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Customer Acquisition Cost | How to Calculate it with an Example

We learn how to understand & correctly calculate the customer acquisition cost (paid & blended), the common mistakes, and why CAC vs. lifetime value is the most important relationship in eCommerce. ► How to calculate CAC for SaaS & B2B companies:    • The Ultimate Guide to Calculating CAC...   ✅ Download the Excel template: https://bit.ly/cac_mlchp 🚀 If you want to master the finance skills & frameworks to successfully scale technology startups, secure your spot in my "Finance for Startups" program, today: https://www.ericandrewsstartups.com/f... Communities: 💼 Linkedin:   / eric-andrews-1624b656   ☑️ Twitter/X:   / eric__andrews   🌟 Instagram:   / ericandrews_startups   🔥 Discord: https://bit.ly/discord_eric 💻 Newsletter: https://bit.ly/joinericnewsletter 🎥 Clips:    / @ericandrewsclips7818   Related Startup Videos: 🚩 How VCs Calculate Customer Retention & LTV:    • Customer Retention & Cohort Analysis ...   🚩 Calculate eComm Contribution Margins:    • How to Calculate eCommerce Contributi...   ▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬ In this video, we break down the customer acquisition cost for B2C businesses (no sales team). We discuss the correct formula to calculate CAC, its variations, and why this is such an important metric with startups & venture capitalists (most important comparison: customer acquisition cost vs. lifetime value). *Note: this video calculates CAC for a B2C e-commerce business with no direct sales team. If you have direct sales reps, you can include their salaries + bonuses in CAC as well in the same way we include advertising spend in this video. First off, when people throw around the term customer acquisition cost, other synonyms they might use could be "CAC", "CPA" (cost per acquisition), and "marginal cost of acquisition". These terms all mean the same thing, just as a heads-up. But to complicate the subject further, there are actually a few different variations of the custom acquisition metric that are commonly used. When people refer to CAC, they implicitly are referring to blended CAC. This is why it is critical to understand how to calculate CAC, as well as understand its other common metrics like Paid CAC (or more specific metrics around individual channels). Lastly, people very frequently calculate these metrics incorrectly, using orders instead or customers, or forgetting to exclude certain types of expenses. We cover the correct formula using a step-by-step example so that you'll have a very clear understanding, as well as how to understand why customer acquisition cost vs. lifetime value is so critical. By the end of this lesson, you will feel very comfortable calculating this metric and understanding its significance for e-commerce businesses and other startups. If you have questions - please leave a comment below and I'll try to help. Cheers! ► Subscribe for more finance videos: https://bit.ly/EricAndrewsSubscribe #cac #customeracquisitioncost #ecommerce #startups