What is one inquiry worth, and how much can it cost you?
Enter your revenue, number of inquiries and ad spend. The calculator tells you what one inquiry brings in, what it costs you and what budget you need for the number of clients you want.
Why you need it
The phone rings, but the money doesn’t come in.
The number of inquiries on its own doesn’t tell you whether your ads make money. You can have 50 inquiries a month and lose money, or 10 and do great. Two numbers matter: what one inquiry brings in and what it costs you to get it.
A lead is any inquiry, call or message from someone who could become a client.
A dental practice had 40 inquiries a month and the campaign looked successful. Of those 40, only 6 became patients, and one inquiry cost more than a first visit. More inquiries, less profit.
Changing the currency only changes the label. It doesn’t convert numbers you’ve already entered.
What one lead is worth to you and what it costs you
Enter your revenue, number of leads and how much you spent on ads.
Average revenue per inquiry, whether or not they bought.
What one lead from ads costs you.
What share of leads actually become clients.
The value of one lead is the average revenue from one person who gets in touch, whether or not they buy. Once you know it, you know the most you can afford to pay for one inquiry.
An AC repair company thought inquiries were free, because they pay for clicks, not inquiries. When they divided total revenue by the number of inquiries, one inquiry was worth $300 to them. From then on, they knew how much they could pay per click.
CPL is what one lead from ads costs you. If it’s higher than the value of a lead, every inquiry costs you more than it brings in, even though the phone is ringing. That’s why you always compare CPL with lead value.
A plumber was paying $24 per lead, and one lead was worth $20 to him. The calls never stopped, and he lost $4 on every one.
What budget you need for your goal
Enter how many leads you want and in how many days, and the calculator works out the budget based on how your ads perform now.
Enter clicks per conversion, cost per click, target number of leads and number of days.
Clicks per conversion × CPC × target number of leads, divided by the number of days.
Daily budget times 30.
Why you work back from your goal. Part one tells you where you are now. This part starts from the number of clients you want and tells you what budget you need for that, based on your current ad results.
A salon wanted 30 new clients next month. They entered how many clicks it takes them to get one booking and what they pay per click, and got a daily budget instead of a guess.
Before you look at your report
Three things you should know
- 01
The number of leads on its own doesn’t mean much.
You can have 50 leads and lose money, or 10 and do great. Look at what one lead brings in.
- 02
Compare CPL with lead value.
A low CPL looks good in a report. If your lead value is even lower, you’re still losing money.
- 03
Work out your budget from your goal.
Start from the number of clients you want, then work out how much advertising you need for them. That way you know why you’re spending exactly that much.
Next step
A lead costs you more than it brings in? Check your business item by item.
The Service Business Checkup goes through your Google Maps listing, website, calls and ads. In an hour or two, you see where you’re losing inquiries and where to start.
Have an online store? Profitability calculator
Note: the calculator gives an estimate based on the numbers you entered. It isn’t financial advice and doesn’t guarantee results. You make your own decisions about budgets.