Customer Acquisition Cost (CAC) Calculator and Payback
Customer acquisition cost (CAC) is what you spend on sales and marketing to win one new customer: total acquisition costs ÷ new customers. Spend 80,000 in a quarter and win 200 customers, and CAC is 400. At 40 of gross profit a customer a month, that cost pays back in 10 months.
Enter marketing and sales costs for a period and the new customers you won, in any currency. You get blended CAC and marketing-only CAC. Add revenue per customer and gross margin for the CAC payback period, and monthly churn for lifetime value and the LTV:CAC ratio.
CAC formulas
| Figure | Formula |
|---|---|
| Customer acquisition cost | (M + S) ÷ N |
| Marketing CAC | M ÷ N |
| CAC payback (months) | CAC ÷ (ARPA × GM) |
| Lifetime value (LTV) | ARPA × GM ÷ churn |
| LTV:CAC ratio | LTV ÷ CAC |
M: marketing spend. S: sales spend. N: new customers won in the same period. ARPA: revenue per customer a month. GM: gross margin. Churn: share of customers lost a month.
Example
In a quarter a software company spends 30,000.00 on marketing and 50,000.00 on sales and wins 200 new customers. CAC is 80,000 ÷ 200 = 400.00, of which marketing alone is 150.00. A customer pays 50.00 a month at an 80% gross margin, so 40.00 of gross profit a month repays the CAC in 400 ÷ 40 = 10 months. With 2.5% monthly churn, lifetime value is 40 ÷ 0.025 = 1,600.00, and LTV:CAC is 4 : 1.
The customer lifetime value calculator works out LTV for subscriptions and repeat purchases in more detail, with the same example customer.
CAC payback benchmarks
| What it usually means | Payback |
|---|---|
| Fast: growth can fund itself | under 12 months |
| Typical: watch cash as you grow | 12–24 months |
| Slow: needs cash to grow | over 24 months |
Frequently asked questions
What is the customer acquisition cost formula?
CAC = total sales and marketing costs for a period ÷ new customers won in that period. Spend 30,000 on marketing and 50,000 on sales, win 200 customers, and CAC is 80,000 ÷ 200 = 400. Use costs and customers from the same period.
What costs go into CAC?
Everything you spend to win new customers: ads and campaigns, marketing and sales salaries and commissions, agencies, events, and the share of software and tools used for acquisition. Leave out the cost of serving customers you already have, such as support and account management.
What is the CAC payback period?
It is how many months of gross profit a new customer needs to repay their acquisition cost: CAC ÷ (revenue a month × gross margin). A CAC of 400 and 50 a month at an 80% margin pay back in 400 ÷ 40 = 10 months. Many subscription businesses aim for 12 months or less.
What is a good LTV to CAC ratio?
About 3 : 1 is the common benchmark: lifetime value three times the cost of winning the customer. Below 1 : 1 each new customer loses money; far above 5 : 1 may mean you could invest more in growth. Add churn to the calculator to see your ratio.
What is the difference between blended and paid CAC?
Blended CAC divides all acquisition costs by all new customers, including those who found you on their own. Paid CAC counts only customers won through paid channels against that spend. Blended CAC looks lower; paid CAC tells you whether ad spend pays off.
How can I lower customer acquisition cost?
Raise conversion rates at each funnel stage, put budget into the channels with the lowest CAC, build referrals and content that bring customers in without paid media, and focus sales time on leads that fit. Higher prices or margins also shorten payback even if CAC stays the same.
Related tools: customer lifetime value calculator, churn rate calculator, CPM, CPC and CPA calculator. More on sales and running a sales team on the SalesBond blog and the home page.
Official sources
- Wikipedia, Customer acquisition cost — definition and formula.
- Shopify, Customer Acquisition Cost — what to count and the CAC payback period.
- HubSpot, Customer Acquisition Cost — CAC formulas and benchmarks.
- Andreessen Horowitz, 16 Startup Metrics — blended and paid CAC, LTV.
Updated on Nov 6, 2026. This calculator is for information only and is not tax, legal or payroll advice. Results come from the formulas above. Count costs and new customers for the same period; LTV assumes steady revenue, margin and churn.
