How to Calculate Cost of Customer Acquisition (CAC) in Ecommerce

The cost of customer acquisition (CAC) means the price you pay to acquire a new customer. In its simplest form, it can be worked out by:

Dividing the total costs associated with acquisition by total new customers, within a specific time period.

Do not get this metric confused with cost per action (CPA), as there is a strong distinction between the two. In ecommerce, cost per action is typically the amount you pay to convert a customer - i.e to make a sale - but this relates to both new and returning customers.

CAC is all about acquiring new customers. See how even Google refers to CPA as ‘the cost you are willing to pay to make a conversion’ NOT to acquire a new customer.