The formula
Cost per lead = total cost of the source ÷ number of leads from it
Use the same period for both numbers. Count every cost of the source, not only the invoice: the ad spend and the agency fee, the list and the hours spent writing to it, the stand and the travel.
The cost per lead calculator works it out, along with cost per customer.
Three worked examples
The numbers below are made up to show the method. Put your own in the calculator.
| Source | Cost | Leads | Cost per lead |
|---|---|---|---|
| Search ads for a month | $1,500 spend + $500 management | 40 form enquiries | $50.00 |
| A list of 2,000 local businesses | $14 for the list + $600 of your time | 2,000 businesses to contact | $0.31 |
| A trade show | $4,000 stand, travel and time | 80 conversations | $50.00 |
The list looks a hundred and sixty times cheaper. It is not a fair comparison yet, because the three sources produce different kinds of lead.
What cost per lead leaves out
A form enquiry is a warm lead: someone asked. A row on a list is a cold lead: nobody has spoken to them. A trade show conversation is somewhere between. Cost per lead treats them as the same thing.
The fix is to carry the sum one step further, to the number of customers each source produced:
Cost per customer = total cost of the source ÷ customers won from it
| Source | Leads | Customers | Cost per customer |
|---|---|---|---|
| Search ads | 40 | 4 | $500 |
| List of 2,000 businesses | 2,000 | 6 | $102 |
| Trade show | 80 | 3 | $1,333 |
In this made-up case the list still wins, by five times and not by a hundred and sixty. With a weaker message or a poorer fit it could lose. That is the point: decide on cost per customer, and use cost per lead to see where in the chain the money goes.
How to lower it without fooling yourself
- Narrow the target. Leads that fit convert better, which lowers cost per customer even when cost per lead rises.
- Pay for the leads you will use. A list of one niche in the cities you serve wastes nothing; a national database mostly sits unused.
- Check before you buy. A count and sample rows tell you whether the leads are what you expect.
- Count your time. A free source that takes a week is not free.
- Compare like with like: cold with cold, warm with warm.
What a lead costs on a list
Lists here are priced per row: $7 per 1,000 rows with a $7 minimum, paid once, with no subscription. That is $0.70 per hundred businesses before your own time. The price for any niche and place is shown before you pay, on its page and in the lead finder. The pricing page has every fee.
Questions and answers
- How do you calculate cost per lead?
- Divide the total cost of a lead source over a period by the number of leads it produced in that period. If you spent $2,000 and got 40 leads, the cost per lead is $50.
- What is a good cost per lead?
- There is no single good number. A cost per lead is good when the leads convert to customers at a cost per customer below what a customer is worth to you. A $50 lead is cheap for a $20,000 contract and expensive for a $100 sale.
- What is the difference between cost per lead and cost per acquisition?
- Cost per lead counts everyone who became a lead. Cost per acquisition, or cost per customer, counts only those who bought. Cost per acquisition is always the higher number and the one to make decisions on.
- Is pay per lead the same as cost per lead?
- No. Pay per lead is a pricing model: a supplier charges you for each lead delivered. Cost per lead is a measurement you can apply to any source, including ones you pay for by the click, by the month or by the row.