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.