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Oct 20, 2026
Watermark Water Cooler: What Is Client Acquisition Cost (CAC) for Contractors?
Originally posted on May 29, 2025
What does it really cost to land a new client? , Cameron sits down with Lane, a Digital Marketing professional, to break down one of the most overlooked metrics in the construction and AEC industries: client acquisition cost (CAC).
They unpack what CAC is, why it’s critical to business sustainability, and how understanding it can help general contractors and business owners make smarter, more scalable decisions with their marketing budgets.
What is client acquisition cost? Client acquisition cost (CAC) is the total amount a business spends on sales and marketing to win one new client. To calculate it, divide your total sales and marketing costs for a period by the number of new clients won in that period. Lane recommends contractors keep CAC to about 20–30% of the profit on a job.
What Is Client Acquisition Cost (CAC), and What’s Considered Healthy?
CAC includes every dollar spent to bring in a new client — from paid advertising to CRM tools to sales team labor. Lane explains that for contractors, CAC should ideally land between 20–30% of total job profit. Anything higher can start to eat into margins and signal inefficiencies in the sales and marketing process.
Lane also points to a simple return target: about $4 in revenue for every $1 spent on marketing. A ratio like that is a sign your acquisition spend is working.
How Do You Calculate Client Acquisition Cost?
Add up everything you spent on sales and marketing in a set period, such as a quarter, and divide it by the number of new clients you won in that same period.
CAC = total sales and marketing costs ÷ number of new clients won
In the episode, the total is divided by the number of leads. That calculation gives you cost per lead. To get CAC, divide by the number of leads that became paying clients.
Costs to include:
- Advertising: Google Ads, Local Services Ads, social ads, print and radio
- Lead platforms: pay-per-lead services
- Software: CRM, email marketing, call tracking and estimating tools used in sales
- Website and SEO: hosting, maintenance, content and SEO work
- Labor and agency fees: your team’s sales and marketing time, plus any agency or freelancer fees
For example, a contractor who spends $10,000 on sales and marketing in a quarter and wins five new jobs has a CAC of $2,000. If each job brings in about $8,000 in profit, CAC is 25% of profit, inside Lane’s 20–30% range.
For architecture and engineering firms, where a single win can take months of pursuit work, it is often more useful to measure cost per win, including proposal and business development time.
Why Is CAC Often Higher Than It Should Be?
Many businesses overspend because they don’t understand where their leads are coming from — or worse, they don’t track it at all. Without attribution or a functioning CRM, it’s impossible to identify which campaigns are working. Poor website performance, misaligned ads, or an unclear sales funnel all contribute to rising CAC.
Lane sees the same mistake often with businesses running their own Google Ads: they set it and forget it. They pick a pre-made audience, set a daily budget and never review keywords, add negative keywords, set location targeting for their service area or send clicks to a landing page built to convert. Every step from ad to landing page to sales call needs to make sense.
How Can Contractors Lower CAC?
Reducing CAC starts with improving efficiency. Lane highlights tactics like better Google Ads optimization, refining SEO strategy, and improving website performance to ensure that every marketing dollar is pulling its weight. Clear attribution allows marketers to double down on what works and cut spend where it isn’t delivering results.
How Does Seasonality Affect CAC?
For many contractors, leads cost more in the off-season, and there are fewer of them. Lane uses structural repair as an example: winter leads are more expensive and lower in volume, so it may make sense to shift some ad budget into sales time or CRM features during the slow months, then move it back into ad spend in spring and summer when demand picks up.
What Role Do Attribution and CRM Play in Calculating CAC?
Without a CRM and proper tracking, you’re flying blind. Lane and Cameron stress the importance of tracking where leads come from, how they move through your pipeline, and whether they convert — data most contractors simply don’t have. A good CRM (like HubSpot) provides clarity, showing not just lead volume, but revenue impact by channel.
Attribution also makes it safe to test. If you try a new platform such as Facebook or Reddit ads and only get a couple of leads in a few months, the data tells you to pivot. And when every closed client is tied to the source that brought them in, you know what each channel is actually worth in revenue, not just in clicks.
Why Is Spreading Your Marketing Budget Too Thin a Problem?
Lane shares that a common mistake is running ads across too many platforms without the budget to make an impact on any of them. Others overspend on one platform (like Google Ads) without evaluating actual return. Instead, businesses should identify which channels consistently drive results and reallocate the budget accordingly.
It also helps to know what each channel is for. Paid search is pay to play: well-targeted ads can bring in leads quickly. SEO and content marketing work more like a long-term investment that builds authority and visibility over time. Watermark favors an omnichannel approach, but only with enough budget behind each channel to make a difference.
Why Does CAC Matter for Growth?
As the market fluctuates and costs rise, knowing your CAC gives you control over your growth. Understanding the cost per client allows you to set realistic revenue goals, scale your pipeline, and make data-backed decisions. It also helps identify when it’s time to invest more — or when to shift strategy entirely.
It also makes growth repeatable. If you’re getting six leads a month and you know what each client really costs, you can scale up the channels that work with confidence.
Key Takeaways
- CAC is your total sales and marketing cost divided by the number of new clients you win.
- For contractors, Lane recommends keeping CAC to about 20–30% of job profit.
- You can’t lower CAC without knowing where leads come from, so track every lead in a CRM.
- Put your budget behind the channels that consistently produce clients, not every platform at once.
- Plan for seasonality: shift budget when leads get more expensive in the off-season.
Don’t sleep on CAC. It’s one of the most important numbers in your business — and one that too many contractors ignore. With the right tools, systems, and strategy, you can lower acquisition costs, boost revenue, and scale smarter.
and subscribe to the Watermark Water Cooler for more practical marketing insights built for the construction and AEC industries.
Want help tracking and lowering your CAC? Explore our Inbound Marketing solutions.
Frequently Asked Questions
What is a good client acquisition cost for contractors?
Lane recommends keeping CAC to about 20–30% of the profit on a job. The right number depends on job size and how often clients return. A client who brings repeat work or referrals can justify a higher CAC on the first job, while one-time, low-margin jobs need a lower CAC.
What costs should be included in client acquisition cost?
Include every cost tied to winning new clients: advertising, pay-per-lead platforms, CRM and other sales software, website and SEO work, and the time your team spends on sales and marketing, plus any agency or freelancer fees. Leaving costs out makes CAC look lower than it really is.
What is the difference between CAC and cost per lead?
Cost per lead is what you spend to get one inquiry. CAC is what you spend to win one paying client. Because not every lead becomes a client, CAC is always higher. You can estimate it by dividing cost per lead by your close rate.
How does a CRM help lower client acquisition cost?
A CRM tracks where each lead came from, how it moved through your pipeline and whether it became a client. That shows which channels produce revenue, not just leads, so you can shift budget toward what works and cut spending that isn’t producing clients.
How often should you calculate CAC?
Quarterly works for most contractors and AEC firms, since sales cycles can run weeks or months. If you run active paid campaigns, check it monthly so you can catch a rising CAC early. Track it by channel as well as overall.
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