How to measure cost per lead without fooling yourself

"A lead costs five dollars" means nothing until someone says what counted as a lead. For one person it is a click; for another it is someone who named a budget. Before arguing about price, agree on the unit.

Three numbers instead of one

• Cost per enquiry: what one submitted contact costs
• Cost per client: what one paying client costs
• Cost of money: how much ad spend went into one earned unit

The first is easy to get and easy to fake. The second is honest. The third is the only one decisions are made on, and almost nobody counts it, because it requires connecting advertising to the till.

The simple formula everyone gets wrong

Cost per client is channel spend divided by clients from that channel. The mistake is almost always in the numerator: the salary of whoever handles the enquiries is left out. If a manager spends a day on twenty enquiries, that day is as much a part of the cost as the ad budget.

A channel with free enquiries that each take forty minutes of talking is more expensive than a paid channel where the decision is already made.

Why cheap leads can be expensive

Cheap traffic brings people who have decided nothing. They write, ask the price and vanish. Expensive traffic brings people already looking for a contractor. Comparing them by cost per enquiry is comparing a restaurant and a canteen by the price of the door.

The right comparison is cost per client and refusal rate. A channel at a dollar an enquiry converting at two percent loses to one at ten dollars converting at forty.

When clients come back

In repeat services, cost per client cannot be compared to the first invoice. Compare it to what the person brings over a year. A studio that looks only at the first project turns down channels that pay off on the second.

What you need to count any of this

• The source recorded automatically on the enquiry, not from memory
• Enquiry and deal as one record, not two spreadsheets
• Clear stages: wrote, replied, discussing, paid
• Channel spend entered where the enquiries live

While those sit in three different places, every number is approximate — not because the maths is hard, but because nobody reconciles three spreadsheets on a Monday morning.