The average e-commerce brand spends approximately $70 to acquire a single new customer (Shopify/Statista, 2024). In some verticals, that number exceeds $200. If you don't know your CAC, you don't know whether your growth is profitable or whether you're spending $1.20 to make $1.00. Customer acquisition cost is the most fundamental unit economics metric in e-commerce, and the brands that track it rigorously grow faster and more sustainably than those that don't.
Customer acquisition cost (CAC) is the total cost of acquiring a new customer. The basic formula: CAC = Total Sales and Marketing Spend / Number of New Customers Acquired. If you spend $50,000 on marketing in January and acquire 1,000 new customers, your CAC is $50.
That formula sounds simple, but what counts as "sales and marketing spend" is where most brands get the math wrong. A complete CAC calculation includes: paid ad spend (Google, Meta, Amazon, TikTok), agency fees, marketing team salaries, software and tools (email platform, analytics, CRM), content creation costs, influencer payments, and affiliate commissions. Brands that only count ad spend in their CAC are understating the true cost of acquisition, sometimes by 40-60%.
Blended CAC vs. Paid CAC
There are two ways to calculate CAC, and they tell different stories.
Blended CAC includes all marketing spend (paid and organic) divided by all new customers. This is the number that matters for overall business health. It tells you the true all-in cost of growth.
Paid CAC includes only paid advertising spend divided by new customers attributed to paid channels. This is useful for evaluating ad channel efficiency, but it overstates your marketing efficiency because it ignores the cost of the organic, email, and content programs that contribute to those "free" customers.
A brand might have a paid CAC of $35 and a blended CAC of $55. The $20 gap represents the cost of all the non-ad marketing that supports growth (content team, email platform, SEO investment, social media management). Both numbers matter. Use paid CAC to optimize channel spend. Use blended CAC for business planning and profitability analysis.
CAC Benchmarks by Industry
These benchmarks come from ProfitWell, Shopify, and FirstPageSage data (2024-2025). They represent blended CAC (total marketing spend divided by new customers) for e-commerce and DTC brands.
| Industry / Vertical | Median CAC | Range (25th-75th percentile) | Key Drivers |
|---|---|---|---|
| Apparel / Fashion | $45 | $25-$80 | High competition on Meta and Google Shopping. Influencer costs rising. Returns inflate effective CAC. |
| Beauty / Skincare | $40 | $20-$65 | Strong organic/influencer channels reduce paid dependency. Subscription models improve payback. |
| Health / Supplements | $55 | $30-$90 | Regulatory restrictions on ad claims increase creative costs. High CPMs on Meta for health categories. |
| Home / Furniture | $85 | $50-$150 | High AOV but infrequent purchases. Long consideration cycles increase touchpoints needed. |
| Electronics / Tech | $70 | $40-$120 | Price comparison shopping extends the funnel. Brand loyalty is lower, making retention harder. |
| Food / Beverage (DTC) | $35 | $15-$55 | Lower price points but high repeat rates. Trial offers and subscriptions reduce effective CAC. |
| B2B SaaS | $200-$500+ | Varies widely | Longer sales cycles, content marketing investment, and sales team costs drive higher CAC. Offset by higher LTV. |
These benchmarks are useful as directional guides but shouldn't be your target. Your target CAC should be derived from your own unit economics: what can you afford to pay for a customer and still be profitable?
The CAC:LTV Ratio
CAC in isolation doesn't tell you if your acquisition spend is working. A $100 CAC is great if customers spend $500 over their lifetime. It's terrible if they spend $80 and never come back. That's why CAC always needs to be paired with customer lifetime value (LTV).
LTV:CAC ratio = Customer Lifetime Value / Customer Acquisition Cost
The widely accepted healthy benchmark is a 3:1 LTV:CAC ratio (Bessemer Venture Partners, SaaS benchmarking). That means for every dollar you spend acquiring a customer, you generate three dollars in lifetime gross profit. Here's how to interpret the ratio:
- Below 1:1: You're losing money on every customer. This is unsustainable unless you're deliberately investing in market share with a clear path to improving either LTV or CAC.
- 1:1 to 2:1: Marginally profitable or break-even. You have little room for error. Focus on reducing CAC or increasing repeat purchase rate.
- 3:1: The target for most e-commerce businesses. Sustainable growth with healthy margins.
- 5:1 or higher: You might be underinvesting in growth. A very high ratio can mean you're leaving market share on the table by not spending enough on acquisition.
Payback period matters too. Even with a 3:1 LTV:CAC ratio, if it takes 18 months to recoup your acquisition cost, cash flow becomes a constraint. DTC brands should target a CAC payback period of 6 months or less, meaning the first purchase or first few purchases should cover the acquisition cost.
Strategies to Reduce CAC
Improve conversion rate
The fastest way to reduce CAC is to convert more of the traffic you're already paying for. A 50% improvement in conversion rate reduces your effective paid CAC by 33%. Fix your landing pages, simplify checkout, and add social proof before increasing ad budgets.
Build organic channels
SEO, email marketing, and organic social don't have per-click costs. They require upfront investment (content creation, list building, community management) but reduce blended CAC over time as a growing share of customers comes through non-paid channels. Brands with strong organic programs typically have blended CAC 30-50% lower than brands that rely primarily on paid acquisition.
Increase referral rate
Referred customers have a CAC near zero (excluding the cost of referral incentives, which is typically much lower than paid acquisition). A referral program that generates even 10% of new customers can meaningfully reduce blended CAC. Research from Wharton School of Business found that referred customers have 16% higher LTV than non-referred customers, making them doubly valuable.
Optimize channel mix
Not every channel has the same CAC. Your Meta ads might acquire customers at $55 while Google Shopping acquires them at $35 and email reactivation at $8. Track CAC by channel and shift budget toward the most efficient channels, recognizing that each channel has a saturation point where costs increase as you scale spend.
Improve ad creative and targeting
Within paid channels, creative quality is the biggest variable in CAC. Meta's own data shows that creative accounts for 56% of the auction outcome (Meta Performance Marketing Summit, 2023). Investing in better creative (stronger hooks, clearer value propositions, UGC-style video) often reduces CAC more than any targeting or bidding change. Test 3-5 new creative concepts monthly. Kill underperformers within 3-5 days. Scale winners.
Common CAC Mistakes
- Only counting ad spend. If you exclude agency fees, marketing salaries, and tool costs, your CAC looks artificially low. Include everything that contributes to acquiring customers.
- Not separating new vs. returning customers. If your "CAC" calculation includes returning customers in the denominator, you're understating the cost of acquiring genuinely new customers. Segment your data. Returning customers should have near-zero acquisition cost.
- Ignoring CAC by channel. A blended CAC of $50 might hide that your TikTok ads have a $120 CAC while your email program has a $5 CAC. Channel-level CAC reveals where to invest more and where to cut.
- Not accounting for returns. In apparel and footwear, return rates can exceed 30%. If your CAC is $40 and 30% of customers return the product, your effective CAC is $57. The return rate adjusts your real customer count downward.
Example: CAC Analysis Revealing a Channel Problem
A DTC wellness brand was celebrating $1.2M in annual revenue and "profitable growth." But they'd never calculated true blended CAC. When they added up all marketing costs — Meta ads ($18K/month), Google ads ($8K/month), agency fees ($5K/month), Klaviyo ($500/month), influencer payments ($3K/month), and two marketing team salaries — their total monthly marketing spend was $46,500. Divided by 620 new customers per month, their blended CAC was $75. With a $55 average first order value, they were losing $20 on every new customer before accounting for COGS and shipping. The LTV:CAC ratio was 1.8:1 (below the 3:1 target). The fix: they cut TikTok spend (which had a $140 CAC), doubled down on email (with $8 CAC on reactivation campaigns), and improved landing page conversion to reduce paid CAC. Within a quarter, blended CAC dropped to $52 and the LTV:CAC ratio hit 2.7:1. The average e-commerce CAC is approximately $70 (Shopify/Statista 2024), but knowing your number by channel is what makes the metric actionable.
Frequently Asked Questions
How often should I calculate CAC?
Monthly for blended CAC, weekly for paid channel CAC. Monthly gives you a stable trend. Weekly channel-level tracking lets you catch efficiency drops quickly and adjust spend before wasting budget.
Is CAC different on Amazon vs. DTC?
Yes. On Amazon, your acquisition cost is primarily your advertising spend (ACoS) plus Amazon's referral fees. On DTC, it's your full marketing stack. The concepts are the same, but the components differ. Track both if you sell on multiple channels.
What's the relationship between CAC and ROAS?
ROAS measures revenue returned per ad dollar. CAC measures the cost to acquire each customer. A 4x ROAS with a $100 average order value means you're spending $25 per order in ads. If most customers are new, your paid CAC is approximately $25. ROAS is campaign-level. CAC is customer-level. You need both.
Read next:
- ROAS for understanding return on ad spend across platforms
- Conversion Rate Optimization for reducing CAC by improving conversion