What is the most common CAC mistake?
Calculating CAC as ad spend divided by new customers. That's channel CAC, and it understates the real figure by excluding salaries, tooling, creative production, and agency fees.
What is blended CAC?
Blended CAC includes everything spent on acquisition across every channel. It's the number that matters for business decisions, because it's the number that actually leaves your bank account.
What is a good CAC?
CAC on its own is meaningless without context. A $900 CAC is excellent for a product with $600 monthly revenue and terrible for one with a $40 order value and no repeat purchase.
Formula
Blended CAC = (Ad Spend + Marketing Salaries + Tools + Agency Fees + Creative Costs) ÷ New Customers Acquired
Pair it with payback period (CAC ÷ monthly contribution per customer), which is what determines how fast you can reinvest.
Why CAC matters
CAC payback period, more than CAC itself, determines how fast a business can grow without external funding. A company recovering CAC in four months can reinvest three times a year; one at eighteen months can't self-fund growth at all.
Channel CAC vs. blended CAC
A company spends $34,000 on ads and acquires 100 customers. That's a channel CAC of $340. Add the two salaries running the accounts ($14,000), the ad-tech and analytics tooling ($3,000), and the agency fee ($10,000), and the same 100 customers actually cost $61,000 to acquire: a blended CAC of $610. The board was making budget decisions off the $340 number.
Benchmarks
- Typical understatement from channel-only CAC
- 30–50%
Ranges drawn from Digital Squad client accounts and published industry data. Treat them as orientation, not targets. Your category may differ substantially.
Common mistakes
Excluding salaries and agency fees
The most common error, and it usually understates real CAC by 30–50%. If a cost exists to acquire customers, it belongs in CAC.
Counting reactivated customers as new
A lapsed customer returning is retention, not acquisition. Mixing them flatters CAC and hides a genuine acquisition problem.
Ignoring the lag between spend and conversion
In long cycles, this month's customers came from earlier spend. Dividing this month's spend by this month's customers produces noise, especially when spend is changing.
Using LTV:CAC without payback
The ratio ignores time entirely. Two businesses with an identical 3:1 ratio can have completely different cash needs depending on how long recovery takes. See CAC payback period for why that distinction matters more than the ratio itself.
Where we work on this