Calculate Your E-commerce CAC
Your E-commerce CAC Result
This is the average amount your store spends to acquire a single new customer. Compare this cost to your Average Order Value (AOV) and estimated Customer Lifetime Value (LTV) to assess profitability.
Marketing Cost Distribution
Marketing Spend by Channel
Understanding E-commerce CAC
Why Track E-commerce CAC?
For online stores, tracking CAC is crucial for:
- Determining the profitability of marketing campaigns and channels.
- Making informed decisions on budget allocation (e.g., scale successful ads).
- Optimizing pricing and promotion strategies.
- Understanding the payback period for acquisition spend relative to AOV.
- Evaluating overall business health and scalability.
Key Factors Influencing E-commerce CAC
Several factors impact how much you spend to get a customer:
- Acquisition Channels: Costs vary greatly between Social Media Ads (Meta, TikTok), Google Ads, SEO, Influencer Marketing, Email Marketing, Affiliates etc.
- Conversion Rates: Higher website/ad conversion rates generally lead to lower CAC.
- Competition: Higher competition in your niche often drives up advertising costs.
- Average Order Value (AOV): Stores with higher AOV can often afford a higher CAC.
- Seasonality: Acquisition costs can fluctuate significantly during peak seasons (e.g., holidays).
E-commerce CAC Formula
Basic E-commerce CAC Formula
Example:
Total E-commerce S&M Costs (Month): $15,000
New Customers Acquired (Month): 300
E-commerce CAC = $15,000 / 300 = $50 per customer
This means your store spent $50 on average to acquire each new customer during that month.
Frequently Asked Questions
Include all expenses directly aimed at acquiring *new* customers for your e-commerce store. Common examples: Ad spend (Facebook/Instagram Ads, Google Ads, TikTok Ads, etc.), influencer fees, content creation costs for ads/marketing, email marketing platform costs related to acquisition campaigns, affiliate payouts for new customers, SEO agency fees or tool costs, and potentially a portion of marketing team salaries/freelancer costs directly involved in acquisition activities. Exclude costs related to retaining existing customers or general operational costs not tied to acquisition.
While the basic formula is similar, e-commerce CAC context is unique due to factors like: potentially higher transaction frequency, direct relationship between CAC and Average Order Value (AOV), the significant impact of Repeat Purchase Rate on Customer Lifetime Value (LTV), and specific channels like product listing ads (PLAs) and social commerce.
There's no single "good" number, as it heavily depends on your industry, product margins, Average Order Value (AOV), and Customer Lifetime Value (LTV). A general rule of thumb is that your LTV should be significantly higher than your CAC, often aiming for an LTV:CAC ratio of 3:1 or higher. If your AOV is $100 and your CAC is $30, you might be profitable on the first order, but if your AOV is $40 and CAC is $50, you rely heavily on repeat purchases to become profitable.
Check industry benchmarks for specific niches, but always analyze CAC in relation to *your* store's specific unit economics (AOV, LTV, margins).
AOV is the average amount spent per order in your store. A higher AOV means each new customer generates more revenue upfront. This allows businesses with higher AOV to potentially spend more (have a higher CAC) to acquire a customer and still be profitable on the first purchase. Strategies to increase AOV (like bundling, upselling) can make higher CAC levels more sustainable.
Repeat Purchase Rate is the percentage of customers who buy from you again. A high rate significantly increases Customer Lifetime Value (LTV). If customers frequently return and buy more, you can justify spending more (a higher CAC) to acquire them initially, knowing you'll likely recoup the costs and make a profit over their lifetime. Stores with low repeat purchase rates need a lower CAC to be profitable, often requiring profitability on the first order.
Boost Your Store's Profitability
Calculating your E-commerce CAC is the first step. Dive deeper into optimizing your ad spend, improving conversion rates, and increasing customer lifetime value with our guides.