How to Calculate LTGP to CAC for Your Estate Planning Firm

The one number that tells you whether your marketing is actually making you money. Calculator included.

Most estate planning firms judge their marketing on cost per lead. Some move up to cost per client. Both can fool you. This page gives you the number that can't, your lifetime gross profit to customer acquisition cost ratio, and a calculator that does the math in about a minute.

Why cost per lead lies to you

When cheaper leads become the goal, your marketing starts finding the people who were never going to hire you. Cheap traffic is cheap for a reason. Here is the trap in numbers. Channel A produces leads at 50 dollars and closes 5 percent of them, so a signed client costs 1,000 dollars. Channel B produces leads at 150 dollars and closes 30 percent, so a signed client costs 500 dollars. Cost per lead says Channel A is three times better. Reality says Channel B is twice as good. Any firm judging on cost per lead will move budget toward the channel producing junk.

Cost per client is better. It still misses.

Cost per client fixes the lead quality problem, but it treats every client as equal. They are not. A 1,200 dollar will client and a 3,500 dollar trust client show up as the same win on that scoreboard. Push cost per client down hard enough and you fill your calendar with the smallest matters while the bigger work goes somewhere else.

What LTGP actually means

LTGP is lifetime gross profit. All the profit one client relationship brings you over time. The initial plan, the amendments, the reviews, and the work that comes back to the firm years later. Gross profit means revenue minus what it costs you to deliver the work. It is not net profit, and it is definitely not just the first invoice.

What counts as CAC

CAC is your customer acquisition cost, fully loaded. Ad spend, agency fees, marketing software, and the paid time your team spends on intake and follow up. Divide everything it takes to sign new clients in a month by the number of clients your marketing signed that month. If you only count ad spend, you are flattering yourself.

A worked example

Say your average plan fee is 3,500 dollars and the full relationship is worth about 6,000 dollars in revenue over the years. At a 70 percent gross margin, that is 4,200 dollars of lifetime gross profit per client. If it costs 1,000 dollars to sign that client, you are at 4.2 to 1. Every marketing dollar returns about four over the life of that client. A healthy business wants at least 3 to 1. These are illustration numbers. Plug your own into the calculator above.

The estate planning advantage

Here is what makes this niche unusual. In most industries, lifetime value shows up slowly and firms wait months to recover acquisition costs. In estate planning, the initial plan fee alone usually covers acquisition on day one. In the example above, the first matter returns 2,450 dollars in gross profit against a 1,000 dollar acquisition cost. Everything after that, the amendments, the reviews, the later work, is pure compounding. If your ratio is healthy, hesitating on marketing spend is costing you money.

How to actually use this number

Do not try to steer your day to day marketing with it. A boutique firm signs a handful of clients a month, which is too little data to react to weekly, and this month's spend often signs clients months from now. So run two layers. Steer the machine on qualified consults, the number with enough volume to optimize against. Judge the machine on LTGP to CAC, quarterly, by channel. And score it by cohort. Clients signed from January's spend, not clients signed in January. Cost per lead and conversion rate still matter as signals that tell you where the machine is leaking. They just do not get to be the scoreboard.

FAQ

Estimates are for planning purposes. Every firm's numbers are different.