What is CAC (Customer Acquisition Cost)?

Customer Acquisition Cost includes everything you spent to win those customers: ad budget, agency or freelancer fees, the tools used for campaigns and any commission paid on the sale. Leave any of them out and the number flatters you, which is exactly how stores end up scaling a campaign that loses money on every order.

How to calculate it properly

Take a clear period, add every acquisition cost in it, then divide by the number of first-time customers in the same period. Returning buyers do not belong in the denominator: they were acquired earlier, and counting them makes acquisition look cheaper than it is.

CAC on its own means nothing. Compare it with the gross margin of a first order to see whether you are profitable immediately, and with LTV to see whether you are profitable over time. A high CAC is acceptable when customers come back; it is fatal when they buy once.

Why it matters for an online store in the EU

Auction prices on the large ad platforms keep rising, and privacy changes have made attribution less precise than it used to be. That makes a blended view useful: total spend against total new customers, rather than trusting a single platform's reported numbers.

Channels also behave differently. Branded search and email usually show a low cost per customer because they harvest demand you already created, while broad prospecting costs more but brings people who did not know you. Judging them by the same target will quietly starve your growth channels.

Common mistakes

• Counting only ad spend and ignoring agency fees, tools and sales commissions.
• Including repeat buyers among new customers, which makes CAC look artificially low.
• Comparing platform-reported conversions from different tools that all claim the same order.
• Optimising for the lowest CAC by cutting prospecting, then wondering why growth stops.
• Ignoring returns and cancellations, which reduce the customers you actually keep.