Getting customers to buy your products comes at a cost.  This cost involves anything that is associated with reaching out to a customer and luring them into your store (online or offline) to buy your products within a specific period of time.   This is cost is called the Customer Acquisition Cost (CAC).
 
In order to calculate the CAC you need some key elements of information.  They include:

MCC:  The total marketing campaign cost

W:  The wages of the sales team (if you hire one)

S:  Any software used in the marketing and sales campaign

PS:  Professional services (i.e web designers, graphic designers, consultants, etc.)

O:  The overhead related to marketing and sales (i.e. rent, utilities, etc.)
 

There are two methods to calculating CAC.  There is the simple way and then there is the more complex way.
 

The Simple way to calculate CAC is as follows:

 

CAC = MCC / CA  (CA = total customers acquired)

 

In this example the CAC for six(6) months equals $10.00 per customer.

 

CAC = $1,000 / 100
 

The more complex way to calculate CAC is as follows:

 

CAC = MCC + W + S + PS + O  / CA

 

In this example the CAC for six(6) months equals $56.00  per customer.  It assumes that you did most of the work yourself and only hired one individual part-time and used leased office space which is less expensive. 

 

CAC = $500  + $4,000 + $100 + $0 + $0 + $1,000 / 100

The CAC has to be compared to the purchase made by the customer in order to have a real value.  If it cost $10.00 to acquire a customer and the customer makes a purchase valued at $5,000.00 then that is a good return.  But if the customer make a purchase worth only $20.00 then that is not a good return.
 

Why is CAC important?  There are several reasons.

Knowing what it cost to acquire a customer will inform you on whether or not you're spending your marketing money wisely.  It forces you to examine which marketing campaign is most effective.  CAC can let you know if you know for example, that you're getting better returns from a Direct Mail campaign rather than a Banner Ad campaign.
 

If you're trying to raise money from investors this is a question they like to ask.  How well you answer the question will give them an indication of whether or not you know your business and how well you will manage the money if they give it to you.