Calculate customer acquisition cost for the whole business and for each channel you can track.
Open last quarter's accounts and find two numbers: the total you spent on marketing and sales, and the number of new customers you won in that quarter. Divide the first by the second. The result is your customer acquisition cost (CAC), which is the spend to win new customers in a period divided by the number of new customers won in that same period. If you spent S$3,000 in a quarter and won 15 new customers (example figures), your CAC is S$200 per customer.
The formula is simple. The hard parts are deciding what counts as spend, which customers count as new, and which period they belong to. Make those decisions once, write them down, and use the same ones every time, so you can compare one quarter's figure with the last.
New customers are first-time buyers. Repeat orders from existing customers don't count. Priya runs a tuition centre in Tampines that offers maths tuition, so her new customers are newly enrolled students. For Farah, who owns a workwear shop, new customers are people placing their first order. Count your new customers for the period in your source of truth from lesson 5.2, so the number comes from the same place each quarter.
The most common mistake is to divide ad spend alone by the number of new customers. This gives a flattering number, because ads are rarely the whole cost of winning a customer. Count all marketing and sales spend in the period:
ad spend tools, such as email software, a scheduling app, a design subscription, and your booking system if its cost is mainly about winning customers freelancers and agencies, such as a designer who makes ad graphics or an agency that runs campaigns a fair share of staff time spent on marketing and sales, including your own time as the owner
People leave out staff time more often than any other cost, but for a small business it is often one of the biggest. Estimate the hours honestly and put a rate on them, even a rough one. Then label the result clearly as an estimate.
Write down what you left out as well as what you included. You can exclude costs you would pay with or without marketing, such as rent, but record that you did.
Priya was pleased with her Meta ads, which cost about S$20 per lead, compared with about S$60 per lead on Google. For her, a lead is a parent who fills in the trial class form through an ad. Meta looked three times better value, and she was ready to move money from Google to Meta. Before she did, she checked how many of those leads had actually enrolled, and she totalled her full costs for the quarter.
Her Google Ads cost S$1,800 and her Meta ads S$900. Her tools, including email and booking software, cost S$300. A freelance designer who made her flyers and ad graphics cost S$600. She estimated her own time at 30 hours at S$40 an hour, which is S$1,200. That makes S$4,800 in total. She enrolled 24 new students in the quarter, so her CAC was S$4,800 / 24 = S$200 per student. On ad spend alone it would have been S$2,700 / 24 = S$112.50, so the honest figure is nearly 80 percent higher. She left out the rent for the centre, because she would pay it with or without marketing, and noted that decision on her sheet.
Priya's S$200 is a blended acquisition cost: all costs, all new customers and all channels counted together. It is the most reliable figure you can produce, because it doesn't depend on deciding which channel gets credit for which customer. Every dollar and every customer is counted once.
Acquisition cost by channel is CAC for a single channel. It is more useful for decisions but less reliable, because it depends on attribution. Module 5 covered the blind spots: platform numbers overclaim, GA4 misses people who decline cookies or switch devices, and word of mouth doesn't show up anywhere.
Calculate blended CAC first and treat it as the anchor. Then calculate per-channel CAC as a second view, using your best attribution evidence: GA4, the self-reported source question from lesson 5.3, and the platforms' own numbers for comparison. Add up the channel figures and compare the total with the blended figure. If the two are very different, attribution is the likely cause.
Next, Priya matched leads to enrolments in her spreadsheet. Meta's 45 trial form leads, at S$20 each, produced 3 new students. Google's 30 leads, at S$60 each, produced 9. On ad spend alone, Meta cost S$900 / 3 = S$300 per student and Google cost S$1,800 / 9 = S$200 per student, so the channel with the cheap leads was the more expensive way to win a student. Many of her Meta leads were parents browsing on their phones who never answered her follow-up message. Her Google leads were parents who had searched for maths tuition in Tampines and were ready to book.
Cost per click and cost per lead are useful inside one platform, for comparing ads and audiences against each other. They are poor guides for moving money between channels, because cheap clicks and cheap leads can come from people who rarely buy. Match your leads to actual customers and use cost per customer to decide where money goes. If you can, also check cost per customer against what those customers are worth, which lesson 8.2 covers.
When you run these numbers for your own business, expect your honest CAC to be higher than any figure you have quoted before. A higher, honest figure is more useful than a low one that leaves out half the costs.
Work out your business's blended customer acquisition cost for last quarter. List every cost you included and every cost you left out.
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