Customer Acquisition Cost (CAC) is a key metric in ecommerce that measures how much it costs, on average, to acquire a new customer.
In simple terms, CAC is calculated by dividing all the marketing and sales costs by the number of new customers gained in a given period. For example, if you spend $10,000 on marketing in a month and acquire 100 new customers, your CAC is $100.
So the formula is:
CAC = Total Marketing & Sales Spend ÷ Number of New Customers Acquired.
A lower CAC means you’re acquiring customers efficiently; a higher CAC means each customer is expensive to obtain, which can squeeze your profit margins.
CAC encompasses all spend related to acquiring customers – not just ad clicks, but also marketing team salaries, software tools, content creation, discounts for new customers, etc.
Managing CAC is crucial because acquiring new customers is expensive. In fact, CAC has been rising sharply in recent years (up about 40% between 2023 and 2025 for ecommerce brands on average), so it’s more important than ever to keep an eye on it.
Recent research shows that most ecommerce businesses lose $29 on average per new customer acquired (after accounting for marketing costs and product returns), versus a $9 loss in 2013. This 222% increase shows the importance of a) lowering customer acquisition costs, and b) maximizing retention and lifetime value.
The average CAC in ecommerce varies widely
“Normal” customer acquisition costs in ecommerce vary widely, though Shopify’s internal data shows average CAC roughly in the $68–$78 range in many cases.
These are very broad, global ballpark figures – your mileage will vary based on region and target market.
There’s lots of variance in different markets:
In the United States, CAC is typically higher than average
US ecommerce brands often face above-average CAC, especially in highly competitive markets.
Even within the US, there are differences – for example, brands on the West Coast tend to pay 15–25% higher CAC than the average, whereas the Midwest sees CAC about 10–20% lower than average.
This reflects differences in competition and ad costs across regions. Overall, the US market’s CAC is on the higher side globally, given the intense digital ad competition.
In the United Kingdom, average CAC is hitting all-time highs
UK brands are finding customer acquisition more expensive than ever due to economic pressures, increased competition for online ad space, and tighter data regulations.
While specific UK CAC averages are not always published, the trend is clear – UK companies are paying more to win customers in 2025 than in years past. Factors like modest economic growth and lower consumer spending in the UK are contributing to this, making each conversion harder to get.
Europe sees wide variance between countries
Across Europe, CAC figures vary country by country. For instance, Germany’s average CAC is about 30% higher than Spain’s. Mature Western European markets (UK, Germany, France) generally see higher CACs comparable to the US, while some smaller or less competitive markets may have lower costs.
Australia typically sees higher CAC than the US, but in Southeast Asia CAC is typically lower
In regions like Australia, CAC is reported at 20–35% higher than the US average, likely due to a smaller market with concentrated competition. On the other hand, parts of Southeast Asia enjoy significantly lower CAC – as much as 40–60% lower than US levels – thanks to lower advertising costs and rapidly growing new internet user bases.
The key point here is that geography and market maturity heavily influence CAC: larger, more competitive ad markets drive costs up, whereas emerging markets or less saturated regions can have comparatively bargain CACs.
(Note: If you’re benchmarking, be aware of data recency. A “good” CAC from 2019 may be outdated. Digital ad costs have risen in the past couple years, so look at the latest figures wherever they’re available.)
CAC by Industry: beauty acquisition costs are typically at the lower end, whereas luxury goods like jewelry bring in customers at a higher cost
CAC can vary dramatically by industry vertical within ecommerce. Different product categories have different customer behaviors, competition levels, and marketing dynamics.
Shopify’s analysis (using 2021 data for small brands) illustrated CAC differences: for instance, they found Arts & Entertainment businesses had an average CAC of only $21, while Electronics retailers averaged around $377 per customer.
(Those figures were for micro-businesses with under 4 employees in 2021, so they’re on the low end, but they show the spread. Electronics tends to be high because gadgets have fierce competition and often higher-price ad keywords, whereas arts/crafts can leverage cheap or organic reach.)
Let’s look at variance by sector. Here are some average customer acquisition costs by ecommerce industry as benchmarks:
Fashion & apparel: ~$66 per customer
Fashion is a visual, highly competitive space – brands spend on Instagram ads and influencers, which drives CAC up, though strong repeat purchase rates can help balance it out.
Beauty & personal care: ~$61 per customer
Beauty has relatively loyal customers and heavy organic interest (tutorials, UGC), keeping CAC moderate, but reliance on influencer marketing and high ad demand can elevate costs.
Consumer electronics: ~$76 per customer
Electronics shoppers are price-sensitive and do a lot of research, so brands invest more in PPC, SEO, and comparison shopping visibility, leading to higher CAC.
Food & beverage: ~$53 per customer
Food and beverage enjoys one of the lowest CACs, thanks to subscription models (e.g. meal kits) and repeat purchase behavior. Satisfied customers come back regularly, reducing the need for constantly reacquiring new ones.
Home & furniture: ~$77 per customer
Big-ticket items like furniture have longer buying cycles and require more marketing touchpoints (raising CAC), though the higher profit per sale can justify it.
Jewelry: ~$91 per customer
Niche luxury categories like jewelry and high-end accessories see higher CAC because of premium positioning and smaller target audiences. Customers in this segment are valuable, but you’ll spend more to find and convert them.
Purchases are typically less frequent, too, so lifetime values can be lower.
There can be significant variance within industries, too
Within any category, the range of CACs can be huge. For example, in fashion, a mass-market T-shirt brand might have a much lower CAC than a bespoke luxury apparel startup.
One study showed fashion CAC ranging anywhere from $32 up to $250 in different cases.
The takeaway: know your industry’s ballpark so you can tell if your CAC is in line or way off. If your cost to acquire a customer is significantly higher than peers in your sector, it’s a red flag that something in your strategy or funnel may be inefficient.
(On the flip side, if your CAC is dramatically lower than the norm, it could mean you’re under-investing in growth, leaving market share on the table.)
(Note: Some of the industry data above comes from Shopify’s 2021 dataset; older data is still useful for showing relative differences, but absolute values have likely risen by 2025. Always align with the latest trends.)
CAC is affected by advertising costs, industry competitiveness, wider economic factors, shifts in customer loyalty, and data privacy changes
Why does CAC go up or down? Several factors influence customer acquisition cost, and understanding them can help you control it:
Digital advertising costs
This is the biggest driver of CAC. When ad prices rise, so does your CAC. Lately, advertising costs have been inflating – increased competition on platforms like Facebook/Instagram (Meta), Google, and TikTok has driven up CPMs (cost per thousand impressions) and CPCs.
Targeting is also less precise due to privacy changes, meaning you may spend more to reach the right people.
Simply put, if it costs you $1.50 per click today vs $1 last year, and your conversion rate holds constant, your CAC is 50% higher. This ad inflation has been a major reason CAC keeps climbing in recent years.
Competition and saturation
The more competitors bidding for the same audience, the higher the cost to acquire each customer. In a crowded niche, you’ll pay more for visibility.
This is why emerging markets or untapped niches have lower CAC, and saturated markets (think generic fashion or electronics) have higher CAC. When every brand is throwing budget at ads and promotions, consumers are harder (and pricier) to win.
Economic and market factors
Macro conditions can push CAC up or down. For example, in an economic downturn or periods of low consumer confidence, conversion rates might drop, meaning you have to spend more to convince cautious consumers to buy.
The UK, for instance, is seeing slow growth and soft consumer spending in 2025, which contributes to higher CAC because shoppers are less easily persuaded.
Additionally, if companies cut marketing budgets during lean times, paradoxically it can raise CAC if targets remain high – you’re trying to achieve the same results with less resources, which can hurt efficiency.
On the flip side, if consumer demand is strong and your product is in high demand, CAC may go down as each marketing touchpoint converts more readily.
Data privacy changes
In the past few years, changes like Apple’s iOS 14.5 update (which limited ad tracking) and the phase-out of third-party cookies have made targeted advertising more challenging.
Reduced targeting precision means higher acquisition costs, because you end up paying to reach a broader audience to find the right customers.
Industries heavily reliant on Facebook Ads, for example, saw CAC shoot up after these privacy moves, since lookalike and retargeting audiences became less effective.
Regulations such as GDPR and CCPA also play a role in limiting how marketers can track and target potential customers, adding friction that often equates to higher costs per acquired customer.
Conversion rates and funnel efficiency
Your website conversion rate is a crucial factor.
If 100 people click an ad and 5 make a purchase, your CAC for that campaign is effectively your cost for 100 clicks divided by 5. But if only 2 make a purchase, the CAC more than doubles (same spend, fewer customers).
So a low conversion rate or a leaky sales funnel drives CAC up, while improving conversion rates drives CAC down. Everything from your landing page quality, to site speed, to checkout process affects conversion.
Brands that invest in conversion rate optimization (CRO) can substantially lower their CAC because each marketing dollar yields more customers. For instance, simplifying your checkout or improving product page content can bump your conversion from, say, 2% to 4% – effectively halving the cost to acquire each customer.
Customer loyalty and organic growth
Not all customer acquisition comes from paid marketing. If you have strong word-of-mouth, referrals, or organic traffic, your effective CAC can be much lower.
A well-known brand with an engaged community might get a steady stream of new customers through referrals, search engines, or social media buzz without heavy ad spend. For example, products that go viral on TikTok or Instagram can acquire customers at virtually no cost.
Similarly, a high ranking in search engines for relevant queries can bring in traffic at no marginal cost.
On the other hand, if you rely solely on paid ads for every sale, your CAC will reflect the full brunt of ad costs. Many brands are investing in content marketing, SEO, and community building to naturally attract customers and blunt the rise of paid CAC.
To put CAC in context, you need to compare it to customer lifetime value (CLV) and return on ad spend (ROAS)
CAC isn’t a particularly meaningful metric when viewed in isolation. It’s only valuable if you put it in context of how much revenue you generate per customer.
For example, you could have a CAC of $20 (nice and low), but only make $15 per customer. You’d be losing money on every customer acquired.
Or you could have a CAC of $200 (high, on the surface mildly panic-inducing), but generate $1000 per customer. In which case you’re doing great.
There are two key metrics to use for context: customer lifetime value (CLV) and return on ad spend (ROAS).
CLV is the total revenue you expect to earn from a customer over the entire time they buy from you. Healthy businesses ensure that CLV is comfortably higher than CAC.
A common rule of thumb is a CLV:CAC ratio of about 3:1 or better. In other words, the lifetime value of a customer should be at least ~3 times the cost to acquire them. (Many ecommerce experts even aim for 4:1).
This cushion means you’re not just covering the acquisition cost, but earning a solid return on that investment.
Industry averages bear this out: most ecommerce sectors see CLV:CAC ratios in the 2:1 to 5:1 range.
For instance, a food subscription service might have a CAC of $45 and a CLV 4.5× higher (customers keep reordering), whereas an electronics retailer might have CAC $85 and CLV only about 2× higher (people buy once and don’t return often).
In other words, the higher the repeat purchase rate and customer loyalty in your vertical, the more you can afford to spend upfront to acquire those customers.
It’s also useful to think in terms of payback period: how long does it take for a customer’s purchases (and the profit from those purchases) to pay back the initial CAC?
For example, if your CAC is $50 and your average order profit is $25, you need two orders (and thus maybe several months) to break even on that customer.
Many direct-to-consumer ecommerce brands accept a longer payback (6-12 months or even more) as long as they’re confident in strong retention. Others, especially those with thinner margins, need first-purchase profitability.
Knowing your CLV and margin structure will inform what your “acceptable CAC” is.
Return on ad spend (ROAS) is essentially the flip side of CAC. ROAS measures the revenue generated per dollar of ad spend. If you spend $1 on ads and get $5 in sales, that’s a 5:1 ROAS (or 500%).
ROAS and CAC are directly linked – if your average order value or revenue per customer is fixed, a higher CAC means a lower ROAS, and vice versa. For example, say your average first purchase is $100. If your CAC is $50, then you’re getting a 2:1 ROAS on that first purchase (you spent $50 to get $100 in sales).
Whether that’s good or bad depends on your margins. If your gross margin on that $100 sale is 50%, you made $50 gross profit, which just covers the $50 CAC, yielding essentially no net profit on the first order.
A “healthy” ROAS in this scenario might be higher – perhaps 4:1 – so that the first sale is profitable even after ad costs (with $100 ad spend bringing $400 revenue, for example).
Many brands don’t achieve that on the first sale and are okay with a lower ROAS initially, counting on future purchases for profit. But if your ROAS is too low (CAC too high), you’ll burn cash quickly.
The key is that CAC, CLV, and ROAS must be evaluated together:
CAC vs CLV: How many times over does a customer’s value cover the acquisition cost? If it’s 1× or less, you’re in trouble; ~3× or more is the sweet spot for sustainable growth. This is why businesses with subscription models or frequent reorders can tolerate higher CAC: they know CLV will make up for it.
In contrast, businesses with one-off purchases (e.g. mattresses or luxury watches) need to keep CAC very efficient or expand into new products to increase CLV.
CAC vs ROAS: Are your marketing campaigns generating enough revenue to justify their cost? A rising CAC will push your ROAS down.
If you notice your ROAS on Facebook ads dropping quarter over quarter, it likely means your cost per acquisition is rising (or your average order values are falling).
Some companies target a minimum ROAS (say, 3:1) for campaigns to be considered viable, which indirectly sets a maximum CAC they’re willing to pay (e.g. if AOV is $60, a 3:1 ROAS target means CAC should be no more than $20 per sale).
In practical terms, a “healthy” CAC is one that allows a positive ROI when matched with your CLV. It means you’re not overspending to buy revenue. Many successful ecommerce brands operate with the mindset: spend $1 to earn $3+ back over time.
If you can do that, you’re in a good place. If you find you’re spending $1 to barely get $1 or $1.50 back, it’s time to either lower your CAC or boost your CLV (or both).
To be considered “healthy”, CAC should be significantly lower than CLV, profitable on repeat business, and roughly within industry norms
A healthy CAC for an ecommerce business is one that is sustainable relative to the value of the customer. In simple terms, you want the cost to acquire a customer to be low enough that the profit from that customer’s purchases covers the cost with room to spare.
Here are some rules of thumb and indicators of a healthy CAC:
CLV to CAC ratio ~3:1 or better: As noted, a common benchmark is keeping CAC around one-third (or less) of your customer lifetime value. That implies you’re tripling your money (or better) on what you spend to acquire customers.
If your ratio is, say, 1:1 or 1:2 (spending $50 to acquire a customer who only yields $50–$100 in lifetime gross profit), that’s generally unhealthy for an ecommerce brand. High-growth startups might tolerate a tighter ratio temporarily, but ultimately the unit economics need to make sense.
Profit on repeat business (or even first purchase): Ideally, a healthy CAC means you can break even on the first order or within a few orders.
For brands with subscription models or consumable products, a healthy CAC might be one where the payback period is just a couple of months. For example, if you make $20 profit per order and CAC is $40, you need 2 orders to break even on that customer – that could be fine if customers reorder every month (payback in 2 months).
But if it takes 2 years to recoup your CAC, that’s a long time to be underwater. Many direct-to-consumer brands in recent years found themselves with unhealthy CACs – spending so much on Facebook ads that they never recouped the cost because customers didn’t stick around.
A healthier approach (and one investors like to see) is to have CAC paid back quickly by customer purchases, and everything after that is true profit.
Within industry norms (or better): While every business is unique, if your CAC is dramatically above your industry’s benchmark, it’s likely not healthy. For instance, if the average fashion ecom brand sees $60–$70 CAC and you’re at $150, you need a very good reason (maybe your average order value and CLV are way higher than the norm) or else it points to inefficiency, and you should investigate whether your marketing strategy is bleeding cash.
On the other hand, if you’ve optimized to a CAC below industry average while still growing, that’s a sign of efficient marketing. Being in the right ballpark for your vertical is a sanity check on CAC health.
Not rising faster than your CLV or margins: A healthy CAC is stable or improving relative to the value per customer. If your CAC is creeping up each quarter but your average order values or repeat rates aren’t increasing, that CAC is becoming unhealthy.
For example, say two years ago you spent $30 to get a customer who would spend $120 (4:1 CLV:CAC). Now you’re spending $60 to get a customer who still spends $120 (2:1 CLV:CAC) – that’s a deterioration. At some point, it won’t be profitable.
Ideally, you want to either keep CAC in check or simultaneously improve your average customer value to maintain good economics.
Ultimately, it’s about balance: spending enough to grow, but not so much that you’re upside-down on each customer.
If you find your CAC is unhealthy, don’t panic: it just means you need to refine your marketing mix or customer strategy.
Customer loyalty can decrease your CAC and increase your CLV
One of the best ways to make customer acquisition costs more manageable is to stop relying on acquisition so much in the first place.
If someone buys from you once and never comes back, that CAC has to work pretty hard. But if they buy from you five times over the next year, the numbers start to look a lot healthier, even if your CAC doesn’t go down.
That’s why repeat purchase rate and customer lifetime value (CLV) matter so much. They’re what make CAC sustainable. For instance, the average repeat customer rate in ecommerce ranges from 15–30%, depending on the vertical — and increasing that rate is one of the most direct ways to improve CLV without touching CAC .
Loyalty customers also bring in new customers through referrals, which is one of the few acquisition channels that actually gets cheaper and more effective over time. That’s because referred customers are themselves more valuable (some research suggests a 16% higher CLV than average) and as much as four times more likely to make additional referrals.
None of this means you can ditch acquisition altogether. But loyalty stretches every dollar further. And if your CAC is creeping up, it’s often a sign to stop chasing and start retaining.
When you’re ready to get started with loyalty marketing, book a demo with LoyaltyLion.
