How Much Should a Contractor Pay Per Lead? Run This Math First

Most contractors ask the wrong question about ads. They ask what a lead costs. The better question: what does a booked job cost you, and what is one job worth?

A $25 lead sounds cheap. If 1 in 10 books, you paid $250 for the job. A $90 lead sounds expensive. If 1 in 2 books, you paid $180. The cheap lead lost.

Step 1: Know what one job is worth

Pull three numbers from your last 90 days:

• Average ticket: total revenue divided by jobs completed.
• Gross margin: the share you keep after labor and materials.
• Close rate: booked jobs divided by estimates run.

Example: an HVAC shop sells a $4,000 average install at a 35% margin. Each install brings in $1,400 of gross profit. Spend $400 to win the job and you keep $1,000.

Step 2: Work backward to your max cost per lead

Use two formulas:

• Max cost per booked job = gross profit per job x the share you will spend to win the job.
• Max cost per lead = max cost per booked job x the share of leads who book.

With the numbers above, cap acquisition at 25% of gross profit. $1,400 x 25% = $350 per booked job. If 1 in 3 leads books, your max cost per lead lands near $117. Below $117, ads make you money. Above $117, ads lose you money.

Run the math for your own trade. A roofer with a $12,000 replacement ticket affords a far higher lead cost than a drain cleaner with a $250 service call. A benchmark from a blog post, this one included, will not fit your shop. Your own numbers will.

A real example

Novak HVAC in Northeast Ohio ran a 30 day Meta ads campaign with PVG Media.

• Ad spend: $162
• Leads: 13
• Booked jobs: 8
• Cost per lead: $12.46
• Cost per booked job: $20.25

One shop and one run. The numbers show the setup works. They do not predict your results. Read the full Novak HVAC case study.

Three leaks raise your real cost per job

1. Slow response. Harvard Business Review audited 2,241 US companies and found firms who contacted a lead within one hour were nearly 7 times more likely to qualify the lead than firms who waited longer. Every hour you wait makes each lead more expensive. An AI receptionist answers in seconds, day or night.

2. No tracking. Without call tracking, you do not know which ad produced which job. You end up cutting the ad making you money and keeping the one wasting it.

3. No estimate follow up. Most shops send an estimate and wait. A simple lead pipeline with scheduled texts and calls wins back jobs you already paid to get.

What to do this week

• Pull your average ticket, margin, and close rate.
• Calculate your max cost per booked job and max cost per lead.
• Ask your marketing company for cost per booked job, not cost per lead. If they do not track booked jobs, you have your answer.

Want help with the math for your shop? Book a 15 minute call. We pull up your numbers and your Google rankings on the call and show you where the jobs are going.