How CAC is calculated
Customer acquisition cost is the cost of winning one new paying customer:
CAC = acquisition cost / new customers
A worked example: in September a subscription app spends $40,000 on ads and wins 1,000 new paid subscribers from those campaigns. Paid CAC is 40,000 / 1,000 = $40.
If you add $10,000 of agency fees and tools, the fully loaded CAC is $50. Both numbers are valid; mixing them in one report is where teams get into trouble.
CAC versus CPI and CPA
CPI, CPA and CAC describe the same funnel at different depths:
- CPI counts every install.
- CPA counts a chosen action, such as sign-up or first purchase.
- CAC counts a customer, usually a first payment.
If CPI is $2 and 5% of installs become paying customers, CAC is $2 / 0.05 = $40. Improving onboarding from 5% to 6% conversion drops CAC to about $33 with no change in media cost. That is why product teams care about CAC as much as growth teams do.
Paid CAC and blended CAC
Paid CAC divides paid spend by customers attributed to paid campaigns. Blended CAC divides all acquisition spend by all new customers, organic included. Blended CAC is good for board reporting; paid CAC is what you use to decide budgets, because it shows whether the money you spend is working on its own. Getting paid CAC right depends on attribution: an install that was really organic but gets credited to a campaign makes that campaign look cheaper than it is.
Comparing CAC with LTV
CAC means little without lifetime value. If a customer is worth $120 over their lifetime and costs $40 to acquire, the LTV to CAC ratio is 3:1. The related question is how quickly you get the money back, which is the payback period. Linkrunner ties synced spend from Meta, Google and Apple Ads to attributed installs, events and revenue, so you can see cost per event and revenue by campaign in Linkrunner analytics. For lifetime value estimates, try the LTV calculator.