Customer Acquisition Cost (CAC): Formula, Examples and How to Lower It for Ecommerce

Customer acquisition cost (CAC) is what you spend on marketing to win one new customer. The formula is simple: total marketing spend divided by the number of new customers in the same period. For an ecommerce brand, the version that matters is blended CAC: all your marketing spend divided by all your new customers. Not the CAC Meta or Google reports on its own.

Most founders know their ROAS by heart.

Far fewer know what a new customer actually costs them.

And when they do look, they usually look at the number an ad platform shows them. That number is almost always lower than the real one.

Here's how to calculate customer acquisition cost properly, how to read it and how email and SMS bring it down.

By Emiel Dingemans, Founder of Magicianly

Updated October 2026

What Is Customer Acquisition Cost (CAC)?

Customer acquisition cost is the average amount you spend to get one new customer. Not a visitor, not a subscriber, not an order. A first-time buyer.

It's one of the core numbers in your unit economics, because every new customer has to earn back what you paid to get them.

On its own, CAC doesn't tell you much. A $50 CAC can be great for one brand and a disaster for another. It only means something next to what a customer is worth after they buy, which is why we always read it together with margin and lifetime value.

What Is the Customer Acquisition Cost Formula?

Customer acquisition cost = total marketing spend ÷ number of new customers

Use the same period for both numbers. Monthly works well for most brands.

Two things decide whether the number is any good: what you count as spend, and what you count as a new customer.

Spend. At minimum, include:

• ad spend on every platform (Meta, Google, TikTok and anything else);
• influencer and affiliate costs;
• agency or freelancer fees for acquisition work;
• creative production for ads.

Some brands also add the salaries and tools behind marketing. That's called a fully loaded CAC, and it's fine to use. Just pick one definition and keep it the same every month, or your trend means nothing.

New customers. Count first-time buyers only. Not total orders, and not returning customers. If you count every order, a strong month for repeat purchases makes your CAC look better than it is.

How Do You Calculate Customer Acquisition Cost?

Add up your marketing spend for the month and divide it by the number of first-time customers you got in that same month.

Here's an example for one month:

1. 1Meta ad spend: $24,000
2. 2Google ad spend: $10,000
3. 3Influencer costs: $6,000
4. 4Total marketing spend: $24,000 + $10,000 + $6,000 = $40,000
5. 5New customers in Shopify: 800

Customer acquisition cost: $40,000 ÷ 800 = $50

So in this example, every new customer cost you $50 to acquire.

Now track that number every month. One month on its own can be noisy. The trend is what tells you whether acquisition is getting more or less efficient.

What's the Difference Between Blended CAC and Paid CAC?

Blended CAC divides all your marketing spend by all your new customers. Paid CAC, or platform CAC, divides the spend on one ad channel by the new customers that channel claims.

Paid CAC is useful for optimizing inside one channel. But every ad platform counts conversions by its own attribution rules, so the same customer can be claimed by more than one.

Back to the example. Say Meta reports 600 new customers, so a $40 CAC. Google reports 250, also a $40 CAC. That's 850 new customers between them, while your store only got 800 in total, and that's before the influencer spend is counted at all.

Every platform looks good on its own. The business pays $50.

That's why we judge acquisition on blended CAC: total marketing spend divided by total new customers. Not just Meta, not just Google. The same goes for the revenue email platforms report, which we cover in our guide to Klaviyo attribution.

Is CAC the Same as CPA?

No. CAC only counts new customers. CPA, or cost per acquisition, divides spend by conversions, and depending on how it's set up, a conversion can be any purchase, including repeat orders, or another action such as a signup.

That's why CPA often looks lower than CAC. A returning customer who clicks an ad and buys again counts as an acquisition for CPA, but not for CAC.

Use CPA to judge campaigns inside an ad account. Use CAC to judge what growth actually costs you.

How Do You Find CAC in Shopify?

Shopify shows CAC per marketing channel in its Performance by marketing channel report. You'll find it under Analytics, then Reports, filtered by the Marketing category.

That report shows ad spend, ROAS, cost per acquisition (CPA) and customer acquisition cost (CAC) next to each other, along with first-time and returning customers. A few things to know before you trust it:

• Spend-based numbers only show for channels that send cost data to Shopify, usually through a connected ad platform. A dash means the data isn't available, not that it's zero.
• It credits channels with last non-direct click attribution by default, so it's still one way of splitting credit, not the truth.
• It won't include costs that never reach Shopify, like influencer fees or agency retainers.

For your blended CAC, take the New customers number for the month (Shopify counts first-time purchasers only) and divide your total spend from your own books by it. You can read more in the Shopify Help Center.

What Is a Good Customer Acquisition Cost for Ecommerce?

A good customer acquisition cost is one your customers pay back, fast enough for your cash flow. There's no universal number, because it depends on your gross margin, your average order value and how quickly customers buy again.

A brand with a $40 average order and no repeat purchases can't afford the CAC that a brand with a $150 average order and a strong second purchase rate can.

So instead of chasing an industry number, ask two questions:

1. 1How much gross profit does a new customer leave in the first 30, 60 and 90 days?
2. 2How long does it take for that to cover your CAC?

Big scaling brands often accept a small loss on the first order. They treat the first purchase as the cost of acquiring the customer, because they know their retention system makes the customer profitable later. That only works if the retention system is actually there.

For the ratio side of this, here's what a good LTV to CAC ratio looks like and how to calculate customer lifetime value.

What Is CAC Payback Period?

CAC payback period is how long it takes for the gross profit from a new customer to cover what you paid to acquire them.

For an ecommerce brand, the cleanest way to measure it is by cohort. Take everyone who bought for the first time in the same month and track the cumulative gross profit per customer at 30, 60 and 90 days. The point where it passes your CAC is your payback period.

Here's an example with a $50 CAC:

• First order: $28 of gross profit per customer
• After 30 days: $36
• After 60 days: $47
• After 90 days: $55

This cohort pays back between day 60 and day 90. Anything after that is where you start to make money on the customer.

Shopify can show cumulative net sales per cohort by months since first purchase. Remember to convert sales to gross profit before you compare it with CAC.

For subscription brands, there's a shortcut: divide CAC by the monthly gross profit per subscriber. A subscriber who leaves $25 of gross profit a month pays back a $50 CAC in two months.

The faster the second purchase comes in, the shorter your payback and the faster you can put that cash back into growth.

Why Is Your Customer Acquisition Cost Going Up?

Most of the time, it's because you're paying for the same people twice.

You pay to bring traffic to your store. Most of those visitors leave without buying. If 2% of that traffic buys, you also paid for the 98% who didn't.

Then you retarget the people who left. You pay again to bring them back and hope they buy this time. Your CAC goes up, your margins shrink and the numbers get harder to make work every month.

The usual causes we see:

• no strong signup form, so visitors leave without giving you a way to follow up;
• a welcome series that doesn't convert subscribers into first-time buyers;
• abandoned checkouts that rely on retargeting ads instead of email and SMS;
• scaling spend while the back end stays the same.

If your blended CAC is rising while the share of revenue from returning customers stays flat, retention isn't offsetting the acquisition pressure. That's a warning sign, even if revenue is growing.

How Can Email and SMS Lower Your Customer Acquisition Cost?

By turning more of the traffic you already paid for into first-time customers. Your ad spend stays the same, but you get more new customers out of it, so your blended CAC goes down.

1. Capture the visitors you already paid for

A high-converting signup form isn't a small email thing on the side. If someone leaves without subscribing, you either lose them or pay again to retarget them. For most brands, we want to see signup rates in the 6 to 12% range. Here's how to improve your popup signup rate.

2. Convert subscribers with a front-loaded welcome series

Instead of paying for retargeting ads, convert those same people through email and SMS, at a much higher margin. Deliver the offer straight away, then answer one buying question per email in the first few days. Here's how we build a welcome email series.

3. Recover checkouts before you pay to retarget them

Someone who started checkout is the closest thing you have to a new customer. A quick, well-built abandonment flow brings many of them back without another ad click. Here's how we set up a Klaviyo abandoned cart flow.

Why Isn't a Lower CAC Always the Goal?

Because pushing CAC down is the hardest lever in the business, and it gets harder every year. Raising what a customer is worth is usually the easier one.

When growth stalls, the instinct is cheaper ads, more creatives, a new channel. But if your 30-day LTV is improving and your first-to-second purchase rate is climbing, you can afford a higher CAC. Scaling ads gets less risky, your cash flow improves and your payback window gets shorter.

A customer who buys three times is worth far more than one who buys once, for the same acquisition cost. Nothing about the ads changed. The customer did.

That's why we'd rather make the first order worth more, with bundles or a smart average order value push, and go after the second purchase early. A lower CAC helps. A higher customer value changes what you can afford.

Which Metrics Should You Read Next to CAC?

CAC only makes sense next to the numbers that show what a customer is worth. These are the ones we read it with:

1. 1Contribution margin after marketing, so you know whether growth is actually profitable.
2. 2Cohort LTV at 30, 60 and 90 days, to see how fast customers pay back.
3. 3First-to-second purchase rate, the clearest sign you're turning acquisition into retention. Here's how to read your repeat purchase rate.
4. 4The share of revenue from returning customers, so you know how dependent you are on new customers.

We cover how these fit together in our guide to ecommerce retention metrics, and where to put your budget in customer retention vs acquisition.

So How Should You Use Customer Acquisition Cost?

As one half of the picture. Here's the short version:

• Calculate blended CAC: total marketing spend divided by total new customers.
• Count first-time buyers only, and keep your definition of spend the same every month.
• Use platform CAC and CPA to optimize inside a channel, not to judge the business.
• Measure payback by cohort, in gross profit, at 30, 60 and 90 days.
• Lower CAC by capturing and converting the traffic you already paid for.
• Raise customer value so you can afford to pay more for growth.

The goal isn't the cheapest customer. It's a customer who's worth more than they cost.