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How To Calculate Customer Acquisition Cost

by Jordan Ehrlich, on April 19, 2019

How To Calculate Customer Acquisition Cost

You can determine your customer acquisition cost by adding all costs associated with your customer acquisition efforts (marketing costs) and dividing that by the number of new customers you acquired as a result. 

Depending on your reporting needs, you may calculate overall customer acquisition cost at a high level or dive into your channel costs or campaign costs to bring in new customers. Below, we offer a few templates and resources to better understand your own customer acquisition costs, including:

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Customer Acquisition Cost Formulas

Basic CAC Formula

At its most basic level, the customer acquisition cost formula looks like this:

Marketing Costs (MC) / Number of Customers Acquired (CA) = Customer Acquisition Cost (CAC)

or

MC / CA = CAC

For example, say you want to check how effective your PPC advertising has been over the past week. Let's say you spent $300.00 and acquired 8 new customers. Your customer acquisition cost would be calculated as follows:

$300.00 / 8 = $37.50

And your CAC for that campaign would be $37.50.

But when you start to look at larger marketing campaigns or at your entire marketing efforts for a given period of time, you need a formula that accounts for more detailed expenditures.

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More Detailed CAC Formula

This larger formula takes more specific expenditures into account including: wages for sales and marketing staff,  and marketing & sales software used.

(Marketing Costs (MC) + Wages (W) + Software (S) + Outsourced Services (OS) + Overhead for Marketing & Sales (OH)) / Number of Customers Acquired = Customer Acquisition Cost (CAC)

or

(MC + W + S + OS + OH) / CA = (CAC)

Let’s say you want to figure out your CAC for January, and during January your expenses looked like this:


CAC Component  Value

Marketing Costs (MC)

$5,500.00

Wages (W)

$6,500.00

Software (S)

$125.00

Outsourced Services (OS)

$250.00

Overhead (OH)

$750.00

Total

$13,125.00

New Customers Acquired During January (CA)

1,235

Customer Acquisition Cost

$10.63


$13,125.00/1,235 = $10.63 Customer Acquisition Cost

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Breaking Down Your Costs

Unless you already have all your marketing and sales expenses accounted for and separated into these different boxes, calculating your CAC can be tricky. To help you think about what you should include in the calculation, here is a breakdown of the different expenses you should account for.

Marketing Costs

Advertising Costs for Digital Marketing

  • Search Engine Marketing
  • Social Media Marketing
  • Affiliate Marketing
  • Display Advertising
  • Native Advertising

Advertising Costs for Traditional Marketing

  • Magazines Television
  • Television
  • Radio
  • Newspaper
  • Brochures
  • Flyers

Event Marketing Costs

  • Event Marketing Costs
    • Event Sponsorships

Wages for Marketing & Sales

This one is pretty straightforward, and includes all staff members involved in the marketing and sales process.

Software

Consider the different software and platforms you use for your digital marketing and sales process such as:

    • Customer Relationship Management (CRM) Software like HubSpot
    • Email Management Software like MailChimp
    • Marketing Automation Software like InfusionSoft
    • Marketing Analytics Software

Outsourced Services

This includes the different contractors or consultants your team might use, such as:

  • Graphic Designers
  • Copywriters
  • Photographers
  • Influencer Marketers
  • Digital Strategists

Overhead Costs for Marketing & Sales

Other overhead costs to include for marketing and sales teams might include:

  • Travel costs
  • Entertainment and meal costs
  • Office equipment and supplies

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Customer Acquisition Cost Calculator

Here we've provided an easy-to-use template for you to calculate customer acquisition cost using the inputs discussed above. In order to use it, you’ll need to click File -> Make a Copy, and then you’ll be free to edit it as you wish!

Download Template

Once you’ve used the calculator, you might wonder - how can I tell if our customer acquisition cost is “good”? Here are some benchmarks. →

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Learn More About Customer Acquisition Strategy

If you’re interested in gaining more customers and seeing a better CAC, read through our article on Customer Acquisition Strategies. →

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