What is a good cost per lead?
A good cost per lead is any number below what a lead is worth to you. There is no universal figure - $5 is terrible for one business and a bargain for another. Work out your own number and you can stop guessing.
Why the number you read online is useless
A lead for a $40 haircut and a lead for a $6,000 kitchen cannot have the same good price. Anyone quoting one figure for everybody is quoting it for somebody else's business.
Work out yours in two minutes
Three numbers, in this order:
- What one customer is worth: what they spend × how many times they come back
- How many leads it takes to get one customer: if one in five buys, that is five
- Divide: a $360 customer, five leads per sale, means a lead is worth about $72 to you
What that means for your ads
In that example, paying $20 a lead is good and paying $90 is not. The figure is yours, it is specific, and it settles arguments about ads that otherwise run forever.
The trap: cheap leads that never buy
Cost per lead falls when you ask for less. Give away something everybody wants and leads get cheap and worthless. Judge the cost per sale too, or you will optimise your way into a full inbox and an empty till.
Where the whole thing is taught
Ads That Pay For Themselves is the step by step: the offer, the three ads, the numbers, and what to do when one of them stops working.
See what is inside