Cost Per Acquisition for Contractors: Calculating True Marketing ROI
Cost per acquisition (CPA) is the total marketing spend required to win one paying customer. It's the single most important metric in contractor lead generation, and most contractors don't track it. They track cost per lead instead -- which is a misleading number that hides poor performance.
The formula: CPA = (Total Spend on Lead Source) / (Jobs Won from That Source). If you spent $500 on HomeAdvisor leads and won 2 jobs, your CPA is $250. If you spent $500 on pay-per-call and won 3 jobs, your CPA is $167. The second source costs 50% more per lead but produces 33% lower CPA.
Track CPA by source over at least 30-day windows. This requires knowing which leads came from which source (use call tracking numbers for different channels) and recording win/loss results. Most contractors who start tracking CPA by source discover they've been over-spending on low-performing channels and under-spending on high-performing ones.
Frequently Asked Questions
What is cost per acquisition for contractors?
CPA is the total marketing spend required to win one paying customer. It's calculated as total spend on a lead source divided by jobs won from that source. CPA is more meaningful than cost per lead.
How do I track CPA by lead source?
Assign unique phone numbers to each lead source (call tracking). Record which source each incoming call came from. Track which calls converted to won jobs. Divide total source spend by won jobs.
What is a good CPA for a home service contractor?
It depends on average job value. A roofing contractor with $12,000 average jobs can support a $300-400 CPA. An HVAC contractor with $4,000 average jobs targets $100-150. The key ratio is CPA relative to job value, not CPA in isolation.