Cost per lead is not the value of a lead
Cost per lead is what you pay the ad platform for one inquiry. The value of a lead is what one inquiry brings you on average, once you count how many leads actually buy.
That is why a €20 lead can be a bargain and a €5 lead can be too expensive. It depends on how many of them become customers and what those customers are worth. Judge every cost per lead against its value, not against what someone else pays.
The budget is leads needed times your cost per lead. Profit after ads is the profit from your new customers before ads, minus that budget. The target profit is counted as a share of sales, the same way as in our ROAS calculator.
Why speed and lead handling change the result
The share of leads that become customers is not fixed. It depends on how quickly someone replies, how the conversation goes and whether anyone follows up when the first call is not answered. Harvard Business Review wrote about this back in 2011: most companies reply to online inquiries far too slowly, and by then the person has often moved on.
A higher close rate makes every lead worth more. The same ads become more profitable and you can afford to pay more per lead, often without changing anything in the ads.
- Reply fast during working hours, by phone when the person left a number.
- Follow up more than once. Many people do not answer the first time.
- Write down which leads became customers. Without that you can only push for cheaper leads, not for better ones.
- Compare lead sources by cost per customer, not only by cost per lead. A form that is very easy to fill in can bring many contacts and few buyers.
Example
A service business where the average job is worth €300, the margin is 40% and one in five inquiries becomes a customer:
- One lead is worth €300 × 20% = €60 in sales.
- Without a loss it can pay up to €300 × 40% × 20% = €24 per lead.
- With a target profit of 15% of sales, the limit is €300 × (40% − 15%) × 20% = €15 per lead.
- For 10 new customers a month it needs 10 ÷ 20% = 50 leads. At €8 per lead that is a €400 budget, well under the limit.
- If faster replies lifted the close rate to 25%, one lead would be worth €75 and the limit without a loss would rise to €30.
These are the example values from the calculator above, not results of a real business.
FAQ
What is a good cost per lead?
Any cost per lead that stays under your limit and leaves the profit you planned. A cheap lead that never buys is expensive, and a pricey lead that often buys can be the best money you spend.
Should I count repeat purchases?
Count them if your customers really come back and you can see it in your records. This money arrives over months, while you pay for the ads now. If cash is tight, plan with the first purchase only.
I do not know how many leads become customers. What should I enter?
Look at your last 20 or 30 inquiries and count how many of them bought. If you have no history yet, enter a careful guess and correct it after the first month of ads.
Does this work for an online store?
In an online store the purchase itself is the result, so the ROAS calculator fits better. It shows the most you can pay per purchase and the ROAS you need for your profit goal.
Source on reply speed: Harvard Business Review, The Short Life of Online Sales Leads (2011). Checked in October 2026.
The tool only uses what you enter. Nothing is sent or stored.