Podcast Summary: The Game with Alex Hormozi

Episode: 10. Cost To Acquire A Customer CAC | $100M Lost Chapters Audiobook
Host: Alex Hormozi
Release Date: November 14, 2025

Overview

In this episode, Alex Hormozi breaks down one of the most vital metrics in business: Cost to Acquire a Customer (CAC). He explains its significance, common misunderstandings among entrepreneurs, and provides step-by-step examples to accurately calculate CAC across different channels. The episode is practical and data-driven, encouraging business owners to get honest about their real acquisition costs—because optimizing CAC can mean the difference between breaking even and achieving exponential growth.

Key Discussion Points & Insights

1. Why CAC is Crucial

• Alex stresses that the lower your CAC, the larger the gap between what you spend to acquire customers and what you earn from them—a key to building wealth.

• Many business owners severely underestimate CAC by ignoring several hidden costs.

  "If you spend $10 to make a thousand dollars, it seems a hell of a lot cooler than spending $900 to make a thousand dollars."
  — Alex Hormozi (00:16)

• Miscalculating CAC can mean losing money even with apparently healthy sales.

2. Common Mistakes in Calculating CAC

• Entrepreneurs often only count ad spend, not internal resources or other overheads.

• Content leads are seen as “free" while outbound focuses only on commissions.

• Reality check: True CAC includes salaries, software, commissions, and more.

  "That thousand dollars sale you thought cost you $200 to make really costs $500. And as small of a difference as that may seem... that can be the difference between a million dollars per month and $10 million a month."
  — Alex Hormozi (01:16)

3. How to Accurately Calculate CAC

• Alex insists: CAC is a hard science, not a guess.
• Track monthly, by each channel (ads, outbound, content, etc.)
• Action Prompt:

  "If you don’t [calculate CAC], and you were looking for a sign to start tracking, here’s your sign."
  — Alex Hormozi (02:07)

4. Detailed Examples of CAC Calculation

Alex shares three concrete cases, breaking out specific cost components:

A) Outreach Example (02:35)

• Components:

  • $200/month email software
  • $3,000/month for emailer
  • Sales: 8/month
  • $100 commission per sale

• Formula:

  • Total Cost: $3,000 (emailer) + $200 (software) + $800 (commissions) = $4,000
  • CAC: $4,000 ÷ 8 = $500 per customer

B) Content Marketing Example (04:04)

• Components:

  • 2 media team members at $5,000/month each
  • 10 customers via inbound
  • $100 commission per sale

• Formula:

  • Total Cost: ($5,000 x 2 = $10,000) + $1,000 (commissions) = $11,000
  • CAC: $11,000 ÷ 10 = $1,100 per customer

C) Paid Ads Example (05:08)

• Components:

  • $4,000 media buyer
  • $20,000 ad spend
  • $1,000 software
  • $1,000 commission x 10 customers = $10,000

• Formula:

  • Total Cost: $4,000 + $20,000 + $1,000 + $10,000 = $35,000
  • CAC: $35,000 ÷ 10 = $3,500 per customer

5. Action Steps for Listeners (06:40)

• Calculate actual CAC for your business for the last several months.

• Break it down by every acquisition channel or platform.

• The findings are often surprising and can reveal where the real value lies.

  "One of the first things we do when we invest in a company is run a full diagnostic on acquisition. Half the time we find a channel or platform that’s doing significantly better than others and guess what we do next? We do more of the one that gets us the best cost customers."
  — Alex Hormozi (07:40)

6. Next Steps After Optimizing CAC (08:24)

• If you can’t lower CAC further, the next lever is increasing what you can pay for acquisition—by raising Lifetime Gross Profit per Customer (LTGP).
• Teases that this metric will be discussed in the next episode.

Notable Quotes & Memorable Moments

• What most get wrong:

  "Most entrepreneurs have never calculated their actual CAC." (00:39)

• Truth bomb:

  "CAC is a hard science. You can and should know exactly what it costs you to get a customer each month by channel." (01:36)

• Surprise element:

  "...as small of a difference as that may seem, in some businesses, that can be the difference between a million dollars per month and $10 million a month." (01:29)

• Call to action:

  "If you don’t and you were looking for a sign to start tracking, here’s your sign." (02:07)

Timestamps for Key Sections

• 00:00-02:07 – The significance of CAC, what most business owners get wrong
• 02:08-07:00 – Step-by-step CAC calculation examples (Outreach, Content, Paid Ads)
• 07:01-08:24 – CAC diagnostics, picking winning channels, and action steps
• 08:25-End – Teaser: Lifetime Gross Profit per customer as the next big lever

Summary Flow & Value

This episode is dense with practical instruction in Alex Hormozi’s signature direct, no-fluff style. He demystifies CAC, clarifies what must be included, demonstrates using real-life numbers, and pushes listeners to act. For founders and operators, it’s a wake-up call: get honest about your CAC, track relentlessly, and double down on channels that win. The next episode promises to build on this foundation with strategies to crank up allowable CAC by maximizing LTGP.