Why the question is asked backwards A business owner calls and asks what a lead costs. That question has no honest answer. A 15 dollar lead is expensive for a nail salon. A 150 dollar lead is cheap for an immigration attorney. Same number, different meaning. The right question is: how much can I pay for a lead and still make money. You can answer that yourself in ten minutes, and after that every conversation with an agency changes. # Three numbers you need ## Average ticket What one customer pays you in one purchase. Not monthly revenue, not the price list. Take the last twenty payments and divide by twenty. ## How often a customer returns A salon lives on repeat visits, a roofer usually does not. If a customer comes six times a year, your real income from them is six times the ticket. That is the number ads are paid from. ## How many leads become a customer Ten leads, two paid. That is 20 percent, so five leads per customer. Almost nobody knows this number by heart, and it decides everything. # The math Say the ticket is 200 dollars, the customer comes three times a year, and one in five leads pays. 1. Income per customer per year: 200 times 3, so 600 dollars. 2. Cost of delivering the service, say half. That leaves 300. 3. Five leads per customer, so you can spend up to 60 dollars a lead to break even. Sixty dollars is your ceiling, not your target. At 25 the ads make money. At 70 you are paying for the privilege of working. # Where people get it wrong ## Counting revenue instead of profit Ads are paid for out of what is left after materials, rent and wages. A salon that measures payback against the full service price is surprised three months later. ## Forgetting repeat visits The reverse happens too: a business counts only the first sale and drops ads that would pay off on the second visit. If you know people come back, count by the year. ## Watching cost per lead instead of cost per customer Ads can deliver 10 dollar leads who ask the price and vanish. Other ads deliver 40 dollar leads where every second one pays. The second is cheaper, even though the dashboard looks worse. # Use these numbers on your agency When someone promises cheap leads, ask three things: - How many of those leads reached an actual conversation. - How many paid. - What one paying customer cost. An agency that keeps records will answer. One that shows clicks and impressions will not, and that is a good reason to keep your budget. # What to do today Open a spreadsheet and write down three numbers: average ticket, visits per year, leads per sale. Rough numbers beat no numbers; you will sharpen them in a month. With those three you stop depending on anyone else's promises. You know your ceiling and can say for yourself whether the ads work. On a review call we can run these numbers with you and show what they usually look like in your industry and city.
