intermediateBusiness Operations

Customer Acquisition Cost (CAC)

The total amount you spend on marketing and sales to land one new customer — if you spend $1,000 on marketing and get 5 customers, your CAC is $200 per customer.

Full Definition

CAC includes all marketing expenses (ads, website, sales time) divided by the number of customers you actually close. It's different from cost per lead because it only counts paying customers, not just people who called. For concrete contractors, knowing your true CAC helps you determine if your marketing dollars are working hard enough to justify the investment.

Formula

totalMarketingSpend / customersAcquired

totalMarketingSpend= all marketing costs including ads, website, sales time, materials

customersAcquired= number of customers who actually paid for jobs (not just leads)

Example

Concrete contractor spends $1,800/month on Google Ads + $400/month on Facebook ads + $300/month on truck lettering + 20 hours/month on estimates at $50/hour ($1,000) = $3,500 total marketing spend. Closes 6 customers that month. CAC = $3,500 ÷ 6 = $583 per customer.

For Contractors

Why It Matters

Understanding your CAC is the difference between profitable growth and going broke from expensive leads. If your average concrete job is worth $8,000 but you're spending $2,000 to acquire each customer, you're only netting $1,600 per job (at 20% margin) after paying $2,000 to get them. That's losing $400 per customer. Smart contractors keep CAC under 15-20% of job value — so for $8,000 jobs, aim for CAC under $1,200-$1,600.

Real-World Example

A concrete contractor in Phoenix spends $2,500/month on Google Ads and $500/month on truck wraps and yard signs. Total monthly marketing: $3,000. They close 4 new customers per month. Their CAC is $3,000 ÷ 4 = $750 per customer. With $8,000 average jobs and 25% profit margin ($2,000 profit per job), they net $1,250 per customer after acquisition costs. That's healthy — but if their close rate dropped to 20% (3 customers/month), CAC would jump to $1,000 and profit would drop to $1,000 per customer.

Common Mistakes

-Only counting ad spend and forgetting sales time — if you spend 3 hours per customer on estimates and follow-ups at $50/hour value, that's another $150 in CAC
-Using total leads instead of actual customers — spending $1,680/month generating 40 leads but only closing 10 customers means CAC is $168, not $42
-Not tracking long-term — measuring CAC monthly instead of over 3-6 months misses seasonal patterns in concrete work
-Ignoring referrals — if 20% of customers come from referrals (zero acquisition cost), your paid CAC is actually higher than calculated

What to Do

Track your last 3 months of marketing spend and count actual closed customers (not leads). Add up all marketing costs including your time on sales calls at $50/hour. Divide total spend by customers closed. If your CAC is over 20% of average job value, focus on improving close rate before spending more on marketing.

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Frequently Asked Questions

What's a good CAC for concrete contractors?

Aim for 15-20% of your average job value. For $8,000 concrete jobs, target CAC between $1,200-$1,600. Going higher than 25% ($2,000) squeezes profit margins too thin, especially factoring in job completion costs and overhead.

Should I include my time in CAC calculations?

Yes, absolutely. Count time spent on estimates, sales calls, and follow-ups at $50/hour minimum. A 3-hour estimate process adds $150 to your CAC. Many contractors underestimate their true acquisition costs by ignoring their time investment.

How often should I calculate CAC?

Monthly for trends, but make decisions based on 3-6 month averages. Concrete work is seasonal, so a high CAC in winter might balance out with lower spring costs. Track monthly but don't panic over single month spikes.

What if my CAC varies by service type?

Track separately for high-value services (decorative concrete, commercial work) versus basic services (repairs, small residential). Your CAC for $15,000 stamped concrete jobs can be much higher than for $2,000 driveway repairs while still being profitable.

How do referrals affect my CAC calculation?

Calculate CAC both ways: total customers (including referrals) and paid customers only. If 20% of customers come from referrals, your paid marketing CAC is actually 25% higher than your blended rate. Use paid CAC to evaluate marketing channel performance.