Three Numbers You Need Before You Spend Anything on Marketing

Without these, "is $60 a good cost per lead?" has no answer. It's excellent for a roofer and ruinous for a business selling $200 service calls. Most owners have never worked them out, which is why marketing budgets get set by what feels affordable rather than what's justified.

Three numbers. An hour with your own records. Then every channel decision gets easier.

1. Close rate

Of the leads you get, what fraction becomes paying work?

Count leads properly — every call and form that was a real enquiry, not platform-reported "conversions" which include misdials and abandons. Then count how many booked.

This is why cost per lead misleads. Two channels at $60 a lead, one closing at 40% and one at 12%, produce $150 and $500 per job. Same lead cost, completely different businesses.

2. Average ticket

What's a job actually worth to you?

Take total revenue for a period, divide by number of jobs. Then — this is the part people skip — split it by job type. A plumbing business has $180 drain calls and $9,000 repipes, and averaging them into one number hides the only decision that matters: which one you're buying.

Use gross profit, not revenue, if you can. A $9,000 job with $6,000 of materials isn't a $9,000 job. What you can afford to spend on marketing comes out of margin, not turnover.

3. What a customer is worth beyond the first job

The number that changes everything and that almost nobody counts.

A customer isn't one transaction. They're a maintenance agreement, a repeat call in three years, a replacement eventually, and the neighbour they mention you to.

Rough version: average ticket × how many times a typical customer uses you over five years. Crude, and vastly better than treating each job as a one-off.

If you can't calculate it, estimate conservatively and mark it as an estimate. A conservative guess beats implicitly assuming zero, which is what everyone does by default.

Putting them together

Say a plumbing business finds: close rate 35%, average job $450, gross margin 55%, and a typical customer worth about 2.5 jobs over five years.

• Gross profit per job: $450 × 55% = $248
• Customer lifetime gross profit: $248 × 2.5 = $620
• At a 35% close rate, each lead is worth: $620 × 0.35 = $217

So a $60 lead is comfortable. A $120 lead still works. A $250 lead does not — unless you're deliberately buying customers at a loss to grow, which is a strategy but should be a decision rather than an accident.

Run the same arithmetic with a 15% close rate and the ceiling drops to $93. The close rate moves the answer more than anything else, which is why fixing follow-up beats optimising bids.

The budget calculator does this arithmetic for you.

What usually surprises people

Their close rate is worse than they thought. Owners estimate from the leads they remember, which are the ones they closed.

Their average ticket is distorted by a few big jobs. The median is often well below the mean, and the median is what you're actually buying.

They can afford more than they assumed, once repeat value is counted. Businesses that only count the first job systematically underinvest and lose to competitors who count the relationship.

The bottleneck is conversion, not traffic. Improving close rate from 25% to 35% raises what you can afford per lead by 40% without buying a single extra lead.

Then do this

Recalculate quarterly, and by source once you're tracking that. The whole point is comparing channels on cost per acquired customer against what a customer is worth — which is the number the benchmarks report exists to establish and one almost nobody can currently produce.

And if these numbers say you can't afford paid media yet, believe them. The DIY playbook is free and it's the right starting point when the maths doesn't work. We'd rather tell you that now than take a retainer for six months and have you conclude marketing doesn't work.

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Written by Jared DeValk, founder of Nashville Digital. Published September 8, 2026.

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