Understanding your Customer Acquisition Cost (CAC) is absolutely vital for any Australian business wanting to grow sustainably. It’s not just about spending money on ads; it’s about working out the true cost of turning a prospect into a paying customer. We see too many SMEs flying blind, unsure if their marketing is actually profitable.

So, what are businesses actually paying? It varies hugely, but here’s a realistic look at what we’re observing across different sectors.

• Industry Matters: CAC differs dramatically. Highly competitive industries like fitness or retail generally have higher CACs – often between $80 and $200 per customer. Less competitive, niche businesses can see costs as low as $30 – $60.
• Channel Performance: Google Ads typically sits in the $50 – $150 range, depending on keyword competition. Social media (Facebook, Instagram) can be cheaper, around $20 – $80, but requires consistent content and engagement. Direct mail, while still effective for some, is usually $50+.
• Lifetime Value (LTV) is Key: Don’t just look at CAC in isolation. A higher CAC is acceptable if your customer stays with you for a long time and spends a lot. Calculate your LTV:CAC ratio. A healthy ratio is 3:1 or higher.
• Organic Growth Reduces CAC: Investing in content marketing, SEO, and building a strong brand presence lowers your reliance on paid advertising, significantly reducing long-term CAC. This is where we see the biggest wins for businesses planning for 2026 and beyond.

Calculating CAC isn’t complex. Simply add up all your marketing and sales expenses for a specific period (say, a quarter) and divide it by the number of *new* customers acquired during that same period. Don’t forget to include salaries for marketing and sales staff! Many businesses underestimate this.

The most important takeaway? Regularly tracking and analysing your CAC is non-negotiable. It allows you to optimise your marketing spend, identify the most profitable channels, and ultimately, build a more sustainable and profitable business. If you’re unsure where to start, we recommend beginning with a comprehensive marketing audit to pinpoint areas for improvement and establish a baseline CAC figure.