CAC formula
CAC = Total marketing and sales spend ÷ Number of new customers acquired, over the same period.
What to include in the spend
Ideally, all investment that generated those customers: paid media, sales/marketing team salaries, tools, commissions — not just ad spend.
Is a low CAC always good?
Not on its own — CAC needs to be analyzed alongside LTV (customer lifetime value). A low CAC with an even lower LTV is still a bad business.
Frequently asked questions
Should I include salaries in the CAC calculation?
Ideally yes — the most complete CAC includes all marketing and sales costs, not just paid media.
Does CAC vary by acquisition channel?
Yes, and it's good practice to calculate CAC separately per channel (Google Ads, social media, referrals, etc.) to know where to invest more.
How does CAC relate to LTV?
The LTV/CAC ratio is one of the most used indicators to evaluate business health — a ratio above 3 is usually the target.