Maximum CAC: what to pay for an e-commerce customer in Switzerland

An online store launching its first Meta or Google campaigns often sets a ROAS target because that is the figure the platforms display. That is putting the cart before the horse. The first question is simpler: how much can you pay for a new customer without losing money?

CAC: the useful definition

CAC, or customer acquisition cost, is the marketing spend for a period divided by the number of new customers in that period. Returning customers do not count: they were already acquired. Mixing new and existing customers makes CAC look lower than it is, especially when a loyal base buys at every promotion.

Start from margin, not revenue

What an order brings in is not its value. It is what remains once every cost that rises with each sale has been paid: the product itself, packaging, shipping, payment fees and the share of returns. This contribution margin is the ceiling on what you can spend to win the order.

In this example, a customer who buys only once must not cost more than CHF 40 to acquire. At CHF 40, the sale breaks even. Below that, it contributes to fixed costs. Above it, every new customer deepens the loss.

Why a good ROAS can lose money

ROAS divides attributed revenue by advertising spend. In the example, spending CHF 50 for a CHF 100 order gives a ROAS of 2: the dashboard looks fine, but every order loses CHF 10. The minimum ROAS to avoid losing money is simple to calculate: revenue divided by margin, so 100 ÷ 40 = 2.5 here.

Two stores with the same ROAS can therefore have opposite results. A high-margin cosmetics brand is profitable at a ROAS where an electronics store loses money. Setting a ROAS target without knowing your margin is flying blind.

When customers buy again: LTV

If some of your customers come back, a customer is worth more than their first order. Customer value over a given period, LTV, is calculated in margin, not revenue: average margin per order multiplied by the average number of orders per customer over the period.

In the example, if a customer places 1.5 orders on average over twelve months, their value is CHF 60 of margin. You can then accept a CAC above CHF 40, knowing the difference will only be recovered through repeat purchases. Two limits: cash flow must carry that gap, and the repeat rate must be measured on your own customers, not estimated.

Checking the platforms with MER

Meta and Google each claim part of the same sales. Adding up their figures often gives more sales than the store actually recorded. MER, or marketing efficiency ratio, cuts through this: the store's total revenue divided by total marketing spend, over the same period, all sources combined.

MER does not tell you which campaign works. It tells you whether the whole works. If the ROAS shown by the platforms rises while MER falls, the platforms are claiming sales that would have happened without them.

What brings CAC down

• Fix conversion leaks. Shipping costs discovered at the last moment, missing Swiss payment methods, vague delivery times: every visitor lost at checkout makes every customer won more expensive.
• Raise average order value. Bundles, a free-shipping threshold, complementary products: ad spend stays the same, margin per order goes up.
• Refresh creatives. In a market as small as French-speaking Switzerland, the same people quickly see the same ads. Creative fatigue pushes up the cost of every click.
• Capture email addresses. A visitor who does not buy but leaves an email can be converted later, without another paid click.
• Measure properly. Server-side tracking (Meta's Conversions API, Google's enhanced conversions) so the algorithms learn from real sales.