Customer acquisition cost (CAC) is calculated by dividing your total sales and marketing expenses by the number of new customers acquired in a given period. For example, if you spend $10,000 on marketing in a quarter and gain 200 new customers, your CAC is $50. This metric, outlined by David Skok of Matrix Partners, is foundational for evaluating business profitability.
What Is the Core CAC Formula?
This is the simple version. But the devil is in what you include in the numerator. Here are three variations depending on your use case:
Variation 1: Simple CAC
Total Marketing + Sales Expenses ÷ New Customers. Best for quick assessments and small businesses.
Variation 2: Fully Loaded CAC
ALL costs associated with acquisition (including overhead, office space, and legal costs allocated to the sales team) ÷ New Customers. This is what investors and VCs want to see — it reflects the true economic cost of growth, as described in Triple Whale's ecommerce benchmarks.
Variation 3: Paid CAC
Marketing spend only (no salaries or overhead) ÷ New customers from paid channels only. Best for performance marketing optimization — it tells you whether your ad spend alone is efficient.
What Should You Include in Your CAC Calculation?
| Include in CAC | Do NOT Include |
|---|---|
| Ad spend (Google, Meta, TikTok) | Customer success / retention costs |
| Sales team salaries + commissions | Product development / R&D |
| Marketing team salaries | General company overhead |
| CRM and marketing tools | Costs for retaining existing customers |
| Creative production costs | Shipping and fulfillment |
| Agency fees | Returns and refunds |
| Allocated overhead for S&M team | Inventory costs |
What Does a CAC Calculation Look Like for a Shopify Store?
Let's say your Shopify store had these costs in Q1:
New customers acquired in Q1: 500
If your average customer LTV is $350, then LTV:CAC = 3.5:1 — a healthy ratio that indicates your acquisition spend is generating sustainable returns. ProfitWell's research confirms that the 3:1 threshold separates sustainable businesses from those burning cash.
What Are Common Mistakes That Inflate or Deflate Your CAC?
- Mistake 1: Excluding salaries. Brian Balfour, former VP of Growth at HubSpot, identifies this as the most common error. Your marketing team's time is a real acquisition cost — ignoring it makes your CAC look deceptively low and leads to underinvestment in the wrong areas.
- Mistake 2: Including returning customers. Only count net-new customers in the denominator. Including repeat buyers makes your CAC look artificially low and hides the true cost of reaching new audiences, as Shopify's CAC guide explains.
- Mistake 3: Ignoring time lag. If your conversion cycle is 60 days, the customers you acquired this month were driven by spend from two months ago. Offset your calculation accordingly — match spend periods to acquisition periods.
Our free Shopify CAC Calculator walks you through the formula, compares your result to industry benchmarks, and shows the potential impact of adding a zero-cost referral channel.
Try the Free CAC Calculator →Frequently Asked Questions
What is the difference between CAC and CPA?
CAC measures the cost to acquire a paying customer. CPA (cost per acquisition) measures the cost to achieve any conversion — including leads, trial signups, or app installs that may never become paying customers. CAC is always equal to or higher than CPA.
Should I calculate CAC monthly or quarterly?
Quarterly is usually more accurate because it smooths out short-term fluctuations and accounts for conversion lag. Monthly calculation works for high-volume stores with short sales cycles (under 7 days).