How To Calculate Cost of Acquisition Ratio in Sage 100 | Arithmix

Calculating the cost of acquisition ratio is an essential step in determining the profitability of your business. This ratio measures the cost of acquiring a new customer against the revenue generated by that customer. It is a crucial metric for any business looking to grow and expand its customer base. In this article, we will discuss what the cost of acquisition ratio is, when it is valuable to calculate it, and how to calculate it in Sage 100.

What Is Cost of Acquisition Ratio?

The cost of acquisition ratio is a financial metric that measures the cost of acquiring a new customer against the revenue generated by that customer. It is calculated by dividing the total cost of acquiring new customers by the total revenue generated by those customers. This ratio helps businesses determine the effectiveness of their marketing and sales efforts and identify areas for improvement.

For example, if a business spends $10,000 on marketing and sales efforts to acquire 100 new customers, and those customers generate $50,000 in revenue, the cost of acquisition ratio would be 0.2 ($10,000 ÷ $50,000). This means that for every dollar spent on acquiring new customers, the business generates $5 in revenue.

When Is It Valuable To Calculate Cost of Acquisition Ratio?

Calculating the cost of acquisition ratio is valuable for any business looking to grow and expand its customer base. It helps businesses identify the most effective marketing and sales channels and allocate resources accordingly. By calculating this ratio, businesses can also determine the lifetime value of their customers and make informed decisions about customer acquisition and retention strategies.

Additionally, the cost of acquisition ratio is valuable for businesses looking to attract investors or secure financing. Investors and lenders often look at this ratio to assess the profitability and growth potential of a business.

How to Calculate Cost of Acquisition Ratio in Sage 100

Calculating the cost of acquisition ratio in Sage 100 is a straightforward process. First, you need to gather data on the total cost of acquiring new customers and the total revenue generated by those customers. This data can be found in your sales and marketing reports in Sage 100.

Next, divide the total cost of acquiring new customers by the total revenue generated by those customers. The result is your cost of acquisition ratio.

For example, if your business spent $10,000 on marketing and sales efforts to acquire 100 new customers, and those customers generated $50,000 in revenue, the cost of acquisition ratio would be 0.2 ($10,000 ÷ $50,000).

In conclusion, calculating the cost of acquisition ratio is an essential step in determining the profitability and growth potential of your business. By understanding this metric and how to calculate it in Sage 100, you can make informed decisions about your marketing and sales strategies and attract investors and lenders.

How Do You Calculate Cost of Acquisition Ratio in Sage 100

Sage 100 itself isn’t naturally geared towards letting you calculate complex metrics like Cost of Acquisition Ratio. As an alternative, teams typically use products like Arithmix to import data from Sage 100 and build out dashboards.

What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like Sage 100, combine it with data from other systems, and create calculations like Cost of Acquisition Ratio.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.

Arithmix is fully collaborative, giving your entire team access to your numbers and the ability to work together seamlessly.

Calculating Cost of Acquisition Ratio in Arithmix

Calculating metrics like Cost of Acquisition Ratio is simple in Arithmix. Once you've created your free account, you’ll be able to import your Sage 100 data, and use it to create natural language formulas for metrics like Cost of Acquisition Ratio.

Arithmix is designed to give you the power to build any calculations you want on top of your Sage 100 data, while also being easy to use and collaborate on. You can share your dashboards with users inside and outside of your organisation, making it easy to empower your whole team.