- leads
- profitability
- definition
Cost per lead: definition, calculation, and why the cheapest isn't the best
Cost per lead is what each contact request costs you. How to calculate it, what to compare it with, and why to follow it all the way to signed customers.
Published on · Joh · 5 min read
Cost per lead (CPL) is the amount spent on advertising to get one contact request: a form filled in, a call, a quote request.
Cost per lead = ad spend ÷ number of leads.
Two real examples
At a joinery business I work with, €6,500 of Meta advertising over two months brought 193 quote requests: 6,500 ÷ 193 = €33.68 per request. The full case.
At an independent kitchen fitter, €10,000 over five months brought 254 requests, an average of €39.37. The cost per request went from about €58 in the first month to €31 in the fifth, as the algorithm learned and the good videos replaced the others. The full case.
What is a good cost per lead?
There is no universal number. A good cost per lead is one that leaves margin once the sale is signed. To know, you need two more numbers:
- Your signing rate. Out of 100 requests, how many become customers?
- Your margin on a sale. What is left once the job or product is paid for.
At the kitchen fitter, 254 requests led to 15 signed kitchens, for an average sale of €11,000. A €39 request was therefore comfortably profitable, when it would have been ruinous for someone selling a €200 service.
The cheap lead trap
A falling cost per lead is only good news if the requests stay good. It is easy to drive CPL down: a very short form, a vague offer, an audience that is too broad. You then collect fake numbers, people who don't remember filling in the form, out-of-area projects.
That is the only real question with cost per lead. I would rather have one €45 request that picks up the phone than three €15 requests that never answer. How to qualify requests.
The three numbers to follow together
| Number | What it tells you |
|---|---|
| Cost per lead | What a request costs |
| Signing rate | Whether the requests are good |
| Cost per signed customer | Whether advertising is profitable |
The first is read in the ads manager. The other two require noting what happens to each request, even in a simple spreadsheet. That is the tracking I set up with every client. How to calculate the cost of a signed job.
Further reading: How to generate qualified leads with Meta Ads and ROAS, its calculation and threshold.
Want to know what cost per lead is profitable for you? . We start from your average sale and your signing rate.