How Much Can You Afford to Pay for a Qualified Lead?

The number you need comes from the economics of your business. Start with the contribution from a typical sale after the direct costs of fulfilling it. Decide how much of that contribution you can spend to win a customer while leaving enough for overhead and profit. That amount is your working customer acquisition allowance.

Work backward from a win

Take an illustrative installation business with $2,000 of contribution per completed job. Its owner allows $600 per new customer for acquisition. If one in five genuinely qualified inquiries becomes a paying customer, the most that acquisition budget can support per qualified inquiry is $120. The arithmetic is $600 multiplied by 0.20.

That ceiling is for everything included in the acquisition allowance. If the business also pays management fees, commissions or appointment setting costs from that same allowance, reserve room for them before declaring $120 an acceptable media cost. A raw form submission has a different value. If only half of forms qualify in this example, the corresponding ceiling for a raw submission is $60 before those other costs.

Use a close rate that has had time to mature

Ask sales to count unique inquiries from a past period and follow them through to a consistent end point. A new inquiry waiting on a proposal has not yet had the same chance to close as an inquiry from last quarter. Exclude repeat submissions that would count the same buyer twice.

Run a second calculation with a more conservative close rate or lower contribution. If the campaign only works under your most optimistic assumptions, know that before scaling. Track actual spend and actual contribution as jobs complete. The calculation gives a budget decision a starting point, and the results tell you whether that starting point matches your business.

Put this into practice

Bring your current campaign, website, or lead follow up process. We can help you choose which part of the work to hand off first.

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