Why the DTC Customer Acquisition Cost (CAC) Math Is Broken in 2025

If you’re still treating “CAC” as a single number, you’re building a strategy on a foundation that’s already crumbled. Between shifts in privacy, higher media costs, supply-chain volatility, and a changed consumer, the old customer-acquisition math no longer aligns with reality. At Ugly Talk NYC, our panel didn’t mince words: Customer Acquisition Cost (CAC) only makes sense when you model it as a layered system against true unit economics and cash flow, not as a one-line KPI you try to push “down and to the right.”

Speakers at Ugly Talk NYC, Meet the Panelists Featured Here

• Manish Chowdhary — Founder & CEO, Cahoot (panel moderator)
• London Glorfield — Founder, Kickback (screenless electronics)
• Maya Juchtman — Senior Director, Marketing & Partnerships, Roswell NYC
• Sabir Semerkant — Founder, Growth by Sabir, helped drive $1B+ in ecommerce growth

(Detailed bios appear at the end of this article.)

1) From One Metric to Layered Math

Two years ago, many teams proudly shared “our CAC.” In 2025, that’s not just naïve, it’s dangerous. CAC behaves very differently by funnel stage and by audience familiarity. As Maya explained, top-of-funnel for a premium brand is a long play and will be more expensive by design, while lower-funnel retargeting to brand-aware shoppers should be dramatically cheaper. Roswell’s work with Hyperlite leaned into that layered view, featuring different content for different stages, and incorporating constant creative refreshes. The result was a lower CAC with a rising LTV.

The environment compounds this reality. Media isn’t uniformly “more expensive”; what’s gotten pricier is the intent you didn’t “earn.” For example, 2025 benchmarks show brand-term CPCs rising notably faster than non-brand (13% YoY vs. ~3% YoY among Tinuiti clients in Q2), which distorts a single blended CAC and hides the real levers you control (creative, landing-page speed, merchandising, and mid-funnel education). 

Operator takeaway: break CAC into at least three layers: (1) Prospecting/Top-Funnel CAC, (2) Mid-Funnel CAC (engaged audiences), and (3) Bottom-Funnel/Retargeting CAC. Model content, time-to-convert, and allowable CAC differently in each layer, then reconcile to margin and cash, not just ROAS.

2) Gross Margins & Cash Flow First

“Treat ecommerce like your Fidelity account,” said Sabir. If attention shifts, reallocate; if a “trade” (channel, campaign, creative) stops working, close it and move to the next. His point: top-line ≠ cash. Without money-management discipline, brands can post record BFCM revenue and still file for bankruptcy by January because payables, debt, and COGS swallow the apparent “wins.”

Operator takeaway: set allowable CAC by contribution margin after all variable costs, not list-price margin. Keep a live cash model: if inventory deposits or platform fees spike, your allowable CAC drops this week, not “next quarter.”

3) Inventory, Tariffs & True Unit Economics

CAC isn’t just a marketing question; it’s entangled with the supply chain. Manish’s team highlighted how a $1 packaging swing can significantly impact unit economics at small margins, and Maya pointed out how stockouts reset platform learnings, forcing you to pay to “re-earn” distribution you had already achieved. Plan 6+ months ahead when lead times run three months, or you’ll burn reacquisition dollars restarting cold campaigns.

Tariffs and carrier policies have also reshaped landed costs, changing what “profitable CAC” even means. Don’t price CAC in isolation from freight, warehousing, pick/pack, and packaging; your “winning” CAC may be unprofitable after fully-loaded costs.

Operator takeaway: build CAC guardrails per SKU based on real landed cost and per inventory state (in-stock vs. constrained). Pause prospecting when you’re <30 days of stock; rotate to waitlist, content, or wholesale outreach to protect LTV and platform learnings.

4) CAC + Community Lifetime Value

One reason CAC “broke” is that LTV became bifurcated: anonymous clicks on rented platforms vs. durable relationships you own. London reframed channels like an investment portfolio: TikTok as growth equities (top-funnel reach), Instagram as your S&P 500 (steady engagement), email/Discord as “bond-like” long-term value, and direct mail as a surprisingly efficient performance lever that, for the first time, has become cost-competitive with digital marketing.

On stage, the panel cited direct-mail campaigns with 14 – 20% response rates and a sub-$1 cost to send a letter, often cheaper than a click on Meta or Google in 2025. Externally, industry studies peg average direct-mail response lower (≈4 – 9% depending on format and list), but still multiples above common digital baselines, and USPS-cited research consistently shows exceptional open/attention compared to email. The point isn’t that mail always beats digital, but that portfolio math (not single-channel math) is how you now lower blended CAC and increase LTV.

Operator takeaway: track CAC/LTV by community tier (e.g., “VIP community” vs. “cold social”). Budget for “relationship CAC”, the cost to move a customer from follower → subscriber → community → advocate, and price the step-ups (e.g., Discord moderation, handwritten notes, or quarterly mailers) into your allowable CAC.

5) The Measurement Mirage (why “good” CAC can still be a lie)

The measuring stick itself is wobbly. Apple’s App Tracking Transparency (ATT) materially reduced signal; recent academic work finds firms with high Meta dependence saw revenue declines in the 8 – 40% range and ~37% lower click-through rates after ATT, which helps explain why pixel-only CAC “improved” on paper for some while cash didn’t. Modeled data ≠ reality. 

Meanwhile, Chrome’s third-party cookie saga didn’t end with a clean deprecation. In April 2025, Google signaled that it would maintain third-party cookies with user choice, rather than introducing a new prompt, which complicates attribution parity across browsers and extends the ‘messy middle’. Translation: any “exact” CAC is still a model. Treat it like a forecast, not “truth,” and triangulate with incrementality tests and blended cash payback.

Operator takeaway: pair platform-level CAC with blended CAC (all marketing $ / all new customers), cash payback (days to recover CAC from contribution margin), and incrementality experiments (geo holdouts, catalog holdouts), then decide.

Summary

In 2025, customer acquisition cost isn’t a single target to hit, it’s a living system you have to manage. As Ugly Talk NYC made clear, privacy shifts, volatile media costs, and squeezed margins have rendered “one-number CAC” meaningless. The fix isn’t chasing cheaper clicks; it’s building a layered Customer acquisition cost (CAC) model tied to true unit economics, cash payback, and customer lifetime value. Operators need to set stage-specific CAC targets (prospecting, mid-funnel, retargeting), adjust allowable spend in real-time as costs and inventory change, and diversify channels like a portfolio. When CAC is measured this way, grounded in cash flow and community, it stops being a vanity metric and becomes a tool for sustainable growth.

Frequently Asked Questions

What’s a healthy CAC in 2025?

There’s no universal number. Start with allowable CAC = contribution margin × payback horizon in orders. If your first-order contribution margin is $35 and you require payback in ≤60 days, your base allowable CAC is ≤$35. If you reliably get 40% of customers to a profitable second purchase in <90 days, widen the envelope, but only if your cash model supports it.

How should I budget CAC by funnel stage?

Set separate CAC targets for (a) Prospecting (highest), (b) Mid-funnel (lower), and (c) Retargeting (lowest). Assign distinct creative, landing pages, and time-to-convert expectations per layer. That’s how Roswell brings down CAC while increasing LTV: layered plays, constant refresh, not a single blended target.

Our ads “look” efficient, but cash is tight. What’s wrong?

Probably unit economics or inventory cadence. A $1 packaging change or unexpected freight surcharge can turn an “efficient” CAC into a cash drain. Stockouts also reset platform learning, wasting reacquisition spend. Tie CAC approvals to landed cost and inventory forecasts.

Is direct mail really back?

For targeted house files, yes, it’s a strong mid-to-bottom-funnel lever when used thoughtfully. The panel cited 14 – 20% response rates; broader industry studies show ~4 – 9% averages across formats. Bottom line: priced correctly, mail can lower blended CAC and raise LTV. Test it like any performance channel. 

What’s the single best “new” CAC metric to add?

Add Cash Payback (days) next to CAC. It forces you to reconcile marketing math to bank math, the discipline Sabir pushed on stage.

Speaker Bios

Manish Chowdhary — Manish Chowdhary is the Founder & CEO of Cahoot, the most comprehensive post-purchase logistics platform for ecommerce brands. We help merchants scale profitably with a bundled suite of services that includes:

• Fast, cost-effective fulfillment (1-day and 2-day nationwide coverage)
• AI-powered multi-warehouse shipping software that selects the cheapest label automatically
• An industry-first peer-to-peer returns solution that eliminates return shipping and restocking costs

With over 100 warehouses and advanced shipping automation, we help brands maintain control, boost speed, and cut logistics costs without the overhead of traditional 3PLs. I’m passionate about helping ecommerce businesses grow smarter. If you’re looking to improve your margins, delight customers, and future-proof your logistics, let’s connect.

My work has been recognized with multiple industry accolades, most recently winning the SaaStock USA Global Pitch Competition 2024. I’m passionate about leveraging technology and collaboration to push the boundaries of e-commerce and logistics, creating new opportunities for merchants worldwide.

London Glorfield — London is a founder and creative strategist who’s built at the intersection of culture and product his entire career. A former RCA-signed artist, he previously ran a creative direction firm and a Squarespace-style software startup. He is currently reimagining consumer electronics with Kickback.world, a fashion-forward audio brand rooted in youth culture and design.

Maya Juchtman — Maya is a creative marketing strategist and partnerships leader known for blending brand storytelling with performance. As Senior Director of Marketing & Partnerships at Roswell NYC, a Webby Award–winning Shopify Plus agency, she’s helped brands like Brixton, Hyperlite, and Curious Elixirs scale through thoughtful strategy and standout campaigns. With a background in customer experience and leading brands through start-up to acquisition, she brings a human-first, culturally aware lens to every project, building community, driving growth, and pushing the boundaries of what digital marketing can be.

Sabir Semerkant — Sabir is the go-to eCommerce growth strategist, credited with over $1B in revenue for 200+ brands from Canon to Sour Patch Kids. Backed by Gary Vee and Neil Patel, Sabir’s Rapid 2X method delivers 2X growth in 12–18 months profitably. Since 2024, it has powered over 70 brands across 17 industries, achieving an average 108% lift. His Rapid 2X Protocol is the unfair advantage for any eCom brand with product–market fit, engineered to scale revenue and profit even in down markets. Want real talk? Sabir reveals why most brands will fail in 2025 and exactly how to make sure yours isn’t one of them.

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