Cost per lead
CPL / cost per inquiry
Cost per lead is what you paid to get one person to actually get in touch: ad spend divided by the calls, forms and bookings it produced. Cost per click counts everybody who clicked. Cost per lead counts only the ones who reached out, so it is the number to set against what a lead is worth.
No ad platform has a column called cost per lead. Google Ads shows Cost / conv., which it works out as your total cost divided by the number in the Conversions column. Microsoft Advertising's cost per conversion is spend divided by conversions. Either one is your cost per lead only if every conversion it counts is a real lead, counted once.
So the figure worth trusting comes from your own records: a month's ad spend divided by the calls, form fills and bookings from ads you actually received that month. When your number and the platform's disagree, the direction of the gap tells you where to look. A platform figure lower than yours usually means it counts things that are not leads, like taps on your phone number, or counts some leads twice. A platform figure higher than yours usually means leads from ads are going untracked.
Cost per lead is also only half a verdict. A lead is worth roughly your average profit per job times the share of leads that become jobs, and that is the most you can pay for one and break even. A $75 lead is cheap for a roofer who closes one in three at $3,000 profit and expensive for a handyman who closes one in five at $150.
Google files both the spend and the conversions under the day of the ad click, so last month's cost per lead in Google Ads can still improve as late conversions arrive. Compare a finished month, a few days after it ends.
In practice
An electrician spends $3,000 on Google Ads in a month. The account shows 75 conversions and a Cost / conv. of $40. The phone log and inbox show 40 leads from ads, so the real cost per lead is $75: the other 35 conversions were taps on the phone number. If one lead in four becomes a job worth $600 in profit, a lead is worth $150, so $75 a lead is working. The $40 looked better and was wrong.
Not the same as
- Cost per acquisition
- The platform's spend divided by whatever its conversion column counts. It equals cost per lead only when every counted conversion is a real lead.
- Cost per click
- What one click cost, whether or not that person ever got in touch. Cost per lead divides the same spend by far fewer people.
Why it matters to you
Budgets and bid targets get set from this number. Set them from an inflated conversion count and the campaign looks cheap while real leads cost twice as much, so the budget goes up on the strength of taps and duplicates. Set them from your own lead count and your lead value, and you know the most a lead can cost before the ads lose money.
What to ask or check
- 01What did each lead from ads cost last month, counted from our calls and forms rather than the Conversions column?
- 02Which conversion actions make up the Cost / conv. figure in our account?
- 03What is the most we can pay for a lead, given what a job is worth and how many leads we close?
What people get wrong
That the lowest cost per lead wins. A campaign producing cheap leads that never book is worse than one producing dearer leads that do. Judge it alongside the share of leads that turn into paid work.
Where you will see it
Not as a column of its own. Google Ads shows Cost / conv. on the campaign, ad group and keyword tables; the real figure is your spend divided by the leads in your own records.
Where we fit
Running Google Ads and Microsoft Advertising accounts is one of the things we sell. Settings and figures like this one are part of that work, in an account that stays in your name.
See how we do it