Customer acquisition cost (CAC)
Customer acquisition cost (CAC) is ad spend divided by new customers, for the same channel and period. A channel with no new customers has no CAC. Compared with what a customer pays you, CAC tells you whether a channel can grow profitably or whether every new customer loses money until they have paid for months.
Formula
CAC = ad spend(channel, period) ÷ new customers(channel, period)Add up the spend for one channel over a period, count the customers whose first payment fell in that period and whose first touch was that channel, and divide.
Worked example
| Google Ads spend in June | $1,200 |
|---|---|
| New customers from Google Ads in June | 15 |
- $1,200 / 15 = $80
CAC for Google Ads in June is $80.
How ProductLense shows it
ProductLense shows CAC per channel, source and campaign in the Sources table and on the Profit page, next to revenue, spend, profit, ROAS and payback. Channels without spend show no CAC rather than zero, so organic channels are not mistaken for free customers with a perfect score.
ProductLense needs ad spend for the channel, entered by hand or imported as CSV with the same channel, source and campaign values as your UTM tags, and a billing connection so new customers are counted from first payments.
CAC: questions
- What is CAC?
- Customer acquisition cost (CAC) is ad spend divided by new customers, for the same channel and period. A channel with no new customers has no CAC. Compared with what a customer pays you, CAC tells you whether a channel can grow profitably or whether every new customer loses money until they have paid for months.
- How do you calculate CAC?
- Add up the spend for one channel over a period, count the customers whose first payment fell in that period and whose first touch was that channel, and divide. For example, $1,200 of Google Ads spend that brought 15 new customers is a CAC of $80.
- Where does ProductLense show CAC?
- ProductLense shows CAC per channel, source and campaign in the Sources table and on the Profit page, next to revenue, spend, profit, ROAS and payback. Channels without spend show no CAC rather than zero, so organic channels are not mistaken for free customers with a perfect score.
- What does ProductLense need to calculate CAC?
- ProductLense needs ad spend for the channel, entered by hand or imported as CSV with the same channel, source and campaign values as your UTM tags, and a billing connection so new customers are counted from first payments.
- How is CAC different from payback period?
- CAC is a cost per customer; payback period turns it into time by dividing CAC by what a new customer pays in their first month. A $80 CAC is fine if customers pay $40 a month and stay, and painful if they pay $9.
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