Cost Per Lead & ROI Calculator

Almost every bad marketing decision we see traces back to one missing number: what an enquiry is actually worth. Without it, "$60 a lead" is meaningless — it is either a bargain or a disaster, and there is no way to tell which.

How the calculation works

The arithmetic is deliberately simple. Average revenue per customer, multiplied by your gross margin, gives the gross profit a customer produces. Multiply that by the number of times an average customer buys from you, and you have the lifetime gross profit of one customer.

Then divide by your conversion rate. If one in four enquiries becomes a customer, each enquiry is worth a quarter of a customer — so a customer worth $800 in gross profit makes each enquiry worth $200. That $200 is your ceiling. Anything you pay below it is profitable before overheads; anything above it is not.

Why gross margin, not revenue

Revenue flatters everything. A $10,000 job with a 12% margin produces $1,200 of gross profit, which is less than a $4,000 job at 35%. Bidding on revenue is how businesses end up busy and broke. Every figure in this calculator uses margin for that reason.

If you do not know your gross margin, use your cost of goods or subcontractor cost as a proportion of the sale price and work backwards. An approximate figure you have thought about beats a precise one you have not.

What to do with the number

• If your cost per enquiry is under 30% of enquiry value, you almost certainly have room to spend more and should.
• Between 30% and 60% is a working account. Optimise, but do not panic.
• Between 60% and 100% is thin. It works only if your conversion rate is genuinely as good as you think it is.
• Above 100% you are buying enquiries at a loss. Either the conversion rate, the offer or the targeting is wrong — more budget will only lose money faster.

The number this calculator cannot see

Repeat business and referrals. A customer who returns twice a year for six years is worth many times a one-off, and a customer who sends two friends is worth more again. If that describes your business, the "repeat purchases" field is the one to be generous with — but be honest, because inflating it is how people justify unprofitable advertising to themselves.

It also cannot see your capacity. A cost per enquiry that works beautifully at ten jobs a month may be irrelevant if you can only deliver eight. When capacity is the constraint, the answer is usually higher prices rather than more marketing.

A worked example

A flooring installer averages $4,500 a job at a 38% margin, closes one in three quotes, and sees roughly 1.2 jobs per customer over time. That is $1,710 gross profit per job, $2,052 per customer, and $684 per enquiry. At $70 an enquiry from Google Ads, that account has an enormous amount of headroom — and the correct decision is to raise the budget until either the cost per enquiry climbs sharply or the calendar fills.

The same business with a 12% margin and one in eight closing would produce $81 per enquiry, and the same $70 cost would be barely viable. Same trade, same city, entirely different marketing strategy — which is exactly why nobody can quote you a sensible budget without these numbers.

Figures and bands on this page are guidance drawn from Canadian local markets, not benchmarks or guarantees. Your own numbers should replace them as soon as you have three months of data.