Marginal CAC vs. Average CAC (Customer Acquisition Costs) 

by Robert Palumbo

By: Rob Palumbo

Does your brand track and understand the difference between these two crucial marketing cost metrics?

  • Average CAC shows how much on avg. your company spent per customers acquired. Simple. Total spend / total customers.

However, Average CAC misleads a more crucial input for ad spend decision making:

  • Marginal CAC: What is the *additional* cost of acquiring a new customer as spend increases?

marginal_cac
Ad spend decisions should be made using Marginal CAC.

A failure to differentiate between Marginal CAC and Average CAC can lead brands to spend unprofitably on platforms past a point of diminishing returns. Sadly, you won't find Marginal CAC in your typical ad spend dashboards.

OutPoint runs free DTC audits to help figure out the difference between the two and identify a channel's saturation point & Marginal CAC.

Questions we'll dig into:

  • For a given channel and spend amount, how does Marginal CAC compare to Average CAC? Are you saturating your audiences?
  • How do Marginal costs vary across channels — i.e., will re-allocation of $$$ provide a lift in growth and an improvement in returns?

Interested? Sign up at OutPoint.app or shoot me a message at rob@outpoint.app