Customer acquisition cost
What you pay to win one new customer, not one order: a customer may buy once or ten times.
Formula
CAC = advertising and marketing spend ÷ number of new customers
A worked example (hypothetical numbers)
Say you spend 30,000 EGP on ads in a month and 60 new customers who never bought from you before come from them. CAC = 30,000 ÷ 60 = 500 EGP. If the month had 100 orders in total, cost per order = 30,000 ÷ 100 = 300 EGP. The difference is that 40 orders came from existing customers (assuming each new customer bought once).
The numbers are illustrative, only to show the arithmetic. They are not real results or market averages.
How to read it
- Read it next to customer lifetime value: a customer who buys once can carry a far lower acquisition cost than one who returns every month.
- Do not mix old and new customers in the denominator: someone who bought from you before is not a new customer even if an ad brought them back.
- In stores that depend on repeat buying, cost per order looks lower than the truth because repeat orders sit inside it, so CAC is the more honest figure.
The common mistake
Calculating the cost over every order, repeat customers included: the figure looks low while the ads brought only a small number of new customers, and those are the ones you are actually paying for.