# What is CAC (customer acquisition cost)?

> CAC is the full cost of winning one new customer, across ads, tools and team. Learn the formula, see a worked example and compare it with CPA.
- **Author**: Marxx
- **Published**: 2026-10-23
- **Category**: Metrics
- **URL**: https://marxx.ai/library-glossary/cac

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CAC (customer acquisition cost) is everything you spend to win one new customer, divided by the number of new customers. If you spent INR 5,00,000 in a month and won 250 new customers, your CAC is INR 2,000.

## The formula

CAC = total sales and marketing cost / new customers won

What goes in "total cost" is your choice, but keep it the same each month. A full CAC usually includes:

- Ad spend on every platform
- Agency and freelancer fees
- Tools and software for marketing
- The marketing team's salaries

## A worked example

In August a D2C brand spent:

- Meta ads INR 3,00,000
- Google ads INR 80,000
- Agency fee INR 60,000
- Tools INR 20,000

Total = INR 4,60,000. It won 230 first-time buyers.

- CAC = 4,60,000 / 230 = **INR 2,000**

Meta might report a cost per purchase of INR 900 for the same month. That number counts only Meta spend and includes repeat buyers. CAC is the truer cost of growth.

## What is a good CAC?

One you earn back. Compare CAC with what a customer is worth over time. A common rule of thumb is a [LTV to CAC ratio](/glossary/ltv-to-cac-ratio) of 3 or more.

## How to lower CAC

1. Fix the ads that cost the most per first purchase.
2. Raise conversion rate on your site, so the same visits make more buyers.
3. Push referrals and reviews, which win customers without ad spend.
4. Stop paying for people who were already customers, by excluding them from prospecting.

## FAQ

### Is CAC the same as CPA?

No. [CPA](/glossary/cpa) is ad spend per action on one platform. CAC is the full cost per new customer across everything.

### Should I include returning customers?

No. CAC counts new customers only. Mixing in repeat buyers makes CAC look lower than it is.

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