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.
The example below is hypothetical. It uses assumed inputs to show how the arithmetic works, not TPG results, and it does not predict what any channel will produce for you.
Agent A buys 200 shared internet leads at $5 each. Assume, for the illustration only, some percentage of those leads answer and some smaller percentage fit a plan. Whatever those two assumed percentages are, they are what set Agent A's CAC. Change either assumption and the CAC changes with it.
Agent B takes 22 TV live transfers at $45 each. The call is consumer-initiated, so the contact assumption in the model is different, while the number of paid opportunities in the same budget is much smaller.
Agent A paid $5 a lead and Agent B paid $45 a lead. The point of the comparison is that lead price alone tells you nothing, because it says nothing about contact rate or close rate. Which side comes out ahead depends entirely on the inputs you actually measure in your own book.
That's why lead cost is an incomplete metric on its own. It doesn't factor in whether the prospect answers, whether the conversation happens, or how those rates differ across channels for a given agent.
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 with a first-year commission structure:
- Illustrative average AP per sale: $900
- Commission: 100% first year = $900
- CAC (illustrative): a few hundred dollars per issued policy
- Margin per sale is the piece that decides whether a channel is a business
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 | Warmth and contactability | Approx CAC |
|---|---|---|---|
| Aged internet leads | $2 – $8 | Cold, many never answer | Often the highest CAC of any channel |
| Fresh shared internet leads | $12 – $22 | Cold and competitive | High CAC, very speed-to-lead dependent |
| Fresh exclusive internet leads | $20 – $35 | Warmer, only you have them | Moderate CAC |
| Direct mail (exclusive) | $25 – $40 | Warm, prospect raised a hand | Moderate CAC |
| TV live transfers | $40 – $90 | Consumer-initiated live phone conversation | Depends on your contact and close rates; measure it |
Notice something. Sticker price and CAC are two different numbers, and a low lead price does not by itself make a channel cheap per issued policy.
The reason is simple: warmth and whether the conversation actually happens affect CAC as much as sticker price does. Run the numbers on your own production before drawing a conclusion about any channel.
Where new agents burn cash
The two biggest CAC killers we see:
1. Chasing cheap leads to "learn." Aged leads at a few dollars each feel safe because the sunk cost per lead is small. In practice, most never pick up and very few of the ones who do fit a plan, so agents grind through hundreds of leads to issue a handful of 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, the chance a prospect ever picks up drops sharply the longer you wait. An agent who dials within a couple of minutes reaches meaningfully more prospects than one who dials hours later. Same lead, very different CAC.
How to actually lower your CAC
You have four levers. In order of impact:
- Raise your close rate. A modest improvement in close rate on the same lead flow can cut CAC meaningfully. Role-play, script mastery, and objection handling move this number faster than switching channels.
- Fix your contactability. Answer live transfers on the first ring. Dial internet leads within minutes. Text before you call. Whether the conversation happens is often the difference between a low CAC and a high one 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.
