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Book a call →Customer Acquisition Cost (CAC) explained in plain English: the formula, worked examples and what to change when the number is off.
Customer acquisition cost (CAC) is the total cost of winning one new customer. The CAC formula is total sales and marketing costs ÷ number of new customers in the same period. If you spent $20,000 on ads, agency fees and tools in a month and won 400 new customers, your CAC is $50. In digital marketing, CAC is compared with customer lifetime value (LTV) to judge whether growth is profitable.
CAC = total sales & marketing costs ÷ new customers acquired5,000+ B2B brands. Coaches, agencies, and service providers turning video into a growth engine.
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CAC answers one question: how much does it cost us to get a new customer? It includes every cost of acquisition: ad spend, creative production, agency and freelancer fees, marketing software and, in a full CAC, the salaries of the people doing sales and marketing.
Only new customers go in the bottom of the formula. Orders from people who already bought are retention, not acquisition.
Ad spend: $15,000 Creative production: $2,000 Agency / freelancers: $2,500 Software: $500 Total: $20,000 New customers: 400 CAC = $20,000 ÷ 400 = $50
Paid CAC uses only paid-media costs and the customers attributed to paid ads. Blended CAC uses all acquisition costs and all new customers, including organic and word of mouth. Paid CAC tells you whether the ads work; blended CAC tells you whether the business works.
| CPA | CAC | |
|---|---|---|
| Costs counted | Ad spend for one campaign | All sales and marketing costs |
| Divided by | Conversions (sale, lead, install) | New customers only |
| Used for | Optimising campaigns day to day | Unit economics and planning |
Lifetime value (LTV) is the gross profit a customer brings over the whole relationship. Dividing LTV by CAC shows how much profit each acquisition dollar returns. Payback period is CAC ÷ monthly gross profit per customer: how long until a customer has paid back what it cost to win them.
CAC: $50 Gross profit per customer per month: $20 Payback = $50 ÷ $20 = 2.5 months
Since ad platforms removed hyper-specific manual audience targeting, creative has become the sole targeting mechanism. An ad that hooks the exact target buyer while repelling non-buyers naturally lowers wasted ad spend and cuts CAC.
Seven Figure Studio produces high-converting UGC video ads, VSLs, and static creative engineered specifically around direct-response metrics. Packs start at $35 with 24 to 48 hour delivery.
The creative system behind every client result — pick a cut, read the breakdown, and watch it full-screen with sound.
A behind-the-scenes look at the exact creative system we run to book high-ticket calls — the hooks, offer framing, and calls-to-action that turn scrolls into booked calendars.
We review your offer and ad account before the call, then recommend the right package, the first angles to test for Customer Acquisition Cost (CAC), and a delivery timeline. No pitch deck.