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. Most never answer, and of the ones who do, only a fraction ever fits a plan. On a typical week, that budget produces a small handful of issued policies.

CAC on that budget usually lands in the hundreds of dollars per issued policy, sometimes higher.

Agent B takes 22 TV live transfers at $45 each. Every call is a real consumer already asking about coverage, so the conversation actually happens. A similar budget tends to produce more issued policies than the shared-lead run above.

CAC per issued policy is materially lower on this channel for most experienced agents who work the calls in real time.

Agent A paid $5 a lead and Agent B paid $45 a lead. On CAC, the "expensive" leads are frequently cheaper per sale.

That's why lead cost lies. It doesn't factor in whether the prospect answers, whether the conversation happens, or the reality that some channels convert meaningfully 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 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	Frequently among the lowest CAC per issued policy

Notice something. The cheapest lead channel is often the most expensive per issued policy. The channels with the highest sticker price frequently produce the lowest CAC.

The reason is simple: warmth and whether the conversation actually happens 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 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.