What is a good cost per lead? The maths for Australian service businesses

What is a good cost per lead?

A good cost per lead is any number comfortably below what a lead is worth to your business. Work it backwards: take your average client value, multiply by your lead-to-client close rate, and that is your break-even CPL. A good CPL sits well under that, leaving margin for the cost of delivering the work.

Anyone who quotes you a universal benchmark ("a good CPL is $50") is guessing with your money. A $300 lead can be a bargain and a $20 lead can be a rip-off, in the same city, in the same month.

The four numbers that matter

You only need four figures, and rough versions are fine to start.

First, average client value. Not the first invoice, the realistic revenue a new client brings over whatever horizon you plan around. A tax client worth $1,500 a year who stays four years is a $6,000 client.

Second, close rate from lead to client. If ten enquiries become two clients, that is 20 percent.

Third, your delivery margin, because revenue is not profit. If half of client revenue is cost to serve, budget from the other half.

Fourth, your current cost per lead by channel. If you cannot produce this number, that is the finding. You cannot judge any marketing without it.

A worked example

Illustrative numbers for a suburban accounting firm. Average new client: $6,000 over their lifetime, roughly $3,000 of that is margin. Close rate on qualified enquiries: 25 percent.

Break-even CPL on margin is $3,000 multiplied by 0.25, which is $750. Meaning: even a $300 cost per lead leaves this firm acquiring clients at $1,200 each against $3,000 of margin. Most owners in that position would buy every lead available at that price, yet many would flinch at "$300 a lead" because a benchmark article said leads should cost $80.

Run your own numbers before you judge any channel. The spreadsheet takes ten minutes and changes every marketing decision after it.

Why cheap leads are usually the expensive ones

Chasing a lower CPL almost always means widening the net: broader targeting, vaguer offers, forms that ask nothing. Volume rises, quality falls, and your team burns hours on enquiries that were never going to buy. The real metric underneath everything is cost per client (this is why our lead generation systems report it by default), and it frequently moves in the opposite direction to cost per lead.

The other silent killer is response time. A lead answered in minutes and a lead answered tomorrow are not the same asset, even at the same CPL. Slow follow-up quietly doubles your effective cost per client while every report still looks fine.

What to do with this

Three steps. Calculate your break-even CPL with the maths above. Get tracking to the point where every channel reports cost per lead and cost per client honestly. Then judge every campaign, agency and channel against your numbers, not against a benchmark written for someone else's business. We hold our own campaigns to exactly this maths, it's the only honest way to run paid media.

Want the numbers done for you?

Our free Growth Audit works through your ads, landing pages and tracking, and hands you a written report with the maths shown, whoever you hire. Get the free Growth Audit.