Selling and Marketing Cost Efficiency

Selling and marketing costs in construction and renovation include advertising, sales team pay, marketing contractors, software services and communications. To manage these costs, you need to understand how much it costs to acquire customers, how much margin those customers generate and when cash comes in.

Efficiency involves more than cutting costs. You need to understand customer acquisition costs, the potential to scale a channel and the reasons for losses between an enquiry, a contract and a payment. More leads alone do not necessarily mean higher profit or a larger cash balance.

We will look at the costs to include, metric formulas and calculation rules for a project cycle. We will then consider how to account for company and project expenses. Links to other 101 articles provide more detail on individual topics.

What to include in selling and marketing costs

In this article, selling and marketing costs are a management reporting category for customer acquisition and sales expenses. Agree within your company which costs it includes: advertising budgets, sales staff, agencies, content production, software services and commissions. Keep this methodology distinct from formal financial or tax accounting rules, which depend on the country and the standards that apply. For more on the costs to include, see selling expenses: what they are and how to account for them (in Russian).

Hypothetical example: a company has three projects underway and receives more enquiries, but two months later it cannot cover salaries and rent. A review finds that advertising was charged to one project, sales staff pay was allocated without a consistent rule and software services were put under “other expenses”. This grouping makes projects harder to compare; the timing of receipts and payments also needs a separate review.

Separate the costs of delivering a specific project from the company’s sales and administrative expenses. Materials and subcontracting for a project usually belong to that project; it is useful to identify company advertising, CRM, telephone services and sales team pay separately. Classify borderline costs, such as a commission on a particular deal, according to your agreed methodology. You can allocate shared costs to projects if the allocation basis is consistent, understandable and avoids double counting. For another category of costs, see what administrative expenses include and how to keep them under control.

Measuring efficiency: metrics that connect advertising with financial results

A channel may generate inexpensive enquiries but few suitable customers. In a long sales cycle, advertising, site measurements and estimating costs arise before the contract and payment. Compare channels using the same definitions, cost scope and level of data maturity.

Use several metrics: cost per lead, cost per new customer, conversion rate, the advertising cost ratio and margin. The advertising cost ratio, known as DRR, is defined in the Yandex Direct glossary (in Russian), and CAC is defined in the HubSpot glossary. For more from 101, see DRR in marketing and other performance metrics (in Russian).

Hypothetical example for a single group of enquiries: advertising generated 120 leads at RUB 900 each, costing 120 × 900 = RUB 108,000. By the review date, 6 distinct enquiries in this group had each resulted in one contract: the lead-to-contract conversion rate is 6 / 120 × 100% = 5%, and advertising spend per contract is 108,000 / 6 = RUB 18,000. This is not yet the full CAC: a contract does not necessarily represent a new customer, and sales staff costs and other acquisition costs are not included here.

• CPL, cost per lead = advertising spend for the selected group / number of leads in that group. Define in advance what counts as a lead and how duplicates are removed.
• CAC, customer acquisition cost = all acquisition expenses included in your methodology / number of new customers associated with those expenses. Include marketing and sales costs, the chosen observation period and the rule for allocating shared costs. A repeat contract with an existing customer does not increase the new customer count.
• DRR, the advertising cost ratio = advertising spend / associated revenue × 100%. Advertising costs are already included in full CAC, so do not add them again. DRR does not capture all expenses and does not, on its own, demonstrate profitability.
• Stage conversion rate = number of enquiries in one group that reach the next stage / number of enquiries in that group at the previous stage × 100%. For an example stage structure, see the sales funnel in construction and renovation.
• Gross margin in monetary terms = revenue minus the cost of delivering the work under your chosen methodology; gross margin percentage = that margin / revenue × 100%. A comparison with CAC requires margin in monetary terms for the same customer over a stated period, or the total margin for the same customer cohort. Do not compare a margin percentage directly with a CAC amount.

Document a short metric matrix: each metric’s formula, data source, units, cost scope, period, owner and review frequency. Channel attribution also needs a consistent rule, such as the first enquiry source or the last meaningful touchpoint. Use the same rule across the channels you compare. If the denominator is zero, do not calculate the metric: state that it is undefined because its denominator is zero. Do not report a zero acquisition cost.

How to measure performance from lead to payment

Distinguish three figures: the value of signed contracts, revenue from work performed under your accounting methodology, and actual cash receipts. They may fall on different dates. A contract sets out the parties’ obligations, revenue reflects the recognised result of performance, and payments reflect cash movements. Your revenue recognition methodology must comply with the rules applicable to your company; signing a contract does not mean that you have received its full value.

Hypothetical example: a contract is signed for RUB 1,800,000, the first payment is RUB 200,000 and the remaining payments are scheduled over three months. Do not record the full contract price as cash already received. For financial planning, track work schedules, revenue recognition, expected cash receipts and the company’s mandatory payments separately.

For a long sales cycle, use a cohort: a group of customers or enquiries with a shared characteristic. For example, track enquiries first received from a particular channel in January through to contracts and payments in later months. Do not automatically divide January’s advertising spend by all contracts signed in January: some of those contracts may have originated from earlier enquiries.

1. Record the channels, attribution rule, enquiry cohort, reporting date and observation period. Mark the data as preliminary for sales that have not yet completed.
2. Collect acquisition expenses for this cohort: advertising, agency fees, content production, software services, commissions and the allocated share of sales staff costs. Disclose what is included and how shared expenses are allocated.
3. Link new customers and contracts to the cohort. Show contract value, recognised revenue, planned margin and actual margin separately; keep these figures distinct.
4. Calculate receipts from these customers, expected payments and overdue receivables as of the reporting date. Compare them with the schedule of mandatory outgoings.
5. Compare margin in monetary terms with acquisition expenses for the same cohort and period, or compare margin and CAC per customer. If margin covers acquisition costs, this does not yet demonstrate company net profit: other expenses and risks remain. For more on the comparison basis, see gross margin in the HubSpot glossary.

If you have many leads but few contracts, check both enquiry quality and the sales team’s work: response speed, qualification and the next step. A single conversion rate is not enough to blame a channel or a salesperson. See also why sales teams lose leads (in Russian) and 7 sales techniques for project businesses (in Russian).

How to manage selling and marketing costs without guesswork

Managing selling and marketing costs requires rules: which hypotheses you test, how much you are prepared to spend on acquisition, who handles enquiries and which data drive budget changes. Your threshold should take account of margin, cycle length and cash reserves.

Hypothetical example: after an advertising budget increase, the sales team could not handle the volume, the share of missed enquiries rose and conversion fell. This is a reason to check workload and response speed, but it does not prove that traffic quality stayed the same. Compare the mix of enquiries, their sources and work at each stage before changing the budget.

Set out a few management rules.

• A CAC or DRR threshold: if it is exceeded, pause scaling until you have checked the causes, data maturity and chosen calculation basis.
• One funnel owner: marketing and sales agree definitions and review results together.
• Regular reviews: examine enquiries, response speed, conversion, contracts, margin and payments. Choose a frequency that reflects the cycle length; do not change the budget because of one unrepresentative day.

Clear stages, a defined next step and a record of agreed terms can help improve sales. For one approach, see SPIN selling in renovation and construction (in Russian).

How to account for selling and marketing costs without distorting project results

Create separate expense categories for selling and marketing costs and keep them linked to channels, customers and projects. Show project results before and after shared cost allocation if you use it. Separating expenses alone does not guarantee an accurate report: you also need complete data, a consistent methodology and no double counting.

Hypothetical example: all advertising and a salesperson’s pay were charged to one project, while none were charged to another. The first project looks worse because of the chosen allocation, although delivery performance may be comparable. Check the methodology before judging the team’s results.

Compare the cash flow statement, the profit and loss statement and the balance sheet. The first helps you examine receipts and payments; the second shows income, expenses and profit; the third shows assets, liabilities and equity at a particular date. For more detail, see how to set up a business analytics system in a construction company (in Russian).

How 101 helps you keep selling and marketing costs under control

In 101, you can track money by project. The Company Fund is available for company expenses that do not belong to a specific project. Choosing an accounting approach still requires an agreed methodology: having a tool does not replace classifying expenses or checking data completeness.

For example, you can identify advertising, office and communications expenses in company records while keeping them connected to sales for analysis. The Fund’s purpose is explained in the Company Fund Help article (in Russian). Check availability against the current plan comparison and user permissions (in Russian): this article does not establish that the feature is exclusive to a single plan. For other tools, see five 101 features for assessing business performance.

Recording the source of an enquiry helps you compare acquisition costs with subsequent contracts and cash flows. For this analysis, agree customer and project identifiers, attribution rules and the costs to include in advance. The presence of CRM and project accounting alone does not establish that full CAC or DRR analytics are already calculated automatically.

During a product demonstration, you can clarify how to organise records for your sales model, which features are available on the current plan and which data your chosen calculations require.