What is CAC?

What is CAC? CAC (customer acquisition cost) is what it costs to win one new customer: total acquisition spend in a period divided by the number of new customers in that period. Spending 2,500 to gain 40 new customers is a CAC of 62.50. Returning customers are left out of the count.

Work it out: free CAC calculator.

What is the CAC formula?

CAC is all customer acquisition costs in a period divided by the new customers who made a first purchase in that period. Shopify defines it this way and excludes returning customers.

CAC = acquisition spend ÷ new customers

Which costs go into CAC?

Shopify's list goes beyond ad spend. It includes:

  • advertising fees, online and offline
  • marketing software and tools
  • marketing salaries and freelance or contract work
  • discounts and promotional offers used to win new customers
  • content creation, including videos
  • sales costs that support marketing

Some teams also track an ad-only CAC (ad spend ÷ new customers) because it is quicker to calculate. Say which one you mean, because the full version is always higher.

Worked example

These are the example numbers the CAC calculator uses.

Input Value
Acquisition spend 2,500
New customers 40

CAC = 2,500 ÷ 40 = 62.50.

What is the difference between CAC and CPA?

CPA divides ad spend by the conversions an ad platform attributes to your ads, including returning customers. CAC divides acquisition spend by new customers, usually counted in your store. A business can show a low CPA in Ads Manager and a higher CAC in its own books, because the ads are partly reaching people who already buy.

How does CAC compare with LTV?

CAC is worth paying only if a new customer's lifetime value covers it. With the example numbers, a profit LTV of 144 against a CAC of 62.50 gives a ratio of about 2.3. Shopify says a CLV to CAC ratio between 3:1 and 5:1 suggests acquisition is working efficiently, measured on revenue-based CLV.

How is CAC used for AI and UGC ads?

The cost of making creative belongs in CAC under Shopify's definition, since it includes content creation. For a brand that buys many AI versions of each winning script, that means two levers:

  • Ad efficiency. Better hooks and versions lower the ad spend needed per new customer.
  • Production cost per version. More versions raise content costs, so the gain in ad efficiency has to outweigh them.

Measure CAC by month or by campaign, not by single ad. Individual creatives are better judged on CPA, CTR and hook rate, with CAC as the check on the whole account.

Sources

Checked: 12 Oct 2026