Why published averages mislead
A trade average blends emergency and planned work, dense markets and quiet ones, businesses with two hundred reviews and businesses with four, and close rates ranging from one in eight to one in two.
Using someone else's number to judge your own performance can lead you to cut a channel that was working or persist with one that was not.
The calculation
Four numbers, all of which you have:
1. Average job value. Take your last twenty invoices and average them.
2. Gross margin. What share stays after materials and labour. Estimate honestly and low if you are unsure.
3. Close rate. Of the last twenty enquiries, how many became jobs.
4. Value per lead = job value × margin × close rate.
A $600 average job at 45% margin with a one-in-four close rate makes each lead worth about $67 in gross profit. Below that, you are ahead before overhead. Above it, you are not.
The lifetime value adjustment
If customers return — maintenance plans, annual service, repeat repairs — first-job value badly understates the truth.
Work out roughly how many times an average customer buys and multiply. A business counting only the first job will consistently under-invest and then wonder how competitors afford to outspend them.
Calculate it per service, not overall
An emergency callout and a planned installation have completely different values, close rates and urgency. Averaging them produces a number that is right for neither.
If you run ads, this matters directly — you can afford far more per lead for the high-value service, and treating them the same means either overpaying on one or missing the other entirely.
What changes your number
Close rate is the biggest lever, and improving it costs nothing. Moving from 25% to 33% raises what you can afford per lead by a third.
Response speed drives close rate more than anything else.
Reviews change your cost per click before anyone speaks to you.
Pricing. Raising prices raises the value of every lead, which is the least-used lever in small business marketing.
Compare on the right basis
Always cost per booked job, never cost per lead. A shared marketplace lead is cheap per lead and expensive per job.
Working out yours
Twenty invoices, an honest margin figure and your last twenty enquiries. Fifteen minutes, and it replaces every benchmark you have read.
If you want help doing it, call James on 832-338-2926.
Frequently asked questions
Is there a benchmark cost per lead for my trade?
None worth using. Averages blend emergency and planned work, dense and quiet markets, and close rates ranging from one in eight to one in two.
How do I calculate my own?
Average job value multiplied by gross margin multiplied by close rate. A $600 job at 45% margin closed one in four makes a lead worth about $67 in gross profit.
Should I calculate one number or several?
One per service. An emergency callout and a planned installation have different values and close rates, and averaging them gives a number that is right for neither.
What raises what I can afford to pay?
Close rate, driven mostly by response speed — moving from 25% to 33% raises your ceiling by a third for free. Raising prices does it too, and is the least-used lever.