Sales do not always equal profitability. You probably know the number of sales you had this week, but do you know how much those sales cost you? If the cost was more than the sales amount, then you aren’t profitable.

Tracking the sale cost or Cost Per Acquisition (CPA) is how you find out if you’re profitable. Knowing how to calculate your CPA is very important to the success of your business. By analyzing these numbers, you can figure out how to improve your profitability. 

Cost Per Acquisition (CPA) 

The calculation of the cost to convert a lead or a prospect into a client. 

Lead Costs 

Find out how much it costs for each step of the lead generation process. This applies whether your leads are generated from the Internet, telemarketing, or other sources.

There are two ways you can increase your profitability: by reducing your cost per lead or increasing your appointment and closing ratio. If you can do both, even better for your profitability! 

Maximize Your Marketing

When you calculate your CPA for each marketing campaign, you can find ways to budget better and focus your money on what is working. 

Purchased Leads Sample Costs 

Here is an example from Senior Marketing Specialists on some campaign costs. Your costs may be different depending on your circumstances. 


Campaign Cost 


Total Leads Generated = 15 (1.5% return) 

Cost Per Lead $32 

Total Appointments Generated = 6 

Cost Per Appointment $80 

Total Sales = 2 

Cost Per Sale $240

(You can also add your time to the calculating CPA of purchased leads for an even more accurate cost. That includes time spent reviewing the leads, reaching out, following up, updating CRM records, etc. See below for more information on how to calculate your own hourly rate.)

Thoughts to Consider 

Mailers are a low-cost method but take more work and time, both for the mailing to go out and for you to receive your lead cards. Once you receive your lead cards, you must still contact the lead and set the appointment. 

How Low Cost Leads May Equal High CPA 

Sample CPA for individual leads 

Lead Cost 

$12 per lead

10% Appointment Conversion 

$120 per appointment 20% 

Appointment to Sale (Close Ratio) 

$600 per sale (50 Leads) 

Thoughts to Consider 

With low-quality leads, you need more quantity. To convert 10% of your leads to appointments, you would need 10 leads for each appointment.  For a 20% conversion of appointments to actual sales, you would need 5 appointments for every sale or 50 leads per sale. 

$15 per lead = $150 Per Appointment 

$750 Per Sale 

$20 Per Lead = $200 Per Appointment 

$1,000 Per Sale

(Example courtesy of Senior Marketing Specialists) 

Cost of Your Time

For agents who are generating their own leads, remember to factor in the cost of your time.  

Campaign Cost Per Hour 

$40 (your hourly rate) 

Total Leads Generated = 1 Per Hour 

Cost Per Lead $40 

Total Appointment Conversion = 20% (5 hours = 1 Appointment) 

Cost Per Appointment 


Total Sales = 1 (5 Appointments) 

Cost Per Sale 

$1,000 worth of your time (25 hours)

How to Calculate Your Rate  

In 2022, there are 260 working days or 2080 working hours. To find your hourly rate, take your annual income and divide it by day or hour.  

Cost of Referrals 

Getting referrals is a great way of getting qualified leads. Referrals have the lowest CPA and the highest closing ratio of any leads. You’ve been recommended to a person who is now reaching out to you directly. This increases the likelihood they will enroll with you. 

Remember, referrals may not have an upfront cost but they are not free. They are a result of an effective retention plan that builds a strong relationship with your clients who remember and recommend you.  

The cost of retaining customers is generally 5x less than it costs to acquire a new customer. Review your retention plan and talk with your General Agent or FMO about ways you can improve this. 

Steps for Reviewing Your Profitability     

Calculate your CPA 

  1. Write down the overall cost of the campaign (expenses and your time) 
  2. Divide by the number of appointments 
  3. Divide by the number of sales 
  4. Write down the answer 

Answer these Questions

  • What can you do to reduce your costs / increase your ratios? 
  • What marketing campaigns are costing you the most?
  • Which campaigns are the most profitable? 
  • Which campaigns are right for you?  

Review Your Retention Process 

What are you doing to retain your current clients and increase your referrals? Review your process or create one to build on.  

How is your profitability? Do you do a regular analysis of your CPA? 

If you found this helpful, let us know in the comments below. Also, let us know what you want to learn more about to grow your book of business. 

Join our team! If you are a Medicare agent and have questions about Sales or Medicare, call Arnie Fulmer at 702-820-3133. Arnie Fulmer is a Senior Market Advisor and the principal owner of Fulmer Insurance Group, a Medicare Brokerage Agency located in Las Vegas and licensed in multiple states. 

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