What each lead costs — and, once you add your close rate, what each paying customer from those leads really costs.
A lead is a prospect who gave you their details: a form fill, a demo request, a webinar signup, a quote request. Divide what you spent to generate them by how many you got. Include agency fees and tools if you want the full cost rather than media cost only.
A LinkedIn campaign cost $3,000 and generated 75 leads. CPL = 3,000 ÷ 75 = $40. If 10% of those leads become customers, each customer cost 40 ÷ 0.10 = $400.
Cheap leads that never buy are expensive. Two channels with the same CPL can have very different lead-to-customer rates, so always carry CPL through to cost per customer — and compare that with customer lifetime value. A $150 lead that closes at 30% beats a $40 lead that closes at 5%.
It depends on what a customer is worth. B2B software and professional services routinely pay far more per lead than consumer offers, because each customer is worth far more. Work backwards: maximum CPL = what you can afford per customer × lead-to-customer rate.
How do you calculate cost per lead? Divide campaign spend by the number of leads generated. $3,000 for 75 leads is a $40 cost per lead.
What is the difference between CPL and CPA? CPL is the cost of a prospect; CPA is usually the cost of a completed purchase or signup. When a lead is your conversion goal, the two are the same.
How much should I pay per lead? Multiply the most you can afford to spend acquiring a customer by your lead-to-customer rate. If a customer is worth $600 in gross profit and 10% of leads close, a lead is worth up to $60.
