What It Costs to Win a Customer (CAC)

Why this matters

Customer Acquisition Cost is the single number that separates profitable paid channels from expensive vanity metrics. Without a clean CAC calculation you cannot compare channels, set bids, or know whether scaling spend will create or destroy value. Every growth decision downstream — how much to spend, which channel to prioritise, when to cut a campaign — is anchored to this number.

Demo

CAC = Total spend ÷ New customers acquired in the same period. The period alignment is critical: spend and customers must cover the same window or the ratio is meaningless.

Try it yourself

1. Change spend to 18000 and new_customers to 90 — note how CAC rises even though more customers were acquired.
2. Split the spend into two channels (e.g., 8000 Google, 4000 Meta) with separate customer counts and compute a blended CAC vs. per-channel CAC.
3. Set new_customers to 0 and observe the ZeroDivisionError — add a guard that returns None instead, since undefined CAC is informative.
4. Add a salaries variable representing the cost of the marketing team and compute fully-loaded CAC vs. ad-spend-only CAC side by side.

References

• https://www.profitwell.com/recur/all/customer-acquisition-cost
• https://hbr.org/2014/06/the-value-of-keeping-the-right-customers