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 advertising (Facebook, Instagram, LinkedIn) can be cheaper, around $20 – $80, but often delivers lower-quality leads. Content marketing, while slower to build, can deliver a CAC of under $50 once established.
• Lifetime Value (LTV) is Key: Don’t look at CAC in isolation. A higher CAC is acceptable if your customer’s Lifetime Value is significantly higher. For example, a $150 CAC for a customer who spends $1,000 with you over their relationship is a good investment.
• Sales Team Impact: If you have a sales team, include their salaries and overheads in your CAC calculation. This often adds a significant cost per acquisition that’s overlooked. A dedicated sales follow-up can increase conversion rates, justifying the expense, but it needs to be factored in.

We’re also seeing a trend towards increased CAC as advertising platforms become more crowded and privacy regulations tighten. This means optimising for efficiency is more important than ever. Focusing on organic reach, referral programs, and improving conversion rates on your website will become crucial in 2026 and beyond.

The first step is to calculate *your* CAC accurately. Track every marketing expense – ad spend, content creation, salaries, tools – and divide it by the number of new customers acquired in the same period. Once you know your number, you can start to analyse what’s working, what’s not, and make informed decisions to improve your return on investment. If you’re unsure where to start, consider a marketing audit to pinpoint areas for improvement.