How Much Should Contractors Pay for Leads? A Simple Framework

Lead prices vary enormously across trades, regions, and lead types because the underlying economics vary. A $200 lead for a full roof replacement can be a bargain; the same $200 for a gutter cleaning could wipe out the entire job's margin.

Comparing lead prices across contractors or across trades without adjusting for average job value and close rate is one of the most common mistakes in this industry. A number that sounds high or low in isolation only means something once it's tied to what that lead is worth to you.

To figure out what you can afford to pay, you need three inputs: your average revenue per completed job, your close rate on leads or appointments (the percentage that actually turn into paid work), and your target marketing cost as a percentage of revenue.

Your close rate is the one contractors most often guess at rather than track. Pulling this from actual CRM or job records, even for just the last 20-30 leads, gives you a far more reliable number than an estimate.

The numbers below are illustrative math to show the mechanics of the calculation. They are not a claim about typical results, and they are not a promise of any particular close rate or job value for your business.

The formula changes slightly depending on what you're buying. A shared lead (sent to multiple contractors) typically has a lower close rate than an exclusive lead sent only to you, because you're competing for the same homeowner's attention. A booked, confirmed appointment usually commands a higher price than a raw lead because more of the qualification and scheduling work has already been done.

When comparing prices across lead types, always normalize back to cost per completed job, not cost per lead. That's the only number that tells you whether you're actually making money on a given source.

If a lead source's price is consistently above what your close rate and job value can support, either the price needs to come down, your close rate needs to improve, or that source isn't a fit for your business right now — no amount of hoping changes that math.

It's also worth revisiting this calculation seasonally. Close rates and average job values often shift with demand, so a price that made sense in spring may not pencil out the same way in winter.

Run this calculation before signing up with any lead or appointment provider, and re-run it quarterly using your actual, recorded close rate rather than a guess. Track cost per lead, cost per booked appointment, and cost per completed job as three separate numbers so you can see exactly where your money is going.