CAC, or customer acquisition cost, is probably the single number that should govern the most marketing decisions at a home-services contractor, and the one fewest businesses actually calculate. It's simple to define: how much money it costs, on average, to win one new customer. If you invest two thousand dollars a month in ads, sales and an agency, and ten customers come out of it, each customer cost you two hundred dollars before they paid you a cent.
This calculator puts that number on the table and, more importantly, tells you how long it takes to recover it. Adjust your figures above and you'll see, in real time, your CAC, the gross profit the first job leaves, and the payback period in jobs and in months.
What CAC is and why almost nobody measures it right
The most common mistake is thinking of CAC as just the cost of ads. Real CAC includes everything you spend to acquire: the ad spend, the slice of salary for whoever does sales, the agency retainer, the acquisition tools. When you put all of that in and divide by the customers who actually come through, the number is usually a lot higher than most people imagine.
The second mistake is comparing CAC to the first job's revenue instead of its gross profit. If acquiring a customer costs two hundred dollars and the first job invoices three hundred and fifty, it looks like you're well ahead. But if your gross margin is 45%, that job only leaves about a hundred and fifty-eight dollars of gross profit, and the first job barely covers the cost of acquisition. That's why this calculator always works with margin, never revenue.
Why the payback period rules your cash flow
A high CAC doesn't sink a business; taking too long to recover it does. The payback period is the time (or number of jobs) until a customer's gross profit covers what it cost to acquire them. And it's, in practice, a direct measure of cash-flow health.
Picture two businesses with the same CAC of two hundred dollars. The first recovers that investment on the first job; the second takes four jobs spread over eight months. The first can reinvest its money almost immediately and grow fast without borrowing. The second is constantly fronting cash it doesn't recover until much later, and every extra dollar it puts into acquisition strains cash flow further. Same CAC, two radically different businesses.
That's why the rule of thumb we apply at Made For Builders is blunt: a healthy home-services business should recover CAC within the first one or two jobs. If your calculator shows three, four or more jobs, it doesn't mean the customer is bad, it means you have a cash leak worth closing, usually by raising margin, lowering acquisition cost or increasing the first job's value.
How to read the results
- CAC is the headline number: what each new customer costs you on average.
- Gross profit/first job is what the first job actually leaves after materials and direct costs. That's what competes against CAC, not the revenue.
- CAC recovered in (jobs) is the payback in number of jobs: how many of that customer's jobs you need to cover what it cost to acquire them.
- CAC recovered in (months) translates that payback into time, using your annual gross profit per customer spread over twelve months.
- Annual gross profit/customer is what that customer leaves over a year counting their repeat jobs: the base on which LTV is built.
The link to LTV: the full picture
CAC and payback answer "what does it cost and how fast do I recover it." But the other half is missing: "what is the customer worth in the end." That's the question LTV, customer lifetime value, answers, and it's the one that closes the loop. The classic unit-economics rule says LTV should be at least three times CAC; below that ratio, you're overpaying to acquire relative to what the customer leaves.
If this calculator showed you a comfortable payback, the natural next step is to work out your customer lifetime value (LTV), which applies the 3:1 rule and tells you the maximum CAC you can afford without losing money. The two tools together give you the complete unit economics of your business.
What to do with the number
If your payback came out long, there are three clear levers before touching spend. The first is margin: review pricing and direct costs so each job leaves more. The second is the first job's value: offer a more complete first visit or a plan that lifts the initial ticket. The third is CAC itself: improve the conversion of the leads you already pay for, so the same spend generates more customers and each one costs less.
The operations page explains how to build the system so all three levers move at once. And if you want to review your real numbers with someone who knows the trade, let's talk. Before that, take a look at the tools index: you've got margin, hourly-rate and LTV calculators that pair with this one.