Customer acquisition cost (CAC) is what you pay, on average, to win one new customer. It's the price of growth: every new customer your store gets costs roughly this much, and the business only grows profitably if those customers are worth more than that over time.
The calculator gives three numbers. CAC itself, the profit or loss on a new customer's first order, and the number of orders it takes for their contribution to cover what you paid to win them.
How to calculate customer acquisition cost
The formula is one division:
Customer acquisition cost = total acquisition spend ÷ new customers
- Total acquisition spend is everything you paid to win customers in the period: ad spend across every platform, plus agency or freelancer fees, creator content, affiliate commissions and any other cost that exists to bring in new buyers.
- New customers are first-time buyers in the same period. Your Shopify reports split new and returning customers; use the new figure only.
The two extra outputs need your contribution margin per order, which is what an order keeps after product cost, shipping, payment fees and discounts:
Profit on the first order = contribution margin per order − CAC
Orders to earn back the cost = CAC ÷ contribution margin per order
If you don't know your contribution margin, the contribution margin calculator works it out from your order value and costs.
Customer acquisition cost worked example
These are the calculator's default inputs, for one month. Change them to your own numbers above.
| Input or result | Value |
|---|---|
| Ad spend | $12,000 |
| Agency fees and creator content | $3,000 |
| New customers | 300 |
| Customer acquisition cost | $15,000 ÷ 300 = $50 |
| Contribution margin per order | $26.20 |
| Profit on the first order | $26.20 − $50 = −$23.80 |
| Orders to earn back the cost | $50 ÷ $26.20 = 1.9 |
This store loses $23.80 on every new customer's first order. A customer needs to place a second order, and most of a third, before acquiring them has paid off. Whether that's fine depends entirely on how many of them come back.
Blended CAC vs paid CAC
There are two common versions, and they answer different questions.
- Blended CAC divides all acquisition spend by all new customers, including those who found you through search, word of mouth or social posts you didn't pay for. It's the honest figure for the business as a whole.
- Paid CAC divides ad spend by the new customers your ad platforms claim. It's useful for comparing channels, but platforms tend to claim customers who would have bought anyway, so it usually looks cheaper than reality.
Use blended CAC for budgets and for comparing against customer lifetime value. Use paid CAC, carefully, to decide which channel gets the next dollar.
How to read your result
A CAC figure on its own says little. Read it against what a customer brings in:
- Against first-order contribution. If the first order covers CAC, every new customer pays for themselves immediately and growth funds itself. That's rare in paid social and common in search.
- Against payback. If customers typically order twice a year and payback is 1.9 orders, you wait around a year for your money back. That's a cash question as much as a profit one.
- Against lifetime value. Lifetime contribution has to exceed CAC, or growth loses money. The customer lifetime value calculator gives the comparison as a ratio.
- Over time. CAC tends to rise as a store scales, because the cheapest customers are won first. Track it monthly so a rise shows up before the budget does.
How to lower customer acquisition cost, or make it matter less
There are two ways to fix a CAC that's too high: pay less per customer, or earn more from each one.
- Convert more of the traffic you pay for. The same spend wins more customers if more visitors buy. Product page and cart improvements lower CAC without touching the ad account.
- Raise the first order. A higher average order value raises contribution per order, which shortens payback directly. A post-purchase offer is the cleanest place to start, because it appears after payment and can't cost you the original sale.
- Bring customers back sooner. A second order in month two instead of month six halves the wait for payback. See our guide to customer lifetime value in ecommerce.
- Cut what doesn't acquire. Spend that mostly reaches existing customers inflates CAC. Check retargeting and branded search before cutting prospecting.
Common CAC mistakes
- Counting all orders instead of new customers. It's the most common error, and it makes acquisition look cheap.
- Leaving out non-ad costs. Agency fees and creator content are part of what a customer costs.
- Comparing CAC with revenue. A $50 CAC against a $60 order looks fine until you see the order only keeps $26.20. Compare against contribution, not revenue.
- Mismatched periods. Spend and new customers must come from the same window. Spend from a launch month divided by customers from the month after gives a meaningless figure.
Where to go next
Payback gets shorter when each order is worth more. Our Gameplan gives you five upsell offers for your store, ranked by what to build first, for $9. To see the whole customer picture, carry your CAC into the customer lifetime value calculator, check what your ads can afford with the break-even ROAS calculator, or browse all our ecommerce calculators.