How much should a Cambridge trade pay for a lead? Work it out from your own numbers

The three numbers you need

You need your average job value, your profit margin and your close rate. Everything else follows from those.

1. Average job value: total revenue from jobs that came from marketing, divided by the number of jobs. Use the last three to six months if you can.
2. Profit margin: what's left after materials, labour and a fair share of overhead, as a percentage of the job value. Your bookkeeper can help you check it.
3. Close rate: jobs won divided by quotes given. If you quote ten jobs and win four, your close rate is 40%.

If you don't have these figures, track them for a month. It's the most useful thing you can do before spending another dollar on marketing.

Step one: profit per job

Multiply average job value by profit margin.

• A Cambridge electrician whose average panel upgrade or rewiring job is $3,200, at a 25% margin, makes $800 profit per job.
• A cleaning company whose average residential clean is $280, at a 30% margin, makes $84 profit per job.

Those two businesses can't possibly afford the same cost per lead, which is why copying someone else's budget rarely works.

Step two: decide what share you'll spend to win a job

Choose how much of that profit you're willing to spend on marketing to win the job. Many owners settle between a quarter and a half, depending on whether the customer is likely to come back.

• If customers rarely return, such as with a one-off roof replacement, stay toward a quarter.
• If customers tend to return or refer others, such as with regular cleaning or furnace maintenance, you can justify a larger share, because one win leads to more.

For the electrician, a third of $800 is about $265 per job won. For the cleaning company, with strong repeat business, half of $84 is $42 per job won.

Step three: convert to a cost-per-lead ceiling

Multiply the amount per job won by your close rate.

• Electrician: $265 × 40% close rate = about $106 per lead.
• Cleaning company: $42 × 50% close rate = $21 per lead.

That figure is your ceiling. If a marketing channel can bring you leads below it, it's making you money. If it can't, it isn't, however busy it makes you feel.

Step four: set a monthly budget

Multiply the ceiling by the number of extra leads you want, which in turn depends on how many extra jobs your crew can handle.

• The electrician can take six more jobs a month. At a 40% close rate, that's 15 leads. 15 × $106 = about $1,600 a month in total lead cost.
• The cleaning company can take 20 more cleans a month. At 50%, that's 40 leads. 40 × $21 = $840 a month.

That total has to cover everything: ad spend, agency fees, directory listings. If the plan fee alone exceeds it, the plan is too large for your current capacity, or you need to raise prices, improve your close rate or target higher-value work first.

A worked Cambridge example, start to finish

Here's one full calculation for a typical owner-run plumbing company in Galt.

With those numbers, a plan costing $1,999 a month plus ad spend is too much for this business today. The honest advice would be to improve the close rate, raise the average ticket by promoting water-heater replacements, or start with lower-cost work such as fixing the Google Business Profile and asking for reviews. Our pricing page lists the plans so you can run the same test.

How to raise the ceiling

If your ceiling is lower than you'd like, there are three levers, and only one involves marketing.

1. Raise your close rate. Answer calls faster, follow up on quotes within a day, and send a clear written quote. Moving from 40% to 50% raises your ceiling by a quarter.
2. Raise your average job value. Promote the higher-value services you prefer, and offer sensible add-ons.
3. Lower your cost per lead. Better pages, sharper ad targeting and a stronger review profile all help. This is where local SEO and Google Ads come in.

Where the ceiling meets a real ad account

Once you have a ceiling, use it every month. Pull your cost per lead from each channel, whether that's paid search, Local Services Ads, a directory listing or a home-show booth, and set it beside the ceiling for that job type.

• Below the ceiling: the channel is paying. If you have capacity, it's a candidate for more budget.
• Close to the ceiling: watch it. Small improvements to the landing page or ad targeting can push it into profit.
• Above the ceiling for two months running: narrow it to the services and areas that work, or stop it.

This turns a vague feeling about whether marketing is working into a simple monthly check that takes ten minutes. It also gives you a fair way to judge any agency, including us.

Mistakes to avoid

• Counting all leads as equal. A lead for a full rewire and a lead for a single outlet are not worth the same. Calculate separate ceilings for your main job types.
• Forgetting the drive. A job in Hespeler for a Galt-based crew may carry extra travel time. Factor it in if it's significant.
• Measuring cost per click instead of cost per lead. Cheap clicks that never call are expensive.
• Never recalculating. Prices, costs and close rates change. Revisit the numbers at least twice a year.

For more practical guidance, see our seasonal calendar or the full list of guides.