CAC calculator

How it is worked out

• CAC = (ad spend + other marketing costs) divided by new customers.
• Margin per order = order value times your margin before ads.
• 12-month margin = margin per order times orders per customer. This is the most you can pay to get a customer and still break even within a year.
• Orders to pay back = CAC divided by margin per order.

Example: a $40 desk organizer store

• $6,000 on ads and $1,500 on creators and tools bring in 250 new customers. CAC is $30.00.
• Each order leaves $16.00 before ads. Customers order 1.4 times in a year, so each brings $22.40.
• Each new customer loses $7.60 over 12 months. The store needs a CAC under $22.40, or more repeat orders.
• Counting ad spend only, CAC would show $24.00 and hide part of the loss.

Questions

What is a good CAC for an online store?

• It depends on your margin. CAC is good when it is below what a customer makes you.
• If a customer makes you $22 over a year, a $30 CAC loses money and a $15 CAC makes money.

Should CAC include more than ad spend?

• Yes. Add creator and agency fees, first-order discounts and marketing tools.
• Leave them out and CAC looks lower than it is.

Why count new customers, not orders?

• Repeat buyers would have bought anyway, so counting their orders makes ads look cheaper.
• Use first-time customers from your store's own data, not the ad platform's.