Published: May 2025
Customer Acquisition Cost (CAC) is the total expense your business incurs to acquire a single new customer. For Australian businesses, understanding CAC is crucial for sustainable growth, especially with the competitive digital landscape and increasing advertising costs across platforms like Google Ads, Facebook, and LinkedIn.
Recent data from the Australian Bureau of Statistics shows that Australian businesses spend an average of 7.2% of their revenue on marketing activities, making CAC optimisation essential for profitability.
The Australian market presents unique challenges. With a population of 26 million spread across vast distances, customer acquisition strategies must be both targeted and cost-effective. Businesses that don't track CAC often discover they're spending more to acquire customers than those customers will ever generate in revenue.
Consider this: if your average customer lifetime value is $1,000 but your CAC is $800, you're only generating $200 in profit per customer before operational costs. This leaves little room for business growth or unexpected expenses.
CAC = Total Acquisition Costs ÷ Number of New Customers Acquired
CAC = (Marketing Spend + Sales Team Costs + Marketing Tools + Allocated Overheads) ÷ Number of New Customers
Google Ads CAC Calculation:
Social Media CAC Calculation:
Email Marketing CAC:
Radio/TV Advertising:
Print Advertising:
Direct Sales CAC:
Many Australian businesses underestimate their true CAC by failing to allocate relevant overhead costs. Here's what to include:
Overhead Allocation = (Marketing + Sales Team Size ÷ Total Employees) × Total Overhead Costs
Business: Local café chain with 3 locations in Melbourne
Period: Q1 2025 (January - March)
New customers acquired: 240
$3,600 + $2,400 + $1,200 + $800 + $4,500 + $6,000 + $500 + $300 + $3,000 + $400 + $450 + $200 = $23,350
CAC = $23,350 ÷ 240 customers = $97.29 per customer
Business: SaaS company providing inventory management software
Period: Q4 2024 (October - December)
New customers acquired: 45
$8,500 + $12,000 + $6,000 + $500 + $300 + $600 + $36,000 + $900 + $1,200 + $2,500 + $4,800 + $600 + $1,500 + $2,000 = $77,400
CAC = $77,400 ÷ 45 customers = $1,720 per customer
Based on 2024 data from Australian marketing agencies and industry reports:
The CAC:CLV ratio is crucial for sustainable business growth. Australian businesses should aim for:
Focus budget on channels with lowest CAC and highest conversion rates. From our examples:
Referral programs can reduce CAC by 30-50%. Australian businesses report referral CACs of $15-$85 compared to paid advertising CACs of $50-$300.
While content marketing has higher upfront costs, it typically reduces CAC over time as organic traffic increases.
Don't just focus on immediate CAC. Consider the payback period and ensure CLV justifies acquisition costs.
Use consistent measurement periods. A customer acquired in December might not convert until January.
Failing to allocate relevant business overheads leads to artificially low CAC figures.
Different channels have vastly different CACs. Aggregate reporting masks inefficient spending.
Track these metrics monthly:
Understanding your CAC is just the beginning. Australian businesses that actively optimise their customer acquisition typically see:
Start by calculating your current CAC using the formulas and examples provided. Then, identify your highest-performing channels and optimise your marketing spend accordingly.
Remember, the goal isn't necessarily the lowest CAC, but the most profitable customer acquisition strategy that supports sustainable business growth.
Q: What is Customer Acquisition Cost (CAC)?
Customer Acquisition Cost (CAC) is the total expense a business incurs to acquire a single new customer. For Australian businesses, it is crucial for sustainable growth amid competitive digital landscapes and rising advertising costs on platforms like Google Ads, Facebook, and LinkedIn.
Q: Why does CAC matter for Australian businesses?
With Australia's population of 26 million spread across vast distances, CAC helps ensure targeted, cost-effective strategies. Poor CAC tracking can lead to spending more on acquisition than customer revenue generates, leaving little profit after operational costs. Australian businesses spend an average of 7.2% of revenue on marketing, per the Australian Bureau of Statistics.
Q: What is the basic CAC formula?
CAC = Total Acquisition Costs ÷ Number of New Customers Acquired.
Q: What is the comprehensive CAC formula?
CAC = (Marketing Spend + Sales Team Costs + Marketing Tools + Allocated Overheads) ÷ Number of New Customers.
Q: How is CAC broken down by digital marketing channels?
For Google Ads: Include ad spend, management fees, landing page costs, and analytics tools. For social media: Advertising spend, content creation, management tools, and community management. For email marketing: Platform costs, design, list building, and staff time.
Q: How is CAC broken down by traditional marketing channels?
For radio/TV: Media buys, production, talent, and distribution costs. For print: Publication costs, design, photography, and distribution.
Q: What sales team costs are included in CAC?
Salaries and commissions, training, CRM software, travel and entertainment expenses, and office space allocation.
Q: What overheads should be allocated to CAC?
Marketing and sales team salaries (100%), office rent and utilities (percentage based on team size), software subscriptions, legal and compliance, and equipment costs. Allocation method: (Marketing + Sales Team Size ÷ Total Employees) × Total Overhead Costs.
Q: What is an example CAC calculation for a Melbourne café chain?
For Q1 2025, with 240 new customers and total costs of $23,350 (marketing $12,500, sales $6,800, overheads $4,050), CAC = $23,350 ÷ 240 = $97.29. Channel breakdowns: Google Ads $37.50, social media $28.57, traditional $33.33.
Q: What is an example CAC calculation for a Brisbane B2B software company?
For Q4 2024, with 45 new customers and total costs of $77,400 (marketing $27,900, sales $40,600, overheads $8,900), CAC = $77,400 ÷ 45 = $1,720. Channel breakdowns: LinkedIn Ads $566.67, Google Ads $600, content marketing $600.
Q: What are industry benchmarks for CAC in Australian B2C sectors?
Retail/E-commerce: $25-$85; Food & Beverage: $35-$120; Travel & Tourism: $45-$200; Financial Services: $150-$400.
Q: What are industry benchmarks for CAC in Australian B2B sectors?
Software/SaaS: $800-$2,500; Professional Services: $300-$1,200; Manufacturing: $500-$1,800; Consulting: $400-$1,500.
Q: What is the CAC to Customer Lifetime Value (CLV) ratio?
Aim for excellent (1:5 or better, CAC ≤20% of CLV), good (1:3 to 1:4), acceptable (1:2 to 1:3), or avoid poor (1:1 or worse).
Q: What strategies can reduce CAC?
Optimise high-performing channels, improve conversion rates via A/B testing and retargeting, enhance customer referrals (reducing CAC by 30-50%), and invest in content marketing for organic traffic.
Q: What are common CAC calculation mistakes?
Ignoring customer lifetime value, using inconsistent time periods, excluding overhead costs, and not segmenting by channel.
Q: What tools can calculate CAC?
Free: Google Analytics 4, Facebook Ads Manager, Google Ads. Paid: HubSpot, Salesforce, Mixpanel.
Q: What benefits come from optimising CAC?
Australian businesses typically see 25-40% CAC reduction within 6 months, 15-30% improved marketing ROI, better budget allocation, and enhanced cash flow predictability.
If you require assistance with calculating Customer Acquisition Cost for your Australian business, Scale Suite provides services including bookkeeping, tax compliance, and financial reporting. These can assist with tasks such as marketing spend analysis, overhead allocation, channel performance tracking, and CAC optimisation. For more details, visit www.scalesuite.com.au/services/finance.
We review and check articles on a periodic basis, and at the time of writing this information was up to date from our assessment.
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