# What’s the cost of a lead?

What’s the cost of a lead? According to Window Visions Magazine, the average cost of a lead is \$120.

Let’s see how that breaks down.

Let’ assume you’re selling \$300,000 a year, and you’re a one-man operation. Let’s say your overhead is \$4000 a month, including rent, advertising, gas, vehicle and office operations. If your average job is \$1200, then you sold 20 jobs for the month, or one a day. If 50% of all calls result in an appointment, and 70% buy, then you will need 75 calls and 37 appointments for the month. Each lead cost you \$109 (\$4000/37).

Once you know the real cost of a lead, you can start to make some educated investments in your business.

Assuming you sell \$25,000 a month, pay yourself \$6250 a month or \$75,000 a year. 25,000–10,250 equals 14,750 in Cost of Goods Sold, a 75% mark-up. If it costs you a \$100, you sell it for \$175, which is fairly standard for the industry.

Now let’s talk about the \$4000 a month and how it’s spent. If you spend \$1500 a month on advertising, that leaves \$2500 for all the rest. Simple. I believe you should spend a minimum of \$1500 a month on advertising for a \$300,000 a year business.