Customer acquisition cost, or CAC, is what you spend to win one new customer. In eCommerce, it usually goes up as the business grows, which is the opposite of what growing is supposed to do to a cost per customer.
That shows up in how companies spend their money. Gartner's 2026 CMO Spend Survey found that awareness and conversion now take 62.6% of total media spend, which is more than 10% higher than in 2024.
This article breaks down:
- What is customer acquisition cost in eCommerce, and how do you work it out?
- How does CAC relate to customer lifetime value?
- Is there an average CAC worth comparing yourself against?
- Why does eCommerce customer acquisition cost rise as a shop grows?
- How does a marketplace model change the numbers?
Key takeaways
- CAC is your total spend on winning customers divided by the number of new customers you won.
- Published dollar averages for CAC eCommerce come almost entirely from platform vendors and agencies, and each one counts different costs, so they make a poor benchmark.
- Gartner reports that spending on customer loyalty and retention fell 29% between 2024 and 2026, to under 15% of total media spend, while acquisition took the difference.
- McKinsey put the rise in customer acquisition costs at 60% over the five years to 2022, and the reasons behind it have not gone away.
- A marketplace changes who pays for growth. Sellers add products and bring their own buyers, so a bigger catalogue stops being something your marketing budget has to buy.
What is customer acquisition cost in eCommerce?
Customer acquisition cost tells you how much you spend to turn one stranger into one new customer. It answers a small question with big consequences: at what you spend today, does one more customer pay for the work of getting them?
The answer shapes decisions well beyond marketing. It sets how far you can push a budget, which channels earn their place, and whether a given order is worth having at all.
How do you calculate CAC?
Take everything you spent on winning customers in a period and divide it by the number of new customers you won in that period.
The American Marketing Association states it the same way: total acquisition spend divided by new customers in the same time period.
A shop that spent 50,000 in a month and won 700 new customers has a CAC of about 71.
Which costs belong in the CAC calculation?
This is where most CAC figures go wrong. A shop that adds up its ad spend and stops there ends up with a number that looks far better than reality.
Count everything you pay to make a new customer show up. Ads, agency fees, making the creative, the tests that never ran, affiliate and referral payouts, app and platform fees tied to selling, and the part of your team's time that goes into winning customers.
Keep money spent on customers you already have out of it. Retention emails, loyalty rewards, and win-back campaigns are a different job, and mixing them in hides which half of the budget is working.
Why should you measure CAC by channel and cohort?
One company-wide CAC hides the decisions worth making. It mixes a cheap channel with an expensive one and tells you nothing about which to fund next month.
Split the number two ways: by channel, and by the month a customer first bought. That second group is called a cohort. Channels show you where money converts, and cohorts show you whether the customers arriving now are as good as the ones who arrived a year ago.
Cohorts catch a problem that channels miss. Your analytics tools can report a steady overall CAC while each new group of customers spends less and leaves sooner, so the average looks calm while the business underneath it gets worse.
How does CAC relate to customer lifetime value?
CAC on its own says nothing about whether a shop is healthy. A CAC of 200 is comfortable for a brand whose customers spend 2,000 over five years and a disaster for one selling a single 40-item.
The two numbers only mean something together. Customer lifetime value, or customer LTV, is your estimate of the profit one customer brings over the whole time they buy from you. Put next to CAC, it answers whether a customer earns back more than they cost.
What is a good LTV to CAC ratio?
Forrester puts the healthy mark at 3:1, meaning more than three units of profit for every one you spend winning a customer.
Its scale runs further in both directions: a company at 1:1 is spending too much, one at 5:1 has a business that works, and one at 10:1 is probably spending too little and could afford to buy more customers.
Two things come with that number. Forrester published it in 2019, and it describes subscription businesses, so a shop selling one-off orders should read it as a reference point instead of a target.
Which way the ratio is moving tells you more than where it sits. A shop whose ratio falls quarter after quarter has a problem whatever the number says, and a shop at 2:1 and climbing may be in better shape than one at 4:1 and sliding.
A high CAC is fine when lifetime value is high enough to carry it. What is hard to defend is a high CAC next to a lifetime value nobody has measured, which is the usual situation when the ratio gets quoted from memory.
How does average order value change the CAC you can afford?
Average order value sets the ceiling on what winning a customer can cost. A shop with an average purchase value of 40 and a 50% gross margin earns 20 on a first order, so a CAC above 20 means the first sale loses money and the shop is betting on a second one.
Lifting average order value lifts the CAC you can afford without waiting for that second sale. Bundles, bigger sizes, and free-shipping thresholds move that number, and they move it for every order from then on.
The same sum explains why some shops live happily with costs that would kill others. A high order value with a healthy margin buys room that no amount of campaign tweaking can create in a low-price catalogue.
4 reasons why eCommerce customer acquisition cost rises with scale
Rising CAC in eCommerce business looks like a marketing problem and behaves like a model problem. The four reasons below stack on top of each other, which is why better campaigns slow the rise without stopping it.
1. Cheap attention runs out before demand does
Early growth runs on cheap ad space: small audiences, keywords nobody else wants, retargeting that costs almost nothing. There is a limited amount of it, and you buy it first.
Once the cheap space is used up, every extra customer comes from a more crowded auction. IAB's 2026 Outlook Study expects US ad spend to grow 9.5% year over year, which means more money chasing attention that is not growing as fast.
None of that means your marketing team got worse. Our comparison of marketplace versus eCommerce growth models describes the same wall from the revenue side.
2. Acquisition takes budget away from retention
Gartner's 2026 CMO Spend Survey, run between January and March 2026 among 401 marketing leaders in North America, the UK and Europe, found that awareness and conversion now take 62.6% of total media spend.
Over the same two years, spending on customer loyalty and retention fell 29%, to under 15% of total media spend. Money moved out of keeping customers and into buying them.
Gartner's own data points the other way for the companies doing best. The most AI-mature marketing teams in the survey put a bigger share of budget into loyalty and retention, which suggests the shift toward buying customers is a symptom of getting it wrong.
3. Privacy changes made targeting more expensive
Ten years of direct-to-consumer growth ran on precise ad targeting, and the targeting got worse. EMARKETER notes that after Apple's App Tracking Transparency, the targeted advertising that let D2C brands grow cheaply became far more expensive.
When the targeting data thins out, the same budget reaches people who are less likely to buy. The spend stays where it was, fewer of them convert, and CAC picks up the difference.
EMARKETER puts the result plainly: many digitally native brands never reached margins they could live on. The era of cheap money that paid for that growth ended at roughly the same time.
4. Every unit of growth has to be bought again
The first three reasons are conditions you operate in. This one is the model itself.
When you sell to one customer at a time, growth arrives one customer at a time, and you pay for each one separately. Winning the last customer does nothing to make the next one cheaper, so the cost of winning customers grows alongside sales instead of falling against them.
McKinsey measured that effect at 60% growth in customer acquisition costs over five years, in work published in November 2022. Everything behind that figure has gotten tighter since, which is the honest way to read a number that is a few years old.
How does a marketplace model change the CAC numbers?
Everything above treats CAC as a number to manage. A marketplace changes what the number is measuring, because somebody else starts paying for part of the growth.A marketplace works differently from a classic online shop, and the difference is who owns the products.
In a classic shop, you buy the stock, set the prices, handle the shipping, and pay to bring in every buyer.
You also carry whatever does not sell.
In a marketplace, other companies list their own products on your website, hold their own stock, set their own prices, ship their own orders, and you take a commission on each sale they make.
The stock and the risk of owning it sit with the seller, and your side of the deal is the commission you set on each sale.
That changes what your shop can hold. A marketplace can carry thousands of products you never bought, from sellers who have their own reasons to want them sold.
When should you add a marketplace layer to your eCommerce, and how to do it without a rebuild?
The time to look at the model is when CAC keeps climbing after the campaign work is already done. If conversion rate, order value, and channel mix have all been worked on and the cost per customer still rises every year, the cause sits in the model, and more tuning will not reach it.
Two other signs point the same way. Catalogue growth is limited by cash instead of by demand, and customers keep asking for products you cannot afford to stock.
The catalogue side of the same problem sits in our breakdown of why adding more SKUs stops increasing revenue. Our five signs an eCommerce is ready to become a marketplace go through that check properly.
Changing the model does not mean rebuilding the shop. A marketplace layer can run next to the store you already have, so your current shop keeps selling while sellers are set up around it.
What does change is the work around the catalogue, and our breakdown of what changes operationally when a retailer becomes a platform goes through it function by function.
Start narrow and widen later. One category and a handful of sellers is enough to see what the commission earns and what running it costs, and the decision to open the rest can wait until those two numbers are on the table.
How does Mercur add a marketplace layer to an existing store?
Mercur is an open-source marketplace platform that can run alongside your existing shop instead of replacing it. It comes with a storefront for buyers, a vendor panel, an admin console, and integrations – with enterprise-grade governance & control.
Around 80% of marketplace functionality is ready on day one, with the rest built as modules for your own rules.
Sellers hold their own stock, so every stock item and location belongs to the seller who owns it. Commission is set up as a rule you control, so you decide what each sale earns you as the number of sellers grows.
The code is available on GitHub if you want to see how it works, or you can explore a demo of the full stack.
Summary and the next step for teams facing rising CAC
Rising customer acquisition cost gets read as a campaign problem and treated with campaign work. The spending data says otherwise. Buying customers takes a bigger share of budgets every year, keeping them takes less, and attention keeps getting more expensive.
A shop that pays for every bit of growth separately will keep watching that cost climb, however good the marketing gets. Changing the number means changing who pays for the products and who brings the people who buy them.
If you are weighing up whether a marketplace layer fits your business, talk to a marketplace expert!
FAQ on customer acquisition cost in eCommerce
What is CAC in digital marketing?
CAC, or customer acquisition cost, is the total amount you spend to win one new customer. In digital marketing, that covers ads, agency fees, making the creative, and the tools you use to sell, divided by the number of new customers all of it brought in. Teams use it to judge whether a channel, a campaign, or the whole shop can afford the customers it is buying.
How do I calculate customer acquisition cost?
Take everything you spent on winning customers in a period and divide it by the new customers you won in the same period. Count every cost that exists to make a new customer show up, including agency fees, creative, affiliate payouts, and your team's time. Leave out people who had bought before, because you already paid to win them, and report blended CAC and paid CAC separately.
What is a reasonable customer acquisition cost?
A reasonable CAC is one your order value and margin can carry, which makes it specific to your shop and not to your industry. A shop earning 20 of profit on a first order cannot live with a CAC of 40 unless a second order reliably follows. Published industry averages are hard to use here, because they come mostly from vendors and agencies counting different costs.
What is a good CLV to CAC ratio?
Forrester sets the healthy mark at 3:1, meaning more than three units of profit for every one you spend winning a customer. Its wider scale reads 1:1 as spending too much, 5:1 as a business that works, and 10:1 as spending too little. Forrester published that benchmark in 2019 for subscription businesses, so a shop selling one-off orders should watch which way its own ratio moves as much as where it sits.
What is a good CAC percentage?
CAC is easier to judge as a share of what a customer brings in than as a figure on its own. Set against the profit on a first order, it tells you whether that first sale pays for itself. Set against lifetime value, it tells you whether the whole relationship does. Both are worth tracking, because a shop can pass the second test and still run out of cash, failing the first.
Sources
- Gartner, Marketing Survey Finds Awareness and Conversion Account for 62.6% of Total Media Spend
- IAB, 2026 Outlook Study: U.S. Ad Spend to Rise 9.5%
- EMARKETER, FAQ on direct-to-consumer commerce: How to make D2C profitable in 2026
- McKinsey, Becoming indispensable: Moving past e-commerce to NeXT commerce
- Forrester, The Most Important Metric for Sales Leaders in Subscription Businesses
- American Marketing Association, Customer Acquisition Cost Calculator and Formula Guide
Top comments (0)