--- title: "CAC calculator" description: "Work out your customer acquisition cost (CAC) from what you spent and the clients you won, plus the payback period and LTV to CAC ratio. Free, no sign-up." canonical: https://www.acquisity.ai/tools/cac-calculator --- # CAC calculator > Work out your customer acquisition cost (CAC) from what you spent and the clients you won, plus the payback period and LTV to CAC ratio. Free, no sign-up. Enter what you spent on sales and marketing and the new clients it won to see your customer acquisition cost, to the cent. Add what a client pays a month, your margin and how long a client stays to see how soon that cost pays back and what a client brings in over that time. Use the tool in a browser at [/tools/cac-calculator](https://www.acquisity.ai/tools/cac-calculator). It is free and needs no sign-up. ## How to calculate CAC Customer acquisition cost (CAC) is what you spend to win one new client. Divide your sales and marketing spend by the new clients you won in the same period: $10,000 spent and 20 new clients is $10,000 ÷ 20 = $500 per client. Use the same period for both numbers, such as a month or a quarter, and count only new clients, not renewals or upgrades. ## What to count in your spend Count everything you spent to win new clients in the period. Leave out the cost of serving clients once they’ve signed, such as delivery and support, which belongs in your margin. - Ads, sponsorships and events. - Sales and marketing tools, such as your CRM, email sending, data and scheduling. - People’s time: pay, [commission](https://www.acquisity.ai/tools/commission-calculator) and bonuses for everyone who sells or markets, or the share of their time spent on it. - Agencies, freelancers and contractors. ## Blended CAC and paid CAC Blended CAC divides all your sales and marketing spend by all your new clients, including the ones who came through referrals or search. Paid CAC divides only your paid spend, such as ads, by the clients those paid channels brought in. Blended CAC is lower when many clients come at no cost. Paid CAC shows whether a paid channel is worth what it costs. ## The CAC payback period The payback period is how many months of a client’s gross profit it takes to earn back what you spent to win them: CAC ÷ monthly gross profit per client. A $500 CAC and $700 of gross profit a month pays back in $500 ÷ $700 ≈ 0.7 months. Use gross profit, not revenue, where you can. Part of every payment goes on serving the client, so revenue makes payback look shorter than it is. ## LTV to CAC ratio Lifetime value (LTV) is the gross profit a client brings in over the whole time they stay: monthly gross profit × months. Divide it by CAC for the LTV to CAC ratio. $700 a month for 24 months is $16,800, which is 33.6 times a $500 CAC. A common rule of thumb is a ratio of about 3 to 1. Below 1 to 1, each client brings in less than they cost to win. A much higher ratio can mean you could spend more to win clients faster. ## How to lower CAC - Move spend to the channels that win clients for the least, and cut the ones that don’t win any. - Close more of the leads you already have: [follow up quickly](https://www.acquisity.ai/tools/follow-up-email-generator) and qualify leads before a sales call. - Ask happy clients for referrals. A referred client costs little to win. - Cut tools and subscriptions that no longer help you win clients. ## Questions ### What is CAC? Customer acquisition cost: what you spend on sales and marketing to win one new client. It’s the spend divided by the new clients won in the same period. ### What is the formula for customer acquisition cost? CAC = sales and marketing spend ÷ new clients won. $10,000 spent to win 20 clients is $10,000 ÷ 20 = $500 per client. ### What is a good CAC? It depends on what a client is worth to you. Compare CAC with lifetime value: a common rule of thumb is a lifetime value of about 3 times CAC, with a payback period short enough that you can wait for it. ### What is a good LTV to CAC ratio? A common rule of thumb is about 3 to 1. Below 1 to 1, a client brings in less than they cost to win. ### Should I use revenue or gross profit? Gross profit, if you know your margin. Enter it here to use it. Leave the margin blank and the calculator works on revenue, which makes payback look shorter and lifetime value look bigger than they are. ### How does this calculator round? Money to the nearest cent, with half a cent rounded up, and an amount above zero that rounds to nothing shows as under $0.01. Payback, lifetime value and the ratio are worked out from the exact cost and profit before anything is rounded. The answer gives payback and the ratio to one decimal place, or as a whole number from 1,000 up, and the working to one decimal place. Where one decimal place would put a payback on the months a client stays, or the ratio on 1, both show up to 4 decimal places, enough to show which side it falls: $2,404 spent to win a client who pays $100 a month for 24 months takes 24.04 months to pay back and brings 0.998 times its cost. Past 4 decimal places they say just over or just under. In the working, = marks an exact figure, and an amount that isn’t whole cents shows its exact value, up to 4 decimal places, then its rounding to the cent: = $0.003, rounded to $0.00. An amount with more decimals shows ≈ and 4 of them, like ≈ $0.0013, rounded to $0.00, or more when 4 would round to other cents, like ≈ $44.33498, rounded to $44.33. ≈ also marks a payback or ratio that isn’t exact as shown. < marks a figure above zero too small to show: < $0.0001 for an amount, < 0.1 for a payback or ratio. ## Getting paid by clients? Acquisity’s CRM ties every payment to its deal, so you can see what each deal has collected and what’s still outstanding. Payments are turned on per workspace. [Payments & Commissions](https://www.acquisity.ai/platform/payments). --- Web page: https://www.acquisity.ai/tools/cac-calculator Site index for agents: https://www.acquisity.ai/llms.txt