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Key takeaways
Your maximum cost per lead is the gross profit from an average first sale multiplied by your close rate. At that figure you break even on the first sale. A sensible target sits well below it, often half, so you keep profit after other costs. Repeat business can justify paying more.
- Maximum cost per lead = gross profit per sale × close rate.
- Aim for a target around 50% of the maximum.
- Raise the maximum only if repeat sales are reliable.
- Recalculate when prices, margins or close rates change.
Want your maximum cost per lead worked out? Message us on WhatsApp.
Chat on WhatsApp →How do you calculate the maximum?
Take the average first sale, subtract the direct costs of delivering it, and you have gross profit per sale. Multiply by the share of leads that become customers. Illustrative example: £600 gross profit and a 25% close rate gives a maximum of £150 per lead before you lose money on the first job.
Why set the target below the maximum?
Because the maximum leaves no profit. Overheads, your time and the risk of a bad month all need covering. Setting the target around half the maximum, £75 in the example, keeps the channel profitable and leaves room for weeks when leads cost more than planned.
Send us your gross profit and close rate on WhatsApp and we will discuss your requirements.
Chat on WhatsApp →When can you pay more than the maximum?
When customers reliably buy again. A dental patient, accountancy client or regular cleaning customer can be worth many times the first sale. Base the maximum on profit over 12 to 24 months, not a lifetime guess, and only if you can fund the wait before that profit arrives.
What makes the maximum go up?
Anything that raises profit per sale or close rate. Faster replies, a clearer offer, better qualification and higher prices all lift the maximum without changing ads. Often the cheapest way to afford social media leads is to convert more of the ones you already get.
What does this look like in practice?
A pattern we see: an owner switches off ads that cost £40 a lead because it 'feels expensive', while the maximum they could afford is over £100. Working out the figure changes the conversation from cost to capacity, and from cutting ads to handling the enquiries they bring.
Cost per lead checklist
- Find your average first-sale value.
- Subtract the direct cost of delivering it.
- Multiply by your close rate for social leads.
- Set a target around half the result.
- Recheck every time prices or margins change.
Next step
Calculate your maximum cost per lead and write the target beside it. Compare both with what your last campaign actually paid per lead.
Message us on WhatsApp with your figures, or book a 30-minute consultation.
Chat on WhatsApp →Sources and further reading
- About key events · Google Analytics Help
- Lead ads · Meta
Frequently asked questions
What is a good cost per lead from social media?
A good cost per lead is one comfortably below your own maximum, not a sector average. Work out gross profit per sale multiplied by close rate, then aim for about half of it. A £150 lead can be excellent for a kitchen fitter and terrible for a cafe.
Should I count my own time in cost per lead?
For ad performance, use ad spend divided by leads so you can compare campaigns. For whether social media pays overall, add production time, fees and tools. Both numbers are useful, but they answer different questions, so label them clearly. Review it each quarter against your enquiries and sales, and adjust in small steps.
How many leads do I need before the figure is reliable?
Twenty or more leads gives a reasonable picture; fewer than ten can swing widely by chance. On a small budget that may take a month or two. Avoid judging cost per lead from the first few days of a new campaign.
Written by
Global Bridge Labs (GBL) is a UK–Sri Lanka partner for social media, websites and BPO. Everything here comes from client delivery, not theory.
