CAC

Definition

CAC (Customer Acquisition Cost) is the total cost of acquiring a new customer, including all marketing and advertising expenses.

CAC is calculated using the formula: CAC = Total Marketing & Advertising Cost ÷ Number of New Customers Acquired

Explanation

In dropshipping, CAC is a critical metric because many stores rely heavily on paid traffic. It shows how much it costs to bring in each customer and helps determine whether a product or campaign is profitable.

Costs included in CAC may involve:

• Advertising spend (social media, search ads)
• Influencer or affiliate fees
• Creative production costs (videos, images)

To be profitable, dropshippers aim to keep CAC lower than the profit generated per customer (e.g., through AOV and repeat purchases).

Example

A dropshipping store spends $1,000 on ads and acquires 50 new customers.

CAC calculation: $1,000 ÷ 50 = $20

This means it costs $20 to acquire each customer. If the average profit per customer is higher than $20, the campaign is profitable.

Key Takeaway

CAC helps dropshipping businesses measure how efficiently they acquire customers, making it essential for controlling costs and scaling profitably.