Cost Per Lead vs Cost Per Job: Know Your Numbers

When tradies tell us about marketing they've tried in the past, the conversation usually lands on one number. "We were paying $60 a lead" or "I got leads for $20 each on Facebook." Cost per lead is easy to measure, so it's what most people focus on.

The trouble is that a lead isn't a job. A cheap lead that never answers the phone is worth nothing. An expensive lead that books a $40k renovation is a bargain. If you want to know whether your marketing is actually working, you need to look further down the line.

01The numbers that matter

There are a handful of simple numbers every trade business should know. Here they are, in order:

• Cost per lead: how much you spend on marketing to get one enquiry
• Lead to quote rate: out of every 10 enquiries, how many turn into a quote or site visit
• Quote win rate: out of every 10 quotes, how many you win
• Average job value: what the average job is worth, ideally in profit not just revenue
• Cost per job: how much marketing it took to win one paying job

That last one is the one that tells you if your marketing is profitable.

02How to work out your cost per job

Here's an example with made-up numbers to show the maths. They're not benchmarks, just a way to see how it all connects.

Say you spend $2,000 on ads in a month and get 40 enquiries. That's $50 per lead.

Out of those 40, you get through to 30 and book 20 quotes. Out of those 20 quotes, you win 6 jobs.

So your cost per job is $2,000 divided by 6, which is about $333.

If the average job is worth $4,000 in profit to you, that's a very good return. If the average job is worth $300 in profit, you're losing money, even though $50 a lead sounds fine on its own.

03Where the numbers usually leak

When we run these numbers with tradies for the first time, the leak is usually not where they expected. It's rarely the cost per lead. It's usually one of these:

• Leads not getting called back quickly, so they go cold before anyone talks to them
• Too many site visits for people who were never going to go ahead
• Quotes sent with no follow-up, so they quietly go to a competitor
• Taking on low-value jobs that eat up time for very little profit

Each of these can make your cost per job double or triple without your ad spend changing at all. That's why our fractional sales person service, where every lead is called within 3 minutes, often makes a bigger difference than tweaking the ads.

04Small improvements multiply

Here's the bit that gets exciting. Because these numbers multiply together, small improvements at each step add up to a big change at the end.

Using the example above, imagine you call leads faster and get through to 35 instead of 30. You qualify better and book 24 quotes instead of 20. You follow up properly and win 8 instead of 6. Your ad spend hasn't changed, but your cost per job has dropped to $250 and you've got two extra jobs.

None of those changes on their own is huge. Together, they make a real difference to your bottom line.

05How to start tracking

You don't need fancy software. A spreadsheet or the job management tool you already use is fine. For every enquiry, note:

• Where it came from, like Google Ads, Facebook, referral or your website
• Whether you got hold of them
• Whether you quoted
• Whether you won the job, and what it was worth

Do that for a couple of months and you'll know more about your business than most of your competitors ever will. You'll also be able to see which marketing channels bring in the best jobs, not just the most leads.

We wrote more about the sales side of this in why your quotes don't turn into jobs.

06Judge your marketing on jobs, not leads

The next time someone tells you their leads are cheap, ask what it costs them to win a job. It's a much better question, and it's the one we report on for every client.

If you'd like help working out your own numbers, that's a big part of our commercial consulting work. Or get in touch and we'll go through them with you.