What this calculator does
Customer acquisition cost divides everything spent on winning customers by the number actually won. It is the denominator of almost every growth decision, and the figure most often calculated too narrowly.
Payback matters more than the cost itself. A $100 acquisition cost against $24.50 of monthly gross profit repays in 4.1 months, which is comfortable. The same spend winning half as many customers pushes that to 8.2 months, and the cash gap widens with every sale.
The formula
Marketing and sales costs are added and divided by new customers acquired. Payback divides that cost by monthly revenue per customer multiplied by gross margin, giving the months to recover the spend.
| Term | Meaning |
|---|---|
| CAC | Total acquisition spend divided by new customers won. |
| CAC payback | Months of gross profit needed to recover the acquisition cost. |
| Gross margin | The share of revenue left after direct costs, which is what actually repays the spend. |
The inputs explained
| Field | What to enter |
|---|---|
| Marketing spend ($) | Total marketing spend for the period. |
| Sales cost ($) | Sales costs for the same period, including salaries and commissions. |
| New customers acquired | New customers acquired in that period. |
| Average monthly revenue per customer ($) | Average monthly revenue per customer. |
| Gross margin (%) | Gross margin as a percentage, since revenue does not repay the spend, gross profit does. |
When to use it
Assessing a marketing channel
Comparing cost per customer across channels shows where the budget works hardest.
Planning cash flow for growth
A long payback means acquisition consumes cash well before it returns any.
Setting a spending ceiling
Acquisition cost only makes sense against what a customer is ultimately worth.
Worked examples
Every figure in the tables below is produced by this page’s own calculator at build time, so the numbers and the tool always agree. Select any row to load that scenario.
How does conversion volume change the cost?
The same budget winning three different numbers of customers.
| New customers | Customer acquisition cost | CAC payback period |
|---|---|---|
| 60 customers | $200.00 | 8.2 months |
| 120 customers | $100.00 | 4.1 months |
| 240 customers | $50.00 | 2.0 months |
Questions
What should be included in the cost?
Everything spent to win customers: advertising, content, events, agency fees, sales salaries, commissions and the tools that support them. Leaving out salaries is the most common way this figure gets understated.
Why use gross profit rather than revenue for payback?
Because revenue has to cover the cost of delivering the product before it can repay anything. A business with 30 per cent margins takes more than twice as long to recover the same acquisition cost as one with 70 per cent.
What payback period is acceptable?
Under twelve months is a common benchmark for subscription businesses, and under six is strong. The right answer depends on how much cash you can tie up while waiting, which is a funding question as much as a marketing one.
Should acquisition cost be as low as possible?
Not necessarily. Paying more per customer is worth it if those customers stay longer or spend more. The ratio against lifetime value is the meaningful test, not the cost in isolation.
For what those customers are ultimately worth, see the SaaS lifetime value calculator. For how many of them stay, see the customer churn and retention calculator.