How to use the customer acquisition cost calculator
- List the sales and marketing costs for one period: advertising, sales salaries, commissions, software and any other spend that goes toward winning new customers.
- Enter the number of new customers you won in the same period. Count customers, not leads, visits or orders.
- Read the customer acquisition cost and the table that shows how much each cost contributed to the total.
- Repeat for other periods to see whether the cost to win a customer is moving up or down.
Formula
Total spend = sum of the sales and marketing costs
Customer acquisition cost = total spend / new customers won
The result is a cost per new customer for the period you entered. Costs of serving or keeping existing customers are left out.
A month of spend and 60 new customers
A company spent $3,500 on advertising, $2,000 on sales salaries and $500 on tools in a month. Total spend is $6,000.
It won 60 new customers in that month. Customer acquisition cost = $6,000 / 60 = $100.00 per customer. Advertising made up $3,500 of the spend, or 58.3%.
Deciding what to include
The biggest choice is which costs count. A narrow version counts only paid advertising. A fuller version adds the pay of the people who sell and market, commissions, tools and agency fees. The fuller version is closer to the real cost of winning a customer, but it only helps if you use it consistently. Write down what you included so the same set is used next time.
Timing matters too. If a customer signs up weeks after the money was spent, the spend and the customer land in different periods. Longer periods smooth this out.
Using the figure
A cost per customer means little on its own. Compare it with what a customer brings in. The CAC payback period calculator shows how many months of gross profit it takes to earn the cost back, and the customer lifetime value calculator estimates the profit over a customer relationship.
Whether a given cost is acceptable depends on your margins, your cash and how long customers stay. This page does not give a benchmark, because any single number would be wrong for many businesses.
Assumptions and limits
- Spend and new customers belong to the same period.
- Only costs of winning new customers are entered, and the same set is used each time.
- New customers means first time buyers or sign-ups as you define them.
- Amounts are rounded to the cent.
Frequently asked questions
How is customer acquisition cost calculated?
Add up everything you spent on sales and marketing in a period and divide by the number of new customers you won in that period. $6,000 spent for 60 customers is $100 per customer.
Should salaries be part of customer acquisition cost?
Many businesses include the pay of sales and marketing staff because their time is part of what it costs to win customers. Others count only paid advertising. Choose one approach and use it every period.
Is customer acquisition cost the same as cost per acquisition?
They are close. Cost per acquisition can refer to a single ad campaign, while customer acquisition cost can cover all sales and marketing spend. Use the one that matches the question you are asking.
What if I won no new customers?
The division has no answer, so the tool asks for at least one customer. In that period the spend produced no customers, which is worth noting in itself.