How to Calculate a Break-Even Cost per Lead

Define the stage before the formula

Choose whether the denominator is all delivered inquiries, qualified inquiries, or estimates. Then use the close rate for that same stage. Mixing a qualified-estimate close rate with all raw form submissions overstates the value of a lead. Deduplicate repeat contacts and choose a period long enough for the selected work to close.

Work through an illustrative scenario

Suppose a completed job produces $1,000 after direct delivery costs, and 20% of qualified inquiries become completed jobs. The expected contribution per qualified inquiry is $200: $1,000 multiplied by 0.20. That is before overhead, agency fees, and desired profit. A $200 media cost per qualified inquiry would consume that contribution, so it is not a sensible profit target by itself.

Test uncertainty before committing

Run lower and higher close-rate cases, include cancellations, and account for the delay between inquiry and payment. For recurring work, use an observed retention period instead of an unlimited lifetime assumption. Keep one-time setup costs separate but visible. Recalculate when pricing, crew costs, service mix, or qualification criteria change.

A working decision record

What to check before calling the work complete

1. Use contribution rather than gross revenue alone.
2. Match close rate to the lead stage.
3. Include overhead and desired profit separately.
4. Save the assumptions with the calculation.

A practical question

Sources and further reading

Platform behavior can change. These primary sources explain the relevant product or search requirements; the working review process above is Modern Apex's practical guidance.

Use this with the rest of your plan