Customer Acquisition Cost Calculator
What it costs to win a customer, and how that compares with what they are worth.
Customer acquisition cost is the total you spend to win customers divided by the number you win. It is only meaningful next to what a customer is worth, because a business can spend any amount to acquire a customer and still lose money.
Enter your marketing and sales spending and the customers it produced, then the value of a customer, and this calculator shows the cost per customer and the ratio between the two.
At a glance
- What you enter
- Marketing spend, Sales salaries and commission, Tools, agency and other costs, New customers won, Revenue per customer, Gross margin, Purchases or years per customer, Monthly revenue per customer, Target value-to-cost ratio
- What you get
- Cost per customer, Lifetime value per customer, Value to cost ratio, Profit per customer, Months to recover the cost
- Formula shown
- Yes - every step, right below your results.
- Cost and privacy
- Free, no account needed, and nothing you type is stored.
See worked examples ↓ Read the FAQ ↓ Share this calculator ↓
Results are estimates for general information only - always verify with a professional or official source before acting on them.
How to use the Customer Acquisition Cost Calculator
- 1 Enter Marketing spend
- 2 Enter Sales salaries and commission
- 3 Enter Tools, agency and other costs
- 4 Enter New customers won (customers)
- 5 Enter Revenue per customer
- 6 Enter Gross margin
- 7 Enter Purchases or years per customer
- 8 Enter Monthly revenue per customer - Used for the payback period. Enter 0 to skip it.
- 9 Enter Target value-to-cost ratio - Three to one is a common rule of thumb for a healthy business.
- 10 Press Calculate. You get Cost per customer, Lifetime value per customer, Value to cost ratio, Profit per customer, Months to recover the cost, and every intermediate step stays visible under “How is this calculated?”
- 11 Change one number at a time to see what moves the result - that is usually the most useful thing a calculator can tell you.
Worked examples
Real numbers run through this calculator. Open any example to load it into the form above and change it.
175 customers won on $35,000 of spending
A repeat purchase business where the customer is worth well over three times the cost.
You enter
- Marketing spend
- $18,000.00
- Sales salaries and commission
- $14,000.00
- Tools, agency and other costs
- $3,000.00
- New customers won
- 175 customers
- Revenue per customer
- $560.00
- Gross margin
- 55%
- Purchases or years per customer
- 2.40
- Monthly revenue per customer
- $48.00
- Target value-to-cost ratio
- 3
You get
- Cost per customer
- $200.00
- Lifetime value per customer
- $739.20
- Value to cost ratio
- 3.70 x
- Profit per customer
- $539.20
- Months to recover the cost
- 7.58 months
The total spend of $35,000 across 175 customers is $200 each. A customer who buys $560 worth 2.4 times over the relationship produces $739.20 of gross profit, so the value to cost ratio is 3.70 and the profit per customer is $539.20. The acquisition cost is paid back in 7.58 months at $48 of monthly revenue and a 55% margin, and 48 customers would cover the whole spend. The most the target ratio allows is $246.40 a customer, so there is $46.40 of room.
130 customers won on $9,000 of spending
A lower priced product where the cost of winning a customer is too close to the value.
You enter
- Marketing spend
- $5,000.00
- Sales salaries and commission
- $3,200.00
- Tools, agency and other costs
- $800.00
- New customers won
- 130 customers
- Revenue per customer
- $150.00
- Gross margin
- 35%
- Purchases or years per customer
- 1.50
- Monthly revenue per customer
- $18.00
- Target value-to-cost ratio
- 2
You get
- Cost per customer
- $69.23
- Lifetime value per customer
- $78.75
- Value to cost ratio
- 1.14 x
- Profit per customer
- $9.52
- Months to recover the cost
- 10.99 months
Spending $9,000 to win 130 customers is $69.23 each. A customer buying $150 worth 1.5 times at a 35% margin produces $78.75 of gross profit, so the ratio is 1.14 and the profit per customer is only $9.52. At $18 of monthly revenue the cost takes 10.99 months to recover, and 115 customers are needed to cover the spend. The 2 to 1 target allows $39.38 a customer, which means the current cost is $29.86 above the ceiling.
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Frequently asked questions
Does the acquisition cost include sales salaries?
Yes, and it should. The total spend is marketing plus sales salaries and commission plus tools and agency fees, divided by the customers won. Leaving salaries out produces a cost per customer that is far below what the business actually paid to win one, which is how a channel looks profitable while the company loses money.
In the example here the spend is $35,000 across 175 customers, which is $200 each. Marketing alone would have been $102.86, so the sales team accounts for nearly half the real cost.
Is the lifetime value gross or net of the cost of serving the customer?
It is gross profit, so the direct cost of serving the customer is already removed through the gross margin. Revenue per purchase of $560 at a 55% margin leaves $308 of gross profit a purchase, and 2.4 purchases over the relationship gives $739.20.
What it does not remove is overhead. Rent, head office salaries and software sit below the gross margin line, so the lifetime value here is not the profit the business ultimately keeps from a customer. Compare it with the acquisition cost, not with the bottom line.
What does the value to cost ratio need to be?
There is no universal answer, but the ratio you enter is the standard to hold the business to, and 3 to 1 is a common rule of thumb because it leaves something for overhead. A ratio of 3.70 means the customer is worth nearly four times what they cost to win.
A ratio just above 1 covers the acquisition cost and nothing else, so the business is working hard to stand still. When the ratio falls below 1, every new customer makes the business poorer, and the fix is a higher price, a better margin or a cheaper channel.
How is the payback period calculated?
It divides the acquisition cost by the monthly gross profit from one customer. Spending $200 to win a customer who produces $48 a month at a 55% margin gives $26.40 of monthly gross profit, so the cost is recovered after 7.58 months.
Payback matters most when cash is tight. A customer who pays back over eight months is a fine investment for a business with cash in the bank and a difficult one for a business funding growth from its own account, even though the lifetime value is identical.