Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC) is the total cost a business spends to acquire one new customer. Computed as: Total Sales & Marketing Spend / Number of New Customers Acquired in the same period. The CAC ceiling (maximum allowable CAC) is determined by Customer Lifetime Value and target payback period: CAC ≤ CLV × (target payback days / total retention days).

CAC formula and payback period

Basic CAC = Total spend on acquiring customers / Net new customers. Payback period = CAC / (Avg ticket × Gross margin × Visits in payback window). Healthy local-business payback: 14-30 days for daily-frequency businesses (coffee, QSR), 30-60 days for weekly (gym, pizza), 60-90 days for monthly (medspa, retail), 90-120 days for quarterly (dental, auto), 150-180 days for annual (HVAC, home services).

Industry CAC benchmarks

Typical CAC ranges Wallefy sees: coffee $5-20, QSR $3-12, fast casual $8-25, beauty salon $30-100, medspa $80-250, gym $40-150, retail $15-50, ecommerce $20-80, auto service $25-80, HVAC $60-200, dental $80-300. These vary by channel mix — Google Search ads for dental run higher ($150-300); EDDM for HVAC runs $60-150; Instagram organic for beauty can be $5-20.

Why wallet-first retention lowers CAC

Wallet pass loyalty programs install at 60-80% conversion rate at point-of-sale (vs <10% for traditional loyalty apps). This means the effective CAC for retained customers is dramatically lower — every wallet pass installer becomes a free push-notification recipient for life. Channel CAC drops 30-50% over 90 days as more new customers convert to wallet pass holders.