Overview
Understanding Customer Acquisition Cost (CAC) by product is essential for eCommerce teams that want to scale efficiently. While overall CAC provides a high-level view of acquisition performance, it can mask large differences between individual products, plans, or offerings.
In this article, you’ll learn:
What CAC by product is and why it matters
How Polar calculates CAC by product
How to create a custom dimension to calculate and analyze CAC by product
How to use these insights to make better growth decisions
By the end, you’ll be able to confidently analyze acquisition efficiency at the product level and tailor your marketing and product strategy accordingly.
Section 1: What Is CAC by Product and Why It Matters
Customer Acquisition Cost (CAC) measures how much you spend to acquire a new customer. When broken down by product, CAC shows how acquisition efficiency varies across your offerings.
Why CAC by product matters
Many eCommerce businesses:
Offer multiple products or pricing tiers
Acquire different products through different channels
Allocate marketing spend unevenly
Looking only at blended CAC can hide important insights. For example:
A lower-priced product may drive volume but be unprofitable due to high CAC
A higher-priced product may justify a higher CAC due to stronger LTV
CAC by product helps you:
Identify which products scale profitably
Understand how acquisition costs differ across offerings
Optimize marketing spend and pricing strategy
Section 2: How Polar Calculates CAC by Product
Polar calculates CAC by product by attributing marketing spend to customers based on the first product they purchased.
The core formula
For each product:
CAC = Total attributed marketing spend ÷ Number of new customers
Attribution logic in Polar
Polar:
Pulls in marketing costs from connected sources (e.g. ad platforms)
Attributes spend to newly acquired customers
Assigns each customer to the first product purchased
This ensures:
Customers are only counted once
CAC reflects true acquisition behavior
Results are consistent and comparable over time
💡 Note: CAC by product focuses on acquisition, not upgrades or expansions. Customers are attributed to their entry product.
Section 3: How to Create a Custom Dimension to Calculate CAC by Product
To analyze CAC by product in Polar, you’ll need to create a custom dimension that groups customers by their first purchased product.
Prerequisites:
Campaign Naming: Ensure your campaign names include product titles or other identifiers, such as targeted countries.
Ad Spend & New Customer Orders: Understand that Blended CAC involves Ad Spend and New Customer Orders. Without the Custom Dimension, you can't break down Ad Spend by product title.
Step 1: Navigate to Custom Dimensions
Go to Settings in Polar
Select Custom Dimensions
Click Create custom dimension
Step 2: Choose the Correct Data Source
Select Customers as the base object
This ensures the dimension is tied to acquisition and first purchase behavior
Step 3: Define the Dimension Logic
Configure the dimension to reflect the first product purchased by each customer.
Recommended setup to Add Rules for Ad Sources and Shopify:
Rule Setup:
Condition:
Campaign name contains [Product Title]
OR
Product titles (from Shopify) contain [Product Title]
Result:
'{Product Title}'
OR
'OTHER' (or another default value for unmatched conditions)
Name your dimension clearly, for example:
First Product PurchasedAcquisition Product
Step 4: Save and Apply the Dimension
Once saved, this custom dimension will be available across:
Dashboards
Charts
CAC and marketing performance reports
You can now use this dimension to break down:
New customers
Marketing spend
CAC
Step 5: Build Your CAC by Product Analysis
Create a new chart or report
Use CAC as the primary metric
Group by your new First Product Purchased custom dimension
Apply a date filter aligned with acquisition (e.g. signup or first purchase date)
This will display CAC broken down by product.
Note: If you are using Google Shopping, you will soon be able to import costs by item ID and map the item IDs to your Shopify SKUs. Let us know if you're interested in learning more about this process.
Section 4: How to Use CAC by Product to Drive Better Decisions
Once your CAC by product is set up, focus on turning insight into action.
Compare CAC to revenue and LTV
Always pair CAC with:
Average revenue per customer
Lifetime Value (LTV)
Payback period
A higher CAC can be healthy if the product retains well and expands.
Optimize marketing spend
Use CAC by product to:
Increase spend on products with efficient acquisition
Rework messaging or channels for high-CAC products
Identify products that rely too heavily on paid acquisition
Inform pricing and packaging
If a product consistently shows high CAC:
Pricing may be too low
Target audience may be misaligned
The product may perform better as an upsell rather than an entry product
Conclusion
CAC by product gives you a clear, actionable view of acquisition efficiency across your business. By creating a custom dimension in Polar, you can move beyond blended averages and understand exactly how each product contributes to sustainable growth.
Key takeaways:
CAC by product reveals hidden performance differences
Polar attributes CAC based on first product purchased
Custom dimensions make this analysis flexible and scalable
The biggest insights come from pairing CAC with revenue and LTV