Free Tool

What Does It Actually Cost
to Acquire a Customer?

Most businesses do not know their true customer acquisition cost — and many of those that do are not comparing it against the right benchmarks. Enter two numbers to get your CAC. Add three more to see whether your unit economics actually work.

Your Numbers

Estimates are fine. Use annual totals throughout.

Include ads, software/tools, sales & marketing salaries, agencies, content, events, and any other spending aimed at acquiring customers.
$
How many genuinely new customers did you bring in over the same period? Renewals and upsells do not count.

Adding these unlocks your LTV:CAC ratio and payback period — the two numbers that actually tell you whether your acquisition is healthy or not.

Total annual revenue ÷ total customers, or your best estimate.
$
How long does an average customer stay with you? If your annual churn is 10%, your lifetime is roughly 10 years; 20% churn means 5 years.
Optional. The portion of revenue left after direct costs (cost of goods, fulfillment, support). If unknown, leave blank — LTV will be calculated on revenue.
%

Your Customer Acquisition Cost

Updates instantly as you type.

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Enter your annual sales & marketing spend and the number of new customers you acquired to see your CAC.

Already know your CAC? Find out what your churn is costing you.

CAC tells you the cost of getting customers. Churn tells you the cost of losing them. Together they show you whether your unit economics actually work. Most leaders look at one without the other.

Use the Churn Cost Calculator →

How the Calculation Works

This calculator uses the standard CAC formula and the most widely-accepted LTV:CAC framework.

Customer acquisition cost (CAC):

CAC = Total annual sales & marketing spend ÷ New customers acquired (annually)

Include everything you spend with the goal of acquiring customers: paid ads, marketing software, sales and marketing payroll, agencies, content production, event sponsorships, and so on. Exclude retention spend like customer success or support.

Customer lifetime value (LTV):

LTV = Average annual revenue × Customer lifetime × Gross margin

If you do not provide gross margin, the calculator returns customer lifetime revenue instead — useful, but slightly more generous than true LTV.

LTV:CAC ratio is the relationship between what a customer is worth and what they cost to acquire. The widely-cited benchmarks:

  • Under 1:1 — you lose money on every customer acquired. Unsustainable.
  • 1:1 to 3:1 — marginal. You are not bankrupting yourself but you have little room to invest in growth.
  • 3:1 — healthy. The classic target ratio for most service businesses.
  • 5:1 to 10:1 — strong unit economics. You may even be under-investing in growth.
  • Above 10:1 — almost certainly under-investing. You could spend more to acquire and still come out ahead.

CAC payback period is how many months it takes to recoup the cost of acquiring a customer. Calculated as CAC ÷ (monthly revenue per customer × gross margin). A healthy payback for most service businesses is 12 months or less; under 6 months is excellent.

What this calculator does not show:

  • Per-channel CAC (your true cost varies widely by acquisition channel — paid ads might be $400, referrals might be $40)
  • The hidden CAC inflation that happens as you scale (channels saturate and get more expensive)
  • The discount you should apply to LTV for time value of money and the risk that customers churn earlier than expected

The averages are a starting point. The channel breakdown is where the real strategy work happens.

Unit economics not working?

If your LTV:CAC ratio is below 3:1, the lever that moves it fastest is usually retention — keeping more of the customers you already paid to acquire. Let us help you find what is breaking.

Book a Free Consultation