Glossary
CAC
CAC is customer acquisition cost: what it costs, on average, to win one new customer.
What it means
CAC is calculated as total sales and marketing cost over a period, divided by the number of new customers won in the same period. The two halves must match in time: costs from one month and customers from another give a meaningless number. Blended CAC counts all sales and marketing costs; paid CAC counts only advertising spend — and the two tell different stories, so a page that quotes CAC should say which one it means. There is no universal good CAC: what is ruinous for a shop selling low-price goods is cheap for a business selling high-price services.
Example
As an illustration, suppose a store spent 500 on sales and marketing in a month — advertising, a marketplace fee for promoted listings, and the hours valued honestly — and won 25 new customers in that same month. Its CAC is 500 divided by 25, which is 20 per customer. Whether 20 is good or bad depends entirely on what those customers are worth, which is the lifetime value lesson — a customer worth 30 is a loss, and a customer worth 200 is a bargain.
Common misunderstandings
The most common misunderstanding is comparing CAC across businesses as if the number meant the same thing everywhere. It does not: a store and a service business have different margins, different order values and different repeat rates. The second is counting only advertising and forgetting the rest of the cost — the freelancer's hours, the tool subscriptions, the content that brought the customer in.
Related terms
Learn more
- Customer Acquisition for E-commerce
- Store Profitability
- Customer Acquisition Cost Calculator
- Lifetime Value Calculator
- E-commerce Fundamentals
- Back to the full glossary
Last checked: 14 November 2026.
Frequently asked questions
How is CAC calculated?
Total sales and marketing cost over a period, divided by new customers won in the same period. Spend of 500 and 25 new customers means a CAC of 20 per customer.
Why must the costs and the customers be from the same period?
Because costs from one month and customers from another describe two different things. A period-mismatched CAC is not a measurement at all.
What is the difference between blended and paid CAC?
Blended CAC counts all sales and marketing costs; paid CAC counts only advertising spend. They answer different questions, so a page quoting CAC should say which one it means.
Is there a good CAC figure I should aim for?
No universal figure exists. Whether a CAC is good depends on the customer's lifetime value and the margin on what they buy — the CAC versus LTV comparison is the decision, not CAC alone.