lead generation pricing

A Guide to Lead Generation Pricing

Adding new customers to your sales funnel is critical to ensure continued growth for your business.

Lead generation is a massive part of this.

But lead generation pricing can be something of a mystery. Here, you’ll learn how to calculate the cost, the average cost per lead, how many leads you’ll need to hit your revenue target, and where to source the best sales leads!

Let’s dive in.

The Costs that Go into Lead Generation Pricing

Lead generation pricing is based on a few factors.

Right off the bat, there are several costs that are associated with lead gen:

  • Media agencies and operations: The cost of hiring an agency to generate leads for you.
  • Media placement and distribution: Costs associated with external ads, like Facebook.
  • List purchases: The cost of buying third party lead lists.
  • Campaign creation: The internal costs of developing a marketing campaign.
  • Incentives: Rewards, such as discounts or gifts/prizes.

Finding Your Cost Per Lead (CPL)

Calculating Your Cost Per Lead

When it comes to lead generation pricing, your cost per lead is among the most critical metrics available. The formula to discover it is amazingly simple:

Total $ Spent on Marketing / # of Leads Generated by the Campaign = CPL

No need for an MBA for this one!

Average Cost Per Lead

On average, the cost per lead in 2020 was about $198. However, CPL can vary wildly depending on your industry, the knowledge of your target audience, and your competition.

Take a look at some of these number based on industry and other influencing factors:

Average Cost per Lead by Industry (source)

IndustryAverage CPL
Finance$160
Tech$208
Healthcare$162
Manufacturing$136
Travel & Tourism$106
Retail$34
Education$5
Telecom$45
Marketing$99
Consumer Products$105
Media & Publishing$10
Non-Profits$31
Business Services$132

Average CPL per Lead Generation Channel (source)

ChannelAverage CPL
Events & Trade Shows$811
Public Relations$294
Referrals$73
Video Marketing$174
LinkedIn Advertising$75
Webinars$72
Display Advertising$63
Content Marketing$92
Traditional Marketing$619
Search Engine Ad$110
Social Media Ad$58
SEO$31
Email Marketing$53
Online Re-targeting$31

 Average CPL by Company Size (source)

Company SizeAverage CPL
1,001+ employees$349
201-1,000 employees$212
51-200 employees$180
2-50 employees$147

 Average CPL by Company Revenue (source)

It shouldn’t come as any surprise, given the numbers above, that the businesses that bring in the highest annual revenue are also the businesses paying the most for their qualified leads.

Company RevenueAverage CPL
$500 million +$429
$10-500 million$179
$1-10 million$185
<$1 million$166

How Many Qualified Leads Do You Really Need?

The goal of every lead gen campaign is to improve efficiency and increase sales. To achieve this, you must first know how many qualified leads you need to reach your business goals.

To find this number, you’ll need to understand a few things about your company first:

  • Target Revenue: The amount of revenue you hope to reach within a certain period.
  • Marketing-Driven Revenue: The slice of total revenue that comes in thanks to your marketing efforts.
  • Average Sales Price (ASP): Net Sales divided by Number of Units Sold.
  • Market-Driven Deals: Market-Driven Revenue divided by Average Sales Price.
  • Opportunity-to-Sales Ratio: How close you are to converting one lead into a customer out of the total number of leads you have.
  • Qualified Lead-to-Opportunity Ratio: How many leads it takes to convert one lead into a customer.
  • Lead-to-Qualified-Lead Ratio: How much analysis is needed to convert one lead into a customer.

Let’s make this easier by looking at an example.

Say you want to reach $50,000 in revenue by the end of next:

  • Your market-driven revenue is $30,000 at the end of this month.
  • Your average sale price is $6,500.
  • Market-Driven-Deals: $30,000 / $6,500 = $4.62
  • Opportunity-to-Sales Ratio is predicted as 4, which means you have the chance to convert 1 lead out of 4.
  • Number of opportunities needed: 4 x $4.62 = 18.48
  • Qualified Lead-to-Opportunity ratio is predicted as 5, which means you can turn one lead into a converting customer if you have 5 leads.
  • Number of leads needed: 5 x 18.48 = 92.4

What all this means is that, in this example, you would need no fewer than 93 leads just to break even. Plug a revenue of $50,000 into the calculations and you’ll find the number of leads you’ll need to reach it.

Looking for someone to help guide you through the weeds of lead generation and its costs? Give Asset Digital Communications a call today to book your free consultation with one of the GTA’s top digital marketing agencies!