Know what a new customer really costs.

CAC is customer acquisition cost, your total acquisition spend divided by the new customers it produced. The honest version includes more than ad spend: agency fees, creative production, tools, and first-order discounts all belong in the numerator. And the denominator counts first-time customers only. A repeat buyer was not acquired this month, so counting them flatters the number and hides a real problem.

CAC on its own is half a sentence. A $50 CAC is excellent for a brand whose customers are worth $250 over their lifetime and fatal for one whose customers spend $40 once. That is why the ratio matters: LTV divided by CAC. Under 1 to 1 you lose money on every customer. Between 1 and 3 to 1 you are technically positive but thin. At 3 to 1 or better you are healthy, with room for COGS, overhead, and growth. If you do not know your LTV yet, the LTV calculator works it out from your order data.

One more lens: payback. The ratio ignores time, and a healthy 3 to 1 that takes 18 months to collect still drains cash while you wait. Ecommerce brands generally want the first order or two to repay the CAC. If yours does not, you are funding growth out of working capital, and the ratio alone will not warn you.

Lowering CAC almost always comes back to creative, because converting more of the traffic you already pay for beats squeezing the auction. The angles that convert come from scraping what your customers actually say.