Measuring Revenue
Average Contract Value
Also known as: ACV, average project value, average job value by source
Definition
Average contract value is the average signed contract amount over a period, ideally broken out by lead source. For custom home builders it reveals which marketing channels bring larger, more profitable homes: two channels can produce the same number of leads at the same cost and very different revenue.
For custom home builders
Cost per lead treats every lead as equal. Contract value shows they are not. A channel that brings buyers for $800,000 homes and one that brings buyers for $2 million homes may look identical in a lead report. Tracking average contract value of closed deals by channel, and comparing marketing-generated contracts with referrals, shows where the bigger projects really come from.
It also explains why a cheaper lead that closes smaller is not automatically a win. Paired with customer acquisition cost, average contract value tells a builder which channels to fund and which price band their website and ads are actually attracting.
How to measure and improve it
- Record the signed contract value on every won deal.
- Group signed contracts by original lead source.
- Compare average value by channel and against referrals.
- Review alongside CAC and gross profit per home.
- Check that messaging matches the price band you want; content aimed at one budget can repel another.
Frequently asked questions
Why should builders track contract value by lead source?
Because channels differ in the size of project they bring, not just the number of leads. Comparing average signed contract value by source shows which channels deserve more budget.
Is a lower cost per lead always better?
No. A cheaper lead that signs a smaller project can be worth less than a more expensive lead that signs a larger one. Compare channels on cost per signed contract and contract value together.
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