What is CAC?
Customer acquisition cost (CAC) is what you spend to win one new customer. It counts ad spend plus the other costs of winning customers, divided by the customers who bought for the first time in the same period. It is the number to set against customer lifetime value.
The formula
Count only customers buying for the first time in the period; returning customers were already won. Use the same dates for costs and customers.
Worked example
$18,000 won 400 new customers, so each one cost $45.00 to win.
Using it on Meta ads
Meta reports CPA, which counts every purchase, so CAC is usually worked out from your store's own count of new customers. Use the same dates for spend and customers.
If CAC rises while CPA holds, a smaller share of your buyers are new. MER gives the whole-business view of the same spend.
Questions
Anything spent to win customers that is not the ad spend itself: agency or freelancer fees, creator payments, design and the tools you run ads with. Leave out costs you would pay with no new customers at all.
CPA is ad spend per conversion, and a conversion can be a repeat buyer or a lead. CAC is the full cost per new customer, so it is usually the higher of the two.
Compare it with what a customer leaves you. If the first order's contribution covers CAC, each new customer pays for themselves at once; if not, repeat purchases have to make up the gap, which the LTV calculator shows.
