Why published averages are worthless to you
A cost-per-lead average across a trade blends emergency and planned work, cheap markets and expensive ones, businesses with two hundred reviews and businesses with four. It tells you what a category costs on average. You are not a category.
Worse, using someone else's number to judge your own performance can lead you to cut a channel that is working or persist with one that is not.
The calculation that matters
Work out what a lead is worth to you, then compare what you pay.
- Average job value. Take your last twenty invoices and average them.
- Gross margin. What share of that stays after materials and labour. If you do not know, estimate honestly and low.
- Close rate. Of the last twenty enquiries, how many became jobs.
- Value per lead. Job value × margin × close rate.
If your average job is $600, margin is 45%, and you close one in four enquiries, then each lead is worth about $67 in gross profit. Anything you pay below that is making money before overhead; anything above is not.
That is your number. It is specific to you, and it changes when your close rate or your pricing changes.
The second number nobody calculates
Lifetime value. A repeat customer with a maintenance plan is worth several times a single job, so a lead that becomes one is worth far more than the first invoice suggests.
If you have any repeat business at all, using first-job value alone will make you under-invest in acquisition. Work out roughly how many times an average customer buys, and multiply.
What moves your cost per lead
- Close rate. Improving from 25% to 33% cuts your effective cost per job by a quarter without spending a cent more.
- Speed of response. The same lead is worth more contacted in five minutes than in five hours.
- Reviews. They affect click-through before anyone reaches your site, which changes what every click costs.
- Which service. Emergency calls and planned installs behave nothing alike and should not be averaged together.
The trap in cheap leads
A shared marketplace lead sold to four contractors is cheap per lead and expensive per job, because your close rate on it collapses. Always compare on cost per booked job, never cost per lead.
Working out your own number
Bring your last twenty invoices and a rough close rate to a call and we can do this in fifteen minutes.
Frequently asked questions
What is the average cost per lead for home services in Houston?
Any single figure would be misleading. Averages blend emergency and planned work, different close rates and very different review positions. The useful number is the one you calculate from your own job value, margin and close rate.
How do I calculate what a lead is worth to me?
Average job value, multiplied by your gross margin, multiplied by your close rate. If jobs average $600 at 45% margin and you close one in four, each lead is worth roughly $67 in gross profit.
Should I use first-job value or lifetime value?
Lifetime value, if you have any repeat business. Using the first invoice alone will make you systematically under-invest in getting customers who buy from you for years.
Why are cheap marketplace leads expensive?
Because they are sold to several contractors at once, so your close rate on them drops sharply. Compare channels on cost per booked job, never on cost per lead.