CAC (Customer Acquisition Cost)

Customer acquisition cost, written as CAC, is the total amount a business spent acquiring a paying customer over a defined period, divided by the number of new paying customers acquired in that same period. For a Calgary home-service contractor, the numerator typically includes paid media, design and print costs for any physical assets, sales labour attributable to the campaign, and (in some accounting conventions) a share of overhead. The denominator is the count of customers who actually paid an invoice — not leads, not bookings, but realized revenue.

CAC is mathematically related to cost per lead by the close rate: CAC equals CPL divided by close rate. A $30 CPL with a 50% close rate produces a $60 CAC. The same $30 CPL with a 25% close rate produces a $120 CAC. The arithmetic makes the link between marketing and sales explicit and is why operators who track only CPL routinely under-invest in their phone-handling and quoting process — fixing the close rate halves the CAC at zero additional marketing cost.

Calgary home-service benchmarks for CAC vary widely by trade and lead source. A junk-removal operator with strong same-day phone handling can close 50% to 70% of door-hanger leads, putting CAC in the $30 to $60 range against a $20 CPL. The same operator running Google Ads on a $45 CPL with a 40% close rate sees CAC near $115 — a structurally different unit economics. Roofing CAC is much higher because the close rate on cold leads is lower (10% to 25% for unsigned inspections) and the per-job ticket justifies the spend; an unhelpful CAC of $400 on a $12,000 roof replacement is excellent.

CAC is the input to two downstream comparisons that determine whether a marketing channel is worth running. The first is the CAC-to-LTV ratio: customer lifetime value divided by CAC. Healthy home-service businesses target an LTV-to-CAC ratio of 3:1 or higher — every dollar spent acquiring a customer should return at least three dollars in lifetime margin. The second is the CAC payback period: how many billing cycles it takes for the gross margin from one customer to recoup the CAC. Subscription businesses obsess over this; for one-shot trades like junk removal, payback is collapsed to a single transaction and the metric reduces to "is this job profitable after the marketing line".

CAC is sometimes confused with CPA (cost per acquisition, which is platform-side ad terminology for the same thing) and with CPL (one stage upstream). The clearest mental model is funnel-based: an impression generates a click at CPC, a click generates a lead at CPL, a lead becomes a paying customer at CAC. Each step adds dropout and each step compounds the cost. Door hangers compress the funnel by collapsing the impression and click stages into a single physical exposure — there is no auction to lose and no click to fail, just a phone call or no phone call — which is why mature operators report better unit economics on physical channels even when the per-impression cost looks higher.