Customer Acquisition Cost: Formula and Example

By Alva Chew · Updated 2026-11-05

Definition Customer acquisition cost is the total you spend on marketing and promotions in a period divided by the number of new customers you won in it. If you spend US$600 in a month and win 40 new customers, your cost is US$15 each. Judge it against the gross profit a customer brings over time, and a points program gives you a way to see how many of those customers come back.

What is customer acquisition cost?

Customer acquisition cost is the money you spend to win one new customer. It is often shortened to CAC. For a café, restaurant or shop, it covers the adverts, first-visit offers and promotions that bring in someone who had not bought from you before.

The number matters because it sets a ceiling. If a new customer is worth less to you than it cost to win them, each one loses you money.

How do you calculate customer acquisition cost?

Formula: total acquisition spend in a period ÷ new customers won in the same period.

Item	Illustrative number
Social adverts	US$300
Cost of free first-visit drinks	US$180
Flyers	US$120
Total acquisition spend	US$600
New customers in the month	40
Customer acquisition cost	US$15

These numbers are made up to show the arithmetic. Replace each line with your own spend and your own count of new customers.

What costs belong in it?

Count anything you spent to win a new customer: paid adverts, first-visit discounts, free samples, printed material and commission paid on a first order through a delivery platform. Do not count the cost of serving customers who already buy from you.

Free items are easy to forget because no invoice arrives. Cost them at what they cost you to make, not at the menu price.

How does it compare with customer lifetime value?

Acquisition cost on its own tells you little. Set it against customer lifetime value, the gross profit a customer brings over the years they keep buying. In the made-up US$15 example above, a customer worth US$873.60 in gross profit leaves a comfortable gap. A customer who buys once, at US$4.20 gross profit, does not cover the cost.

The weak point is usually the second visit. A customer who never returns has a lifetime value close to one sale, so your customer retention rate decides whether the cost pays back.

Why do shops look at retention as well?

Bain & Company, in a 2006 article, put the case this way: “by increasing retention by as little as 5 per cent, profits can be boosted by as much as 95 per cent.” Bain attributes this to its own theory and gives no acquisition cost figures on the page, so treat it as a claim about direction. It does not tell you the size of the effect in your shop.

Claim	Scope	Source
Retention up by as little as 5% can lift profits by as much as 95%	Bain & Company’s stated theory, 2006	Bain & Company, 20 January 2006
Referred customers worth at least 16% more than similar non-referred customers	About 10,000 customers of one German bank, 2006 to 2008	Schmitt, Skiera and Van den Bulte, Journal of Marketing, 2011

Both figures come from other settings. Use them as prompts to test your own numbers, not as forecasts.

Can referrals bring the cost down?

A referral program pays existing customers to bring friends, so the cost is a reward and not an advert. The bank study above found referred customers were more valuable, but the extra margin eroded over time. Whether it works for you depends on your reward and how many members refer anyone, so track it for a few months.

How can a points program help you work it out?

You can only count new customers if you can tell them from existing ones. A loyalty program member account gives each customer an identifier, so a first sign-up marks a new customer and later purchases show whether they return. It covers members only, so say that when you report the figure.

A points balance also gives a new customer a reason to come back, which is the part of the cost that loyalty program ROI tries to measure. A discount offered to win someone is a cost you pay once, as the comparison in loyalty program vs discounts shows.

Tracking new members with Gimify

Customers join Gimify by scanning a QR code and entering their email, so a sign-up gives you a count of new members. The free plan covers one outlet with unlimited members, and points carry across every outlet if you add more.

Questions owners ask

How do I calculate customer acquisition cost?

Add up what you spent to attract new customers in a period, such as adverts, discounts, delivery-app promotions and the cost of free items. Divide by the number of new customers in the same period. US$600 spent and 40 new customers gives US$15 each.

What should I include in the cost?

Include every cost you can tie to winning a new customer: paid adverts, first-visit discounts, free samples, flyers and any commission paid to a platform on a first order. Leave out the cost of serving customers you already have.

How do I know how many customers are new?

A till records sales, not people. You need an identifier that stays with a customer, such as a loyalty program member account. A first sign-up is a reasonable proxy, though it misses customers who never join.

Is a lower customer acquisition cost always better?

No. A cheap customer who never returns is worth less than a dearer one who becomes a regular. Compare the cost with customer lifetime value in gross profit, and look at how many come back.

Are referrals a cheaper way to win customers?

They can be, but test it for your own shop. A study of one German bank found referred customers were worth at least 16% more than similar non-referred customers, though their extra margin faded over time.

Does a loyalty program lower acquisition cost?

Not directly. It helps you keep customers you have already paid to win, so each one is worth more against the same cost. Measure repeat visits among new members before drawing a conclusion.