What is a lead actually worth?
Work out gross profit per lead for each job type, the most you can pay for a lead, and whether your current cost per lead is making or losing money.
Your job types
Enter each kind of job separately. Averages across job types hide which leads are worth buying. Figures stay in your browser.
| Job type | Avg job value ($) | Gross margin (%) | Close rate (%) | Current cost per lead ($) |
|---|
Results
| Job type | Profit per lead = break-even CPL | Target CPL | Current CPL | Verdict |
|---|
Gross profit per lead = average job value × gross margin × close rate. Break-even is the most you can pay for a lead without losing money on the first job. The target keeps the share of profit you chose above. Repeat business and referrals are not included, which keeps the numbers conservative.
Why cost per lead misleads
A blended cost-per-lead figure rewards buying cheap leads, which are usually small jobs. A campaign can report falling cost per lead while profit falls, simply by shifting toward low-value work. Calculating value per lead by job type shows which leads you can afford to pay more for, and which cheap ones are barely breaking even.
Where to find your numbers
Average job value and margin come from your job management or accounting system. Close rate is booked jobs divided by leads for that job type, ideally by channel, because purchased leads usually close at a lower rate than direct enquiries. Review the numbers at least twice a year, and after any price change.
We walk through worked examples in what a garage door lead should cost and restoration lead costs.
Frequently asked questions
How do I calculate the value of a lead?
Multiply the average job value by your gross margin and by your close rate for that job type. The result is the gross profit a typical lead produces, and the most you can pay for it without losing money on the first job.
What is a good cost per lead?
One well below the break-even figure for that job type. A common target keeps 60 to 80 percent of the profit per lead, which leaves room for overheads and variance.
Should I include repeat business?
Only if you have data showing how often customers return. This calculator leaves it out, so its figures are conservative.
Why calculate by job type?
Because job values differ widely. A blended average pushes budget toward cheap, low-value leads and hides which campaigns are actually profitable.
Related reading
- What a garage door lead should cost
- Restoration lead costs, and why one number is useless
- PPC & paid lead generation
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