What is a good CAC for e-commerce?

There is no universal "good" CAC -- it depends entirely on your CLV. A $100 CAC is excellent if your CLV is $500 but terrible if your CLV is $120. Focus on the CLV:CAC ratio (aim for 3:1 or better) and CAC payback period (under 12 months). Track CAC trends over time rather than comparing across industries.

How do I reduce my CAC?

Focus on: improving conversion rates (same spend, more customers), building organic channels (SEO, content, referrals have lower marginal CAC), refining ad targeting (reduce wasted spend), optimising retargeting (convert warm audiences at lower cost), and improving customer referral programs.

Should I include all costs in CAC?

For a true blended CAC, include all marketing and sales costs: ad spend, marketing team salaries, agency fees, marketing software subscriptions, and content creation costs. For channel-specific CAC, include only direct channel costs. Be consistent in your calculation method to track trends accurately.

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Customer Acquisition Cost (CAC)

Customer Acquisition Cost

Also known as:CACcost per acquisitionCPAacquisition cost

The total cost of acquiring a new customer, including all marketing and sales expenses divided by the number of new customers acquired during a specific period.

In-Depth Explanation

Customer Acquisition Cost (CAC) measures the total expense required to acquire a single new customer. It encompasses all marketing, advertising, and sales costs involved in converting a prospect into a paying customer.

CAC calculation:

CAC = Total Marketing & Sales Costs / Number of New Customers
Include: advertising spend, marketing salaries, software costs, agency fees, content creation
Example: $50,000 monthly marketing spend / 500 new customers = $100 CAC

CAC by channel:

Calculate CAC separately for each acquisition channel
Compare channel CAC against channel-specific CLV
Some channels have higher CAC but attract higher-CLV customers

Australian e-commerce CAC benchmarks:

Fashion: $30-$80
Beauty: $20-$50
Electronics: $50-$150
Health/supplements: $30-$70
Home goods: $40-$100
Food/beverage DTC: $20-$60

Reducing CAC:

Improve conversion rates (more customers from same spend)
Optimise ad targeting (less wasted spend)
Build organic channels (SEO, content, social, referrals)
Implement referral programs (lower-cost acquisition)
Retarget and remarket to warm audiences
Improve landing page and checkout conversion
Focus on channels with best CAC:CLV ratio

CAC payback period:

How many months until a customer's revenue covers their acquisition cost
Ideal: under 12 months for most e-commerce businesses
Critical for cash flow planning and growth sustainability

Business Context

Understanding CAC by channel enables e-commerce businesses to allocate marketing budgets to channels that acquire customers profitably, avoiding the common trap of growing revenue while losing money on each customer.

How Clever Ops Uses This

Clever Ops helps Australian e-commerce businesses track and optimise Customer Acquisition Cost by connecting advertising, marketing, and revenue data across channels. We build dashboards that show CAC by channel, compare it against CLV, and identify opportunities to reduce acquisition costs while maintaining customer quality.

Example Use Case

"An Australian DTC brand discovers their Google Shopping CAC of $35 delivers customers with $400 CLV (11:1 ratio) while their Instagram influencer campaign has a $120 CAC with $200 CLV (1.7:1 ratio), leading to a budget reallocation toward search."