How it works
Add up what you spent on a channel in a month, such as Google Ads, local services ads, or a directory listing, then divide by the leads that came from it.
Example
If you spend $1,500 on search ads in a month and get 30 phone calls and 10 form leads, your cost per lead is $1,500 divided by 40, or $37.50. If only 20 of those were real prospects in your service area, the cost per qualified lead is $75. Numbers here are examples only.
What counts as a lead
This is where reports go wrong. Calls from job seekers, vendors, wrong numbers, or people outside your service area are not sales leads. Counting them makes a channel look cheaper than it is. Set a definition and stick to it, for example: a request for service from someone inside your service area, for a service you offer.
Why it matters for your business
Cost per lead tells you whether a channel is affordable, but it does not tell you whether it is profitable. Look at it with two other numbers:
- Lead-to-customer rate: how many leads you actually book
- Customer value: what a booked customer is worth to you over time
A cheap lead that never books is expensive. A pricey lead from a commercial account who stays for years may be a bargain.
To measure it, you need to track where leads come from. Call tracking numbers, form source fields, and a CRM that records the channel and the outcome give you a clean count. Phone calls are the hard part, because most roll-off and junk removal leads still call. Without tracking, you may credit the wrong channel and cut spending that works.
Common questions
What is a good cost per lead?
It depends on your market, job value, and close rate. Compare to your own margins instead of industry averages, which vary widely.
Is cost per lead the same as cost per acquisition?
No. Acquisition cost counts only the leads that became paying customers.
Should I include staff time?
For a full picture, yes. Many owners track ad spend first, then add management costs later.