How to Calculate a CAC Ratio

Use a CAC to benchmark your campaigns against past and future performance.
Use a CAC to benchmark your campaigns against past and future performance. (Image: Images)

CAC or Customer Acquisition Cost is an important tool for marketers and companies to benchmark their campaigns. For example, it can help to determine whether a television or Internet advertising campaign was better or worse than past ones. Using this ratio, managers can optimize the company to increase customers while decreasing the costs associated with them. Accurately calculate your company's CAC using a few basic steps.

Use a standard formula for calculating CAC. There are many different formulas and different managers have different interests calculating this formula so it is important to get agreement before implementing. One common formula is cost of sales plus costs of marketing plus other costs divided by annual sales. It is calculated as follows: cost of sales + cost of marketing + miscellaneous costs*)/(annual contract value).

Use your financial report or information from your accountants to determine the components of each part of the equation.

Find the cost of sales which is equal to all the efforts of your sales team. Add the cost of marketing which includes your marketing team and all the media campaigns you run. Add miscellaneous costs such as service and support for those teams.

Divide by total new customers or new sales to determine the cost for each. This number provides the CAC ratio.

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