What Is Customer Acquisition Cost (CAC)?
Customer acquisition cost (CAC) is the marketing cost of bringing in one new customer. For a Shopify store, it helps show whether sales from paid ads, organic marketing, email, and other channels generate enough gross profit to cover what you spent to acquire customers.
Blended CAC includes all marketing costs and new customers; paid CAC focuses on paid advertising. Comparing CAC with the gross profit customers generate over time helps you decide whether to scale a channel, improve retention, or change your spending.
CAC Formulas
Blended CAC
Blended CAC = Total Marketing Spend ÷ New Customers Acquired
Paid CAC
Paid CAC = Paid Advertising Spend ÷ New Customers Attributed to Paid Ads
Gross profit per order
Gross Profit per Order = Average Order Value × (1 − COGS Percentage)
Estimated customer lifetime gross profit and LTV:CAC
Estimated Lifetime Gross Profit = Gross Profit per Order × Average Orders per Customer
LTV:CAC Ratio = Estimated Lifetime Gross Profit ÷ Blended CAC
Orders to pay back CAC
Orders to Payback = CAC ÷ Gross Profit per Order
Round up to the next whole order when estimating how many purchases are needed to recover CAC. Gross profit here subtracts COGS, not operating expenses such as fulfillment, returns, or software.
How to Use This Calculator
Enter monthly figures in the calculator. Use the same month and currency for marketing costs and new customers so the resulting CAC represents one consistent period.
- Paid Ads — Enter monthly spend on Meta, Google, TikTok, and other advertising.
- Organic Marketing — Include content production, SEO, social media management, and influencer costs.
- Email/SMS — Enter platform fees and campaign costs, such as your Klaviyo spend.
- Tools — Add marketing, analytics, and attribution software costs.
- Staff — Include the salary or contractor cost of people doing marketing work.
- Other Marketing — Add events, sponsorships, PR, and any other marketing expenses.
- New Customers — Enter new customers acquired during the same month; exclude returning customers.
- Average Order Value — Enter the average value of the first order placed by new customers.
- COGS — Enter cost of goods sold as a percentage of revenue.
- Average Orders — Estimate the number of orders each customer places over their lifetime.
The calculator uses the customer count you enter to estimate CAC. Because there is no separate field for customers attributed to paid ads, treat paid CAC as a spend-based comparison, not a fully attributed channel result; for precise paid CAC, divide ad spend by customers attributed to those ads in your reporting platform.
Step-by-Step Example
A Shopify skincare store spends $6,000 on marketing in a month and acquires 150 new customers. Its average first order is $80, COGS is 45%, and customers place an average of 3 orders over their lifetime.
| Calculation | Arithmetic | Result |
|---|---|---|
| Total marketing spend | $4,200 + $600 + $300 + $200 + $700 | $6,000 |
| Blended CAC | $6,000 ÷ 150 | $40 |
| Paid spend per new customer* | $4,200 ÷ 150 | $28 |
| Gross profit per order | $80 × (1 − 0.45) | $44 |
| Estimated lifetime gross profit | $44 × 3 | $132 |
| Estimated LTV:CAC | $132 ÷ $40 | 3.3:1 |
| First-order profit after blended CAC | $44 − $40 | $4 |
| Orders to recover CAC | $40 ÷ $44 = 0.91; round up | 1 order |
*This paid-spend figure uses all new customers as the denominator, so it is not a true ad-attributed CAC unless all customers were acquired through paid ads. Use the attributed customer count for a channel-level calculation.
Interpreting CAC and Payback
CAC alone does not show whether acquiring a customer is profitable. Compare it with lifetime gross profit, and check how long the customer’s purchases take to recover the acquisition cost. A high LTV:CAC ratio can still create cash-flow pressure if payback takes many months.
| LTV:CAC ratio | Practical interpretation |
|---|---|
| Below 1:1 | Estimated lifetime gross profit does not cover CAC. |
| 1:1 to 2:1 | Little room remains for overhead, returns, or profit. |
| Around 3:1 | A common planning target for balancing profitability and growth. |
| Above 5:1 | Check whether you can profitably invest more in acquisition. |
These are planning guides, not universal industry averages. Product margins, repeat-purchase frequency, cash reserves, and attribution quality all affect the target. Use the LTV:CAC Ratio Calculator to test ways to reach a target ratio, or the CAC Payback Period Calculator to model recovery over time.
6 Ways to Improve CAC Decisions
- Separate attributed customers by channel. Change the paid-customer denominator in your reporting from all new customers to customers attributed to ads; compare that paid CAC with the blended figure before cutting a channel.
- Test a smaller ad budget before scaling. Reduce a campaign budget from $900 to $750 for a test period and track new-customer volume and CAC, not clicks alone. The ROAS Calculator can help assess ad revenue against spend and product costs.
- Raise repeat purchases with a post-purchase flow. Test a replenishment email 25 days after delivery for products customers use regularly, then compare repeat orders and gross profit by cohort.
- Review creator costs and disclosures. If you pay influencers, include fees and product costs in marketing spend; the FTC’s endorsement guidance explains when creators must disclose a material connection.
- Revisit your marketing budget with a written plan. Allocate costs by channel and objective, then compare actual spend with your plan each month; the SBA marketing and sales guide covers planning and tracking marketing activity.
- Test first-order economics. Change a free-shipping threshold from $50 to $60 and measure whether higher order value offsets added shipping costs; do not count revenue growth as improved CAC unless gross profit also rises.
Frequently Asked Questions
How do you calculate customer acquisition cost?
CAC = Total Marketing Spend / Number of New Customers Acquired. Include all marketing costs: paid ads, content creation, email/SMS platforms, marketing tools, staff salaries, and agency fees. Only count new customers — not returning ones. This gives you the blended CAC across all channels.
What is a good CAC for ecommerce?
A good CAC depends on your LTV. The benchmark is a 3:1 LTV to CAC ratio — meaning each customer generates 3x their acquisition cost in lifetime profit. For Shopify stores, typical blended CAC ranges from $20-$80. If your AOV is $60 with 40% COGS, you need an LTV of at least $100 gross profit to justify a $33 CAC.
What is the difference between blended CAC and paid CAC?
Blended CAC includes ALL marketing spend (paid + organic + email + tools + staff) divided by all new customers. Paid CAC only counts ad spend divided by customers attributed to ads. Blended CAC is usually lower because organic and email channels bring in 'free' customers that dilute the average. Track both to understand channel efficiency.
What is the LTV to CAC ratio?
LTV:CAC ratio measures how much lifetime profit a customer generates compared to their acquisition cost. Below 1:1 means you're losing money. 1:1-2:1 is break-even to marginally profitable. 3:1 is the golden ratio — healthy and scalable. Above 5:1 may mean you're under-investing in growth.
How many orders does it take to recover CAC?
Divide your CAC by the gross profit per order. If your CAC is $40 and each order generates $25 in gross profit (after COGS), you need 2 orders to recover CAC. If customers need 3+ orders to pay back CAC, focus on retention, subscriptions, or reducing acquisition costs.
About This Calculator
The Customer Acquisition Cost Calculator was built by Luis Dev Studio for Shopify merchants comparing marketing costs with customer profitability. For help improving your store’s marketing measurement or setup, contact us.
Updated by Luis Gonzalez · Mar 5, 2026