The formula
- Paid CAC = ad spend ÷ new customers
- Fully loaded CAC = (ad spend + other acquisition costs) ÷ new customers
- First-order profit = first order value × margin − fully loaded CAC
- Orders to pay back CAC = fully loaded CAC ÷ (order value × margin)
How to use it
- Count only new customers — first-time buyers — in the period. Returning customers make CAC look lower than it is.
- Use paid CAC to compare channels and fully loaded CAC to decide whether acquisition pays for itself.
- If orders to pay back is above 1, you lose money on the first order and need repeat purchases to make it back.
Worked example
$20,000 of ad spend brings 400 new customers: paid CAC is $50. With $5,000 of agency, creative and tool costs, fully loaded CAC is $62.50. A $75 first order at a 50% margin earns $37.50, so the first order loses $25 and the customer needs about 1.7 orders to pay back.
Questions
How do you calculate CAC?
Divide acquisition spend for a period by the number of new customers acquired in that period. Decide up front whether the spend is ads only (paid CAC) or ads plus agency, creative and tools (fully loaded CAC).
What is the difference between CAC and CPA?
CPA counts every conversion the platform reports, including repeat buyers. CAC counts only new customers, so it is usually higher.
Should CAC include salaries?
For a fully loaded CAC, include the share of salaries spent on acquisition. Keep a paid-only CAC as well — it is the number you can compare across channels.
How is CAC related to LTV?
LTV:CAC divides what a customer is worth in margin by what it cost to acquire them. Payback in months shows how long it takes to earn the CAC back.