The Customer Acquisition Cost (CAC) calculator is a tool used to calculate how much it will cost to acquire a customer. Understanding the cost to acquire a customer is an important measure used to project the ROI (Return on Investment) for a product development project. Without this measure, it is not possible to determine if the project will have a positive ROI.
In the early stages of product development, there is an idea and some market validation. It will cost money to take the idea any further. How do you know this money is a good investment? Is there any way to de-risk this investment?
In order to know the ROI of a product development project, one must know the Customer Acquisition Cost (CAC) – that is, how much it will cost in terms of sales and marketing to make a sale.
This tool, the Customer Acquisition Cost (CAC) calculator, is designed to estimate the cost to acquire a customer — or make a sale. This tool contains our experience with thousands of product development projects and their cost. Although no tool can calculate the exact cost, this tool will get you close enough so you can decide if further work is warranted.
What it is:
A tool to calculate how much it will cost to generate a sale.
Why it is Important:
If the sum of COGS (Cost of Goods Sold) and CAC is not less than the revenue (sales price), then more work is needed, or the project should not be pursued any further.
What Problem Does it Solve:
Spending a lot of money on a product that will not make a profit.
When to Use it:
At reach stage gate phase of product development — along with the ROI calculator.
How Can FinishLinePDS Help:
FinishLinePDS has decades of experience estimating CAC cost and we are happy to share this experience with you.
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