Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC) is the total amount spent to acquire a new customer. It includes all sales and marketing expenses divided by the number of new customers acquired in a specific period. Understanding CAC is crucial for building profitable affiliate programs.

Calculating CAC

Basic CAC Formula

CAC = Total Sales & Marketing Expenses / Number of New Customers

Channel-Specific CAC

Calculate CAC for each acquisition channel:

Affiliate CAC = (Affiliate Commissions + Program Management Costs) / Affiliate-Acquired Customers

CAC and LTV Relationship

LTV:CAC Ratio

LTV:CAC Ratio = Customer Lifetime Value / Customer Acquisition Cost

Healthy Ratios

• 5:1 or higher: Excellent efficiency
• 3:1 to 5:1: Good efficiency
• 2:1 to 3:1: Acceptable but improvable
• Below 2:1: Unsustainable

Affiliate Marketing and CAC

Advantages of Affiliate CAC

• Performance-based: Only pay for results
• Predictable costs: Known commission rates
• Scalable: Add more affiliates as needed
• Risk mitigation: Diversified acquisition channels

Use our Stripe Affiliate ROI Calculator to:

• Calculate your true affiliate CAC
• Compare affiliate costs to other channels
• Optimize commission structures for profitability

Ready to optimize your customer acquisition strategy? Start with understanding your current CAC.