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Customer Acquisition Cost (CAC) — The average amount spent on marketing and advertising to acquire one new paying customer.
What Is Customer Acquisition Cost?
CAC takes your total marketing spend over a period and divides it by the number of new customers you gained in that same period. It’s the real cost of “winning” a sale, separate from the cost of the product itself.
How to Calculate CAC
Formula: Total Marketing Spend ÷ Number of New Customers.
CAC Example
You spend $600 on ads in a month and gain 40 new customers: $600 ÷ 40 = $15 CAC per customer. If your average profit per order is $18, that leaves only $3 of profit after acquisition cost alone.
CAC vs. Customer Lifetime Value (LTV)
| CAC | LTV | |
|---|---|---|
| What it measures | Cost to win one customer | Total value a customer brings over time |
| Goal | Keep it low | Keep it high |
| Healthy relationship | LTV should exceed CAC by a comfortable margin | |
Why CAC Matters for Dropshippers
Because margins per order are often thin, CAC has to stay comfortably below your profit per order — otherwise every sale from paid ads actually loses money, even though the store looks busy.
FAQ
What's a good CAC for a dropshipping store?
There’s no universal number — it depends entirely on your profit margin per order. The real benchmark is whether CAC stays comfortably below what you earn per sale.
How is CAC different from ad spend?
Ad spend is the total amount spent; CAC divides that spend by the number of customers it actually brought in, so it reflects efficiency, not just budget.
Does CAC include organic customers?
Typically no — CAC usually measures paid acquisition specifically, though some stores calculate a blended CAC that includes all marketing costs across paid and organic channels.