Free Cost Per Lead Calculator

In the Pay-Per-Lead (PPL) industry, determining how much to charge per lead can be a bit of a puzzle, especially when you’re trying to maximize profit without years of trial and error.

Every industry has its nuances, and what works for one may not work for another. However, there is a straightforward method to help guide you in setting your lead prices. This method isn’t a one-size-fits-all solution, but it’s a useful starting point.

The Simple Calculation Method:

• Determine the Average Order Value (AOV): This is the typical amount a customer spends in a transaction in your specific industry. For instance, in some sectors, a converted lead might represent an average value of $3,000.
• Divide the AOV by 3: This step helps to balance the potential revenue with the inherent risks and costs associated with lead generation. Using the previous example, if the AOV is $3,000, dividing this by 3 gives $1,000.
• Calculate the 5Conversion Rate: Estimate what your average calculated figure would be, we recommend 5%. This step is grounded in the assumption that a reasonable percentage of leads will convert into sales. So, 5% of $1,000 equates to $50.

Result – Your Price Per Lead: Following this formula, in our example, you would charge $50 per lead.

This calculation provides a general benchmark for pricing your leads. It’s a balance between the value a lead brings to your clients and the effort and cost involved in generating that lead. Remember, this is a starting point. As you gain more insight into your specific market and adjust for factors like lead quality, competition, and client budgets, you may need to refine your pricing strategy.

This method, shared by Dan Wardrobe from Flexxable, offers a pragmatic approach to lead pricing, especially useful when you’re navigating the complexities of PPL marketing in different industries.