What is CAC (Customer Acquisition Cost)?
Customer Acquisition Cost (CAC) is the total cost of convincing a potential customer to make their first purchase. It includes all marketing spend, advertising costs, sales team salaries, and any other expenses directly tied to customer acquisition.
Why It Matters
CAC is one half of the most important equation in DTC: LTV ÷ CAC. Without understanding your true acquisition cost, you can’t know whether your business model is sustainable.
How to Calculate It
CAC = Total Acquisition Spend ÷ Number of New Customers Acquired
For a more accurate picture, include:
- Paid advertising spend (Meta, Google, TikTok)
- Creative production costs
- Marketing team salaries
- Agency fees
- Marketing software costs
Blended vs. Paid CAC
- Blended CAC includes all customers (organic + paid)
- Paid CAC only counts customers from paid channels
Most brands should track both. Blended CAC gives you the full picture; paid CAC tells you whether your ad spend is efficient.
Reducing Your CAC
- Improve ad creative and targeting
- Optimize landing page conversion rates
- Build organic acquisition channels (SEO, referral, content)
- Use LTV-based bidding to focus on high-value prospects
- Increase word-of-mouth through excellent customer experience