How Much Are Leads Worth? Contractor Lead Costs and What a Lead Is Worth to You

Search this question and you will find pages full of confident price ranges. Nearly all of them are averages assembled across trades, job sizes, seasons and parts of the country, and none of them tell you what a lead costs you.

Here is the more useful version: how to work out what a lead is worth to you, then how to calculate what you are actually paying per lead and per job in every channel you use, so you can compare them against each other on one honest basis.

How much are leads worth? Work out what a lead is worth to you

This is the question to answer before you look at any price, because it tells you the most you could ever pay for a lead and still break even. It takes two numbers you can pull from your own jobs.

Average gross profit per job. What a typical job of this type leaves behind after materials, subcontractors and the labour it used. Not the invoice total.

Win rate. Out of every ten enquiries of this type, how many become paying work.

Multiply them. That is what one lead is worth to your business. As a made-up illustration (use your own figures, not these): if a job of a given type typically leaves $600 of gross profit and you win three leads in ten, each lead is worth $180 to you. Pay $180 and you have worked for free. Pay anything above it and every job from that channel costs you money.

Three things fall out of doing this honestly.

Every job type has its own number. A no-heat call in January, a drain cleaning and a full replacement have different profits and different win rates, so they produce different lead values. Averaging them hides the channel that is quietly losing money on the small jobs.

The win rate moves the answer as much as the profit does. A lead you win half the time is worth far more than the same job sold to four contractors, where you might win one in five. That is why a shared lead and a call from your own listing can carry the same job and still be worth very different amounts.

Break-even is the ceiling, not the target. The lead value is the most you could pay. What you should accept is a share of it, set by the threshold further down this page, so each job still leaves you the profit it was supposed to.

Why the published numbers are not much help

Three reasons, and each one is enough on its own.

A lead is not one product. An after-hours no-heat call in January and a planned bathroom remodel are different transactions with different values, different urgency and different competition. Platforms price them differently, and so should you when you evaluate them.

Local competition sets the price. Lead marketplaces are an auction. What the same enquiry costs in a dense suburban market and a rural county an hour away is not the same number, because the number of contractors bidding is not the same.

The headline price is not the price. The figure that matters includes everything you paid, spread across only the enquiries that produced work. Subscriptions, memberships, the leads that were out of your area, the ones that never answered the phone, the ones that were already booked. All of that is part of what your won jobs cost.

The calculation, for any channel

The same three lines work for a lead platform, for ads, for your website, and for a van wrap. That is the point of doing it this way: one test that lets you compare things that are usually argued about separately.

1. Total cost of the channel, over a period. Three months is a reasonable window. Include the fixed part as well as the variable part. For a website, that is the build cost spread over its useful life plus hosting and the domain. For a lead platform, subscription plus per-lead charges. For ads, the ad spend plus anything you pay someone to run them.

2. Leads it produced, meaning enquiries from real potential customers. Not impressions, not clicks, not calls from suppliers.

3. Jobs it produced, and the gross profit on those jobs. Gross profit, after materials, subs and the labour that job consumed.

Now two divisions. Cost divided by leads gives cost per lead. Cost divided by jobs gives cost per job won, which is the one that matters, and it is always a bigger number than people expect because it carries every enquiry that went nowhere.

If you would rather not do it on paper, our free cost per lead calculator runs exactly this arithmetic, adds the break-even lead price and the ceiling you should be holding, and works entirely in your browser (no email field, nothing stored, and no prefilled average lead prices, for the reason given above).

The comparison that surprises people

Run it across every channel at once and something usually becomes obvious that was invisible while each was considered on its own.

Bought leads normally show a high cost per lead and a low win rate, because the enquiry was sold to several contractors and the customer is comparing. The two multiply together, so cost per job is high.

Leads from your own Google Business Profile and website normally show a much lower cost per lead and a much higher win rate, because the person searched, chose you, and called you specifically. They are frequently not comparing at all. The same enquiry is simply worth more when it arrives without three competitors attached.

That is not an argument that owned channels are free. They are not. It is an argument that comparing raw lead prices between a rented channel and an owned one is the wrong comparison, and the right one usually looks very different.

The shape of each channel's cost over time

This is the part that a single month's numbers hide entirely.

Bought leads have almost no setup cost and a cost that rises. You can start on Monday. The price per lead is set by an auction that gets more competitive as your market does, and you have no control over it.

Owned channels have a real setup cost and a cost that falls. A Google Business Profile is free and costs hours. A website costs money once and then very little, and every lead it produces after that divides the same fixed cost into a smaller share. In year one it can look expensive. In year three it is usually the cheapest thing in the business.

If you only ever look at this month, the first shape always wins, and you will keep renting demand forever. The decision only makes sense across a couple of years.

Setting your own threshold

Rather than asking whether a price sounds high, decide what share of a job's gross profit you are prepared to spend acquiring it. Pick the number once, for your business, based on what you need the job to leave behind.

Then every channel gets measured against that one figure, and the arguments stop. A channel that comes in under it can have more money. A channel that comes in over it is not a marketing expense, it is a subsidy.

Re-run it quarterly. Rented channels drift, quietly and always in the same direction.

What to do with the answer

If bought leads clear your threshold, keep them and build the owned channels in parallel while you can afford the patience. If they do not, do not cancel first: build first, then let the spend fall as the calls arrive.

Either way, the two things worth building are the same. The listing most local service searches are decided on, covered in Google Business Profile for contractors, and a site that converts a visitor into a call rather than sitting there looking respectable. If yours does not, why your website is not getting calls is the diagnosis and our free site check will list what is missing in about a minute, with no email address and nothing stored.

On the build side of it, what a small business website costs sets out the real range and what actually drives it, and the cheapest way to get a business website covers the honest low end, including the option of not paying anybody.

The full case for owning your demand instead of renting it, written for small service businesses rather than for marketers, is The Small Town Strategy.