CAC For Startups. How To Set Benchmarks?

CAC for startups is a post for:People who are looking to start a business.People who have a business but have never spent money to acquire a customer and now are ready to.People who just want to know how to set these benchmarks up.

There is no perfect way to calculate CAC for startups, or for any company as a matter of fact, when you haven't been in the market. It's more of a test, learn and refine an approach that applies over here.

But here are some methods that might help when you are just starting -8% OTLRMany businesses have adopted this logic - 8% of the lifetime revenue. The exact percentage vary from business to business but I have seen in past this is the most common average.So essentially if your average order value per customer is $50, and average customer purchases 5 times in their lifetime. Then your CAC = $50*5*(8)/100 = $20

While there's no definitive method for calculating CAC (Customer Acquisition Cost) for startups, several approaches can be helpful initially. One common method is the 8% of Total Lifetime Revenue (OTLR) logic, where CAC is estimated as 8% of the lifetime revenue per customer. This method involves multiplying the average order value by the average number of purchases per customer and then multiplying by 8% to derive the CAC.