Stop 08 · Marketing Analytics & DataTopics · 8/11

Customer Acquisition Cost (CAC)

In short

Getting a customer always costs something: ads, tools, people's time. CAC adds it all up and divides by how many customers you got. Simple maths, very honest answer.

The total cost to acquire one paying customer, including ad spend and often a share of team/tool costs — a foundational number for deciding whether a channel or campaign is actually profitable.

The blob stands at a coaching centre front desk welcoming a small student with a backpack.

Think of it like this

A coaching centre's admission season

In admission season a coaching centre prints posters, pays for newspaper inserts, runs free demo classes and pays a counsellor. At the end, 50 students join. Total spend divided by 50 is what each admission really cost.

Watch it happen

Adding up one month's acquisition costs

Ads ₹60,000

Tools ₹5,000

Agency ₹20,000

Team time ₹35,000

1/4Ad spend is the obvious part, but rarely the whole cost.

The big ideas

What you need to know

The formula

CAC = total acquisition costs in a period / new customers gained in that period.

Blended vs paid CAC

Blended uses all new customers. Paid CAC counts only customers from paid channels, so it's usually higher.

CAC by channel

Work it out per channel to see which ones bring customers cheaply.

Compare with value

CAC only means something next to how much a customer is worth. That's LTV, the next lesson.

See it in code

Walk through the code

excel

1B1  Ad spend             600002B2  Tools                 50003B3  Agency               200004B4  Team time            350005B5  New customers          3006B6  CAC                  =SUM(B1:B4)/B5     → ₹400

1/3Every cost spent on getting new customers, not on serving existing ones.

A simple CAC sheet. Add a column per channel to compare where customers come from most cheaply.

Save yourself the pain

Common mistakes

Oops

Counting only ad spend and calling it CAC.

Do this instead

Include tools, agency fees and team time, or you'll think customers are cheaper than they are.

Oops

Dividing by leads instead of paying customers.

Do this instead

That's cost per lead. CAC counts only people who actually became customers.

Your mission

Calculate CAC by channel

~20 min

Quick check

You spent ₹50,000 on ads and ₹10,000 on tools, and got 200 leads and 40 customers. What's CAC?

Go deeper

1Calculate a rough CAC for a hypothetical campaign given spend and resulting customers.
2Learn to compare CAC across channels to see which is most efficient.
3Understand why CAC alone is meaningless without comparing it to customer lifetime value.