How to calculate CAC
CAC is the fully loaded cost to acquire one new customer. It underpins unit economics: paired with LTV and payback period, it tells you whether growth is profitable. The integrity of CAC depends on including all the costs teams love to leave out.
Short answer
Calculate CAC (customer acquisition cost) by dividing total sales and marketing spend in a period by the number of new customers acquired in that period. For example, 200,000 dollars of spend and 40 new customers is a 5,000 dollar CAC. Include salaries, tools, and ad spend for an honest, fully loaded number.
Step by step
Total your acquisition spend
Sum all sales and marketing costs in the period: salaries and commissions, ad spend, tools, content, events, and overhead attributable to acquisition.
Count new customers acquired
Count only genuinely new customers in the same period, excluding renewals and expansions, which are retention not acquisition.
- CAC = total sales and marketing spend / new customers
- Include salaries, commissions, tools, and ad spend
- Exclude renewals and expansion from the customer count
Decide blended versus paid CAC
Blended CAC includes all channels; paid CAC isolates spend-driven acquisition. Report both, because blended can hide expensive paid channels.
Match the time periods
Align spend and customers to the same window, accounting for sales cycle lag so this period's cost is not divided by last period's customers.
Compare to LTV and payback
CAC only means something next to LTV and payback period. A high CAC is fine if LTV is far higher and payback is fast.
How Ardovo helps
Ardovo ties spend by channel to the customers each channel actually produced, so CAC is computed per source and fully loaded rather than guessed. Rook pairs it with LTV and payback so you see unit economics, not an isolated cost.
Frequently asked questions
What costs should be included in CAC?
All sales and marketing costs: team salaries and commissions, ad spend, software and tools, content production, events, and attributable overhead. Leaving out salaries is the most common way teams understate CAC and fool themselves about unit economics.
What is the difference between blended and paid CAC?
Blended CAC divides all acquisition spend by all new customers, including organic. Paid CAC isolates paid-channel spend and the customers it drove. Blended looks better but can mask an expensive paid engine, so report both.
What is a good CAC?
There is no universal number; CAC only makes sense relative to LTV and payback period. A common healthy target is an LTV to CAC ratio of at least 3 to 1 and a payback period under 12 months, though this varies by model.