Here is an example. A marketing rep tells you, “Leads are only $60 each.” That sounds cheap. Then you spend $1,500 for the month and book two jobs. What happened? The lead price was real. It just was not the price of a job.
This post shows the simple math, step by step. All the numbers below are examples, not facts about your market. Swap in your own.
Four prices, not one
Most owners only know the first price. There are four:
- Cost per lead. What you pay for one call, text or form.
- Cost per estimate. What you pay for each lead that turns into a visit or a quote.
- Cost per booked job. What you pay for each estimate that says yes.
- Cost per profit dollar. What is left after the job costs, which is what you really care about.
The further down the list, the higher the number, because people drop out at every step.
A worked example
Here is a made-up example for a company we will call Oak & Pine Tree Service. These are example numbers only. They are not an industry average.
| Step | Example number | Result |
|---|---|---|
| Monthly ad budget | $1,500 | Money in |
| Price per lead | $60 | 25 leads |
| Leads that become an estimate | 15 of the 25 | 15 estimates |
| Estimates that book | 6 of the 15 | 6 jobs |
| Cost per estimate | $1,500 / 15 | $100 |
| Cost per booked job | $1,500 / 6 | $250 |
| Average job | $750 | $4,500 in sales |
| Money left after crew, fuel and disposal (45 out of 100 dollars kept in this example) | about $2,025 | gross profit |
| Ad cost taken out | $1,500 | about $525 left |
So a $60 lead became a $250 booked job, and the month left about $525. That is thin, but it is a real picture. If you only looked at the $60, you would think you were doing great.
Where leads leak
Leads are lost in three places, and most of them are not about the ad.
The unanswered call. According to Invoca, about 27% of calls to home-service businesses go unanswered, and under 3% of those callers leave a voicemail. If you pay for the ring and nobody picks up, you pay twice: once for the lead, again for the lost job. Our missed calls guide and the speed-to-lead calculator put a number on this for your business.
The slow reply. A homeowner who is still waiting a day later has often called someone else. A fast reply gives you the first chance. Read the 5-minute follow-up rule.
The weak quote. Some estimates never close because the quote is late or unclear. The estimate win rate calculator shows your own close rate once you enter a few numbers.
Do the math with your own numbers
Try it: open the lead cost estimator, enter your monthly budget, your price per lead, your estimate rate, your close rate and your average job. It shows cost per booked job and what is left. Nothing is sent anywhere. The numbers stay in your browser.
You will need honest inputs. Here is where to find them:
- Price per lead: your ad account, or your total spend divided by calls and forms.
- Estimate rate: of 10 leads, how many did you actually visit?
- Close rate: of 10 estimates, how many said yes?
- Average job: total sales divided by jobs for the last three months.
- Margin: what is left after crew, fuel, disposal and equipment.
If you do not track these yet, start with a notebook. The answer rate test is a simple way to see how many calls you actually pick up.
Common mistakes with lead math
Counting every call as a lead. Wrong numbers, sales calls and people asking for a free tip are not leads. Count only real requests for tree work, or your cost per lead will look better than it is.
Ignoring repeat and referral work. Some jobs come from past customers. Do not credit them to your ads. Keep them in a separate line.
Judging a source in one week. Tree work has busy and slow weeks. Look at a full month, and compare the same season to the same season. Our seasonal demand calendar helps you see the pattern.
Forgetting big jobs. One crane job can pay for a whole month of ads. Your average job may hide this, so also look at your top five jobs of the quarter.
How to read your result
If cost per booked job is well below your profit on an average job, the source is paying for itself. Keep it, and fix the phone before you add budget. If it is close to or above your profit, do not just cut the ad. Check first whether the calls are being answered, because that is often the cheapest fix. If the calls are answered fast and the cost is still too high, the source may not suit your area. Move some budget to your free Google listing and to reviews, which cost mostly time.
Which lever moves the cost most?
Change one number at a time and watch the result. You will find that these moves often matter more than a cheaper lead:
| Change | What it does |
|---|---|
| Answer more calls | Same ad spend, more leads reach a conversation |
| Reply faster | More leads become estimates |
| Send quotes the same day | More estimates close |
| Raise a weak price | More profit per booked job |
| Stop a poor ad source | Frees budget for a better one |
Notice that three of the five cost nothing in ads. That is why we start with the phone, not the ad.
A checklist before you spend more on ads
- I know my cost per lead from last month.
- I know how many leads I answered live.
- I know how many became estimates, and how many closed.
- I worked out cost per booked job, not just per lead.
- I compared that to the profit on an average job.
- Every missed call gets a text within a minute.
- I will change only one thing at a time and check again in a month.
Where to put your next dollar
Plan the whole budget with the marketing budget calculator. Check how the pieces fit with our lead sources guide too.
If you want to catch the calls you already pay for, the missed-call text-back sends a reply in about 30 seconds. See the full services and pricing. Or start by finding out how many calls you miss: get a free audit of your missed calls and listing.
