The Real Cost Per Lead: What Service Businesses Should Expect

"Is $85 per lead good?"

I get this question constantly. The problem is, it's the wrong question. A lead is only worth what it turns into. $85 for a lead that becomes a $5,000 roof repair is great. $85 for a lead that ghosts you is worthless.

But I get it. You need benchmarks. You need to know if you're in the ballpark or getting ripped off. So let's dig into what leads actually cost, what affects those costs, and how to think about lead value beyond the initial price tag.

Current Cost Per Lead Benchmarks (Phoenix Metro, 2025)

These numbers come from campaigns I manage and industry data I track. Your market may vary, but this gives you a baseline.

Google Ads (Search)

| Trade | Cost Per Lead Range | Median | |-------|--------------------|---------| | Plumbing | $60-120 | $85 | | HVAC | $70-150 | $95 | | Electrical | $45-90 | $65 | | Roofing | $80-180 | $120 |

What affects these numbers: - Geographic targeting (Phoenix proper vs suburbs) - Service type (emergency vs scheduled) - Season (summer HVAC is brutal) - Competition level (some zip codes are war zones)

Local Services Ads (LSA)

| Trade | Cost Per Lead Range | Median | |-------|--------------------|---------| | Plumbing | $25-60 | $40 | | HVAC | $30-70 | $45 | | Electrical | $20-50 | $35 | | Roofing | $35-80 | $55 |

Why LSA is cheaper: - You pay per lead, not per click - Google screens for relevance - Lower volume but higher intent - Reviews matter more than bids

Facebook Ads

| Trade | Cost Per Lead Range | Median | |-------|--------------------|---------| | All trades | $25-75 | $45 |

The catch: Facebook lead quality is lower. More tire-kickers, more people who filled out a form and forgot, more wrong-number leads.

Third-Party Lead Services (HomeAdvisor, Angi, Thumbtack)

| Trade | Cost Per Lead Range | Median | |-------|--------------------|---------| | Plumbing | $25-80 | $45 | | HVAC | $30-90 | $55 | | Electrical | $20-60 | $35 | | Roofing | $35-100 | $60 |

The real cost: These look cheap until you factor in: - Leads sent to 3-5 competitors simultaneously - Higher no-show and no-answer rates - Lower closing rates (customers shopping hard)

A $45 "lead" that's shared with 4 competitors and has a 15% close rate is actually costing you $300 per job.

Why Your Cost Per Lead Doesn't Match These Numbers

If you're paying significantly more than these ranges, something's wrong. Here's what to check:

1. You're Targeting Too Broadly

Bidding on "plumber" instead of "emergency plumber phoenix" will inflate your costs. Generic keywords attract research traffic, not buyer traffic.

2. Your Landing Page Sucks

If people click your ad and then leave without calling, you're paying for clicks that don't become leads. A bad landing page can double your effective cost per lead.

3. You're Not Tracking Properly

If you're counting form submissions but not phone calls, your reported cost per lead is artificially high. Most service business conversions are phone calls.

4. Seasonal Spikes

HVAC cost per lead in July can be 2-3x what it is in April. Roofing after a hailstorm spikes similarly. Budget for seasonal variation.

5. Your Agency Has Bad Incentives

If your agency makes money when you spend more (percentage of ad spend), they have no incentive to lower your cost per lead. Ask how they're compensated.

The Number That Actually Matters: Cost Per Acquisition

Cost per lead is a vanity metric. Cost per acquisition (what you pay to get an actual customer) is what matters.

The full funnel:

``` Ad spend ÷ Leads = Cost per lead Leads × Answer rate = Conversations Conversations × Appointment rate = Appointments Appointments × Close rate = Customers Ad spend ÷ Customers = Cost per acquisition ```

Example:

• $3,000 ad spend
• 40 leads ($75 CPL)
• 28 answered (70% answer rate)
• 20 appointments (71% of conversations)
• 12 customers (60% close rate)
• Cost per acquisition: $250

Now you can evaluate: is $250 to acquire a customer worth it?

How to Know If Your Cost Per Lead Is Acceptable

Here's the framework I use:

Step 1: Calculate Your Average Ticket

What's your average revenue per job from this lead source?

If your average emergency plumbing call is $350 and your average HVAC replacement is $8,000, these have very different allowable costs per lead.

Step 2: Calculate Your Close Rate

What percentage of leads become paying customers?

If you close 40% of leads, a $100 lead costs you $250 per customer. If you close 20% of leads, a $100 lead costs you $500 per customer.

Step 3: Calculate Your Profit Margin

If your average job is $500 with 50% margin, you have $250 profit per job. If you're paying $250 to acquire that customer, you're breaking even on the first job.

That might be okay if: - The customer comes back (maintenance plans, future work) - The customer refers others - You're building market share

That's not okay if: - This is one-time transactional work - You have no retention strategy - You need immediate profitability

Step 4: Apply the 10-20% Rule

Conservative benchmark: Your cost per acquisition should be 10-15% of the average ticket value.

Aggressive growth benchmark: Up to 25-30% of ticket value, if you have strong retention.

| Average Ticket | Conservative CPA Target | Aggressive CPA Target | |----------------|------------------------|----------------------| | $300 | $30-45 | $75-90 | | $500 | $50-75 | $125-150 | | $1,000 | $100-150 | $250-300 | | $5,000 | $500-750 | $1,250-1,500 | | $10,000 | $1,000-1,500 | $2,500-3,000 |

A $120 cost per lead with 50% close rate gives you $240 CPA. That's acceptable for a $2,000+ job, tight for a $500 job.

The Lifetime Value Factor

One-time thinking kills marketing ROI calculations.

That customer you acquired for $250, what are they actually worth?

A plumbing customer might: - Call again for future emergencies ($300-500/year average) - Refer friends/family (1-2 referrals lifetime) - Buy a water heater when theirs fails ($3,000) - Sign up for a maintenance plan ($200/year recurring)

Total lifetime value: $2,000-5,000+

Suddenly that $250 acquisition looks different.

The businesses that can afford to pay the most per lead are the ones who've figured out how to increase lifetime value, not the ones with the lowest ad costs.

What "Getting Ripped Off" Actually Looks Like

You're not getting ripped off because your cost per lead is above the median. You're getting ripped off if:

Your CPL is 2x+ the median with no explanation

If you're paying $200/lead in a market where the median is $85, something is wrong with the campaign setup, not the market.

Your lead quality is garbage

$50/lead is great. $50/lead where 80% are spam, wrong numbers, or people in the wrong city is not great.

You're paying for "leads" that aren't leads

Some agencies count every form submission. Including the spam. Including the "test" submissions. Real leads answer the phone and have a legitimate service need.

Your agency won't show you the data

If you can't see the actual Google Ads dashboard, the actual search terms, the actual cost per conversion, there's probably a reason.

Negotiating with Agencies and Lead Services

Questions to ask before signing:

1. . "What's the average cost per lead for businesses like mine that you manage?"
2. . "How do you define a 'lead'? What qualifies?"
3. . "Can I see results from similar clients?"
4. . "How is your fee structured? Flat fee, percentage of spend, or per lead?"
5. . "What's the cancellation policy and notice period?"

Red flags:

• "We guarantee X leads per month" (quality will suffer to hit numbers)
• Long-term contracts with no performance out
• Fees based on percentage of ad spend with no performance incentives
• Unwillingness to share actual account data
• Promising dramatically lower CPL than industry norms

Reducing Your Cost Per Lead

If your CPL is too high, here's where to focus:

Immediate fixes (this week):

1. . Add negative keywords to stop paying for junk searches
2. . Check geographic targeting for location leakage
3. . Review search term reports for irrelevant queries
4. . Ensure conversion tracking captures phone calls, not just forms

Medium-term fixes (this month):

1. . Build service-specific landing pages
2. . Improve page load speed
3. . Add click-to-call and make phone number prominent
4. . Test different ad copy variations

Strategic fixes (this quarter):

1. . Focus budget on highest-converting services
2. . Adjust bids by time of day and day of week
3. . Build remarketing audiences
4. . Improve your reviews (affects LSA ranking)

The Bottom Line

Cost per lead benchmarks are useful, but they're not the whole story. What matters is:

1. . Can you track your full funnel? From ad click to closed job?
2. . Do you know your cost per acquisition? Not just cost per lead?
3. . Is that CPA sustainable for your business model? Given your ticket size and margins?
4. . Are you building lifetime value? Or just chasing one-time transactions?

A $150 cost per lead that turns into profitable customers is better than a $50 cost per lead that turns into garbage.

Focus on the outcomes, not just the inputs.

Not sure if your lead costs are reasonable? [Let's benchmark your campaigns](/contact) against real industry data.