistently when comparing periods.
Should I count free trials as new customers?
This calculator is designed for genuinely new paying customers. A free trial may be tracked separately unless your business defines it as an acquired customer.
What happens if no new customers were acquired?
CAC cannot be calculated by dividing by zero. Report the period's acquisition spending and customer count separately, then review the timing and attribution of the activity.
Is CAC calculated monthly or annually?
It can be calculated monthly, quarterly, or annually. The most useful period depends on the length of the sales cycle and how consistently costs convert into customers.
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