How Customer Acquisition Cost Affects Profit
6 min read · Updated 2026-06
Definition
Customer Acquisition Cost (CAC) is how much you spend to get one new paying customer. If CAC is too high, no amount of revenue will save you.
Formula
CAC = Total Acquisition Spend ÷ New Customers Acquired
Example
A pet supplies store spends $5,000/month on Meta ads, gets 100 new customers. CAC = $50. Average order: $65. Gross margin: 55%.
- Revenue per new customer: $65
- Gross profit: $35.75 (55%)
- Variable costs: ~$8
- Contribution: $27.75
- Acquisition cost: $50
- Net on first purchase: −$22.25 per customer undefined
Common Mistakes
- Not connecting CAC to profit. $40 CAC means nothing without knowing contribution per customer.
- Ignoring CAC for free traffic. SEO, email, and influencer all have costs. Calculate blended CAC.
- Assuming CAC stays constant. First 100 customers: $25 each. Customers 1,000–2,000: $60.
Industry Benchmarks
| Channel | Typical CAC |
|---|---|
| Meta (Facebook/Instagram) | $30–$80 |
| Google Shopping | $20–$60 |
| TikTok Ads | $15–$50 |
| Influencer | $10–$40 |
| Email (repeat) | $2–$5 |
FAQ
What is a good CAC for Shopify stores?
CAC should be less than 1/3 of customer lifetime value. If a customer is worth $150, acquiring them for $50 or less is healthy.
How do I lower my CAC?
Improve ad creative, build an email list for repeat purchases, and increase average order value.
Is CAC the same as cost per click?
No. CPC is what you pay for one ad click. CAC is what you pay to acquire one paying customer. If CPC is $1.50 and 5% convert, CAC is $30.
Should I include organic customers?
For paid CAC, no. For blended CAC, divide total marketing spend by total new customers including organic.
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