What can you afford to pay for a lead?
Put in four numbers you already know. The receipt works out the most you can pay for one lead, then stamps what you pay now as under, tight or over.
Safety cushion and monthly budget
ES STUDIOS SUPPLYOne job, worked backwards
- Average job$8,000
- Job costs (70%)-$5,600
- Gross profit per job$2,400
- Leads to win 1 job (25%)÷ 4
- Safety cushion (20%)-$120
- Safe working target$480
- What you pay now$200
Break-even = gross profit per job × close rate. Before overhead, tax and your wage.
UnderYour month at $4,000.
This puts the same budget next to two lead prices, what you pay now and your safe target, using only the numbers you typed in.
At $200 a lead you're under your safe target, so you have room to spend more.
Paying $200 a lead
- Leads
- 20
- Jobs won
- 5
- Gross profit
- $12,000
- After ad spend
- $8,000
At your safe $480 target
- Leads
- 8.3
- Jobs won
- 2.1
- Gross profit
- $5,000
- After ad spend
- $1,000
Take it to your next ad meeting.
The Maximum Cost Per Lead Planner: your receipt on paper, a 4-scenario table, and a weekly tracking sheet so you can tell the agency (or yourself) exactly what a lead is allowed to cost.
- The formula, with your numbers filled in
- What changes if your close rate moves 5 points
- A weekly sheet: spend, leads, booked, sold, profit
Questions
What is gross margin here?
What's left of the job price after materials, subcontractors and direct labour. Use the number your accountant uses for job profit.
Why a safety cushion?
Break-even leaves nothing for overhead, a slow month or your own wage. The cushion lowers the number you work to. You choose how big.
Are these industry averages?
No. The starting numbers are an example so the receipt prints on first load. Replace them with yours.