# Customer Acquisition Cost (CAC) Calculator

You can use this customer acquisition cost (CAC) calculator to quickly and easily determine your client acquisition costs.

## How to Use the CAC Calculator

Input your marketing expense, sales expense, and new customer figures on a monthly basis to track the evolution of your CAC.

Customer Acquisition Cost Calculator
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CAC Calculation Results
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## What is the Cost of Acquiring a Customer?

The amount of funds a business invests in marketing and sales efforts to turn a lead into a client is known as the customer acquisition cost, or CAC. Effectively, it is the expense of acquiring a new client. By identifying CAC, firms can determine the return on investment (ROI) on their sales and marketing activities. A company's CAC includes its expenditures on the following:

Paying employees, using tools or software subscriptions, purchasing applicable technology (like Google Ads or data collection software), producing any creative aspects, running traditional and/or digital campaigns, etc.

Sales: Payroll costs, associated costs (such as lead generating and email management systems), inventory maintenance, travel costs, incentives for possible new clients, etc.

The cost of customer acquisition is a crucial indicator to monitor. It is useful for evaluating the success of your client acquisition plan and making gradual changes to it. It provides a useful statistic for prospective investors to assess the scalability of your company.

## How is CAC Calculated?

You can take the following steps to determine your CAC:

• Step 1: Select the time for your evaluation. Is the CAC a monthly, quarterly, or annual CAC? This will improve the accuracy of your results and enable you to focus on the breadth of your data.
• Step 2: Include the costs of marketing and sales that you invested in bringing in new clients.
• Step 3: Divide the amount determined in Step #2 by the number of new clients your company gained during the specified period. This will give you your CAC.

Once you have determined the CAC value for your company, you can compare it to other important business indicators to gain insightful information about your advertising, marketing, promotions, and customer service efforts.

## The CAC Formula

You can use a basic formula to assess the effectiveness of a certain campaign or technique that has been utilized to attract new clients to your organization. To determine the customer acquisition cost, divide all associated marketing and sales costs by the total number of new customers.

Your customer acquisition cost can be calculated using the following formula:

CAC = (Total Marketing Expenses + Total Sales Expenses) / Number of New Customers Acquired

## CAC Calculation Example

Let's say a retailer invested \$180K on advertisements and \$120K on sales software and activities over the last quarter. In response, it acquired 500 new paying customers. The retailer's CAC for the quarter would be \$600. This was calculated as follows:

CAC = [(180,000 + 120,000)] / 500 = 600