Lead Cost vs CAC: The Number That Actually Tells You If You're Profitable

Most agents can tell you exactly what they pay per lead. Very few can tell you what a customer actually costs them. Those are two different numbers, and only one of them tells you if you're profitable.

If you're going to fix one metric in your business this quarter, fix this one.

Lead cost vs CAC — the difference

Lead cost is what you pay for a single lead. $5 for an aged internet lead. $28 for a direct mail card. $45 for a TV live transfer. It's the sticker on the shelf.

CAC (customer acquisition cost) is what you actually paid to issue a policy. It's total lead spend divided by policies issued in that same window.

CAC = Total lead spend ÷ Policies issued

Lead cost is a vanity metric. CAC is the scoreboard.

Why lead cost lies to you

Two agents can have wildly different results on the same $1,000 lead budget.

Agent A buys 200 shared internet leads at $5 each. Contact rate is 25%, close rate on contacted is 6%. That's 200 × 0.25 × 0.06 = 3 policies issued.

CAC = $1,000 ÷ 3 = $333 per issued policy.

Agent B takes 22 TV live transfers at $45 each. Contact rate is effectively 100%, close rate is 22%. That's 22 × 0.22 = ~5 policies issued.

CAC = $990 ÷ 5 = $198 per issued policy.

Agent A paid $5 a lead and Agent B paid $45 a lead. Agent B's CAC is 40% lower. The "expensive" leads were actually cheaper per sale.

That's why lead cost lies. It doesn't factor in contact rate, close rate, or the reality that some channels convert 5x better than others.

The real formula agents should run

You want three numbers on a whiteboard every Friday:

CAC = weekly lead spend ÷ policies issued this week
AP per sale = average annual premium of policies issued
Margin per sale = (AP × your first-year commission %) − CAC

Example on a typical final expense band, 100% first-year commission:

Average AP per sale: $900
Commission: 100% first year = $900
CAC: $198
Margin per sale: $702

Now you know if your lead channel is actually a business or a hobby. Results vary and no specific income is guaranteed, but the math is honest.

Channel-by-channel CAC ranges

Real ranges from what we see across TPG producers. Your numbers will move with skill, hours, and state mix.

| Channel | Typical lead cost | Contact rate | Close rate on contacted | Approx CAC | | --- | --- | --- | --- | --- | | Aged internet leads | $2 – $8 | 15 – 25% | 3 – 6% | $250 – $800 | | Fresh shared internet leads | $12 – $22 | 25 – 40% | 5 – 10% | $200 – $550 | | Fresh exclusive internet leads | $20 – $35 | 30 – 50% | 10 – 18% | $150 – $400 | | Direct mail (exclusive) | $25 – $40 | 35 – 55% | 12 – 20% | $150 – $350 | | TV live transfers | $40 – $90 | 90%+ | 18 – 28% | $180 – $400 |

Notice something. The cheapest lead channel has the highest CAC in most cases. The most expensive lead channel has one of the lowest.

The reason is simple: contact rate and warmth matter more than sticker price.

Where new agents burn cash

The two biggest CAC killers we see:

1. Chasing cheap leads to "learn." Aged leads at $3 feel safe because the sunk cost per lead is small. But at a 4% close rate on contacted, you'll grind through 300 leads to issue 6 policies. That's not learning. That's punishment. New agents learn faster on warm calls, which means live transfers or fresh exclusive leads are usually the better teacher, even at a higher lead cost.

2. Ignoring speed to lead. On any internet lead, contact rate collapses if you don't dial within minutes. An agent who dials in 2 minutes has roughly 3-5x the contact rate of an agent who dials in 2 hours. Same lead, different CAC.

How to actually lower your CAC

You have four levers. In order of impact:

Raise your close rate. A jump from 12% to 18% on the same lead flow cuts CAC by a third. Role-play, script mastery, and objection handling move this number faster than switching channels.
Fix your contact rate. Answer live transfers on the first ring. Dial internet leads inside 5 minutes. Text before you call. Contact rate is often the difference between a $200 CAC and a $500 CAC on the same leads.
Upgrade lead warmth, not lead volume. More cheap leads doesn't fix a CAC problem. Warmer leads do.
Cut waste. Stop buying channels you've never converted. Track CAC by source. Kill the losers.

Weekly CAC scorecard

Steal this. Track it every Friday.

Week of ______
Lead spend this week:       $______
Policies issued this week:  ______
CAC this week:              $______
Average AP:                 $______
Margin per sale:            $______

Five numbers, five minutes. Do this for four weeks in a row and you'll know more about your business than 90% of agents in this industry.

The bottom line

Stop shopping for cheap leads. Start shopping for a low CAC. They're not the same thing, and the agents who understand the difference are the ones building real books of business instead of just burning through lead budgets.

If you want to see how the channels stack up on cost and conversion, read live transfer vs direct mail vs internet leads and the full breakdown of final expense lead costs.