Cost per lead is where most people stop. Add your close rate, your average sale and your margin, and you get the numbers that decide whether the ads are worth it — including the most you can afford to pay for a lead.
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Cost per lead is spend ÷ leads. Customers are leads × close rate, and cost per customer — often called CAC, customer acquisition cost — is spend ÷ customers. Revenue is customers times your average sale, ROAS is revenue divided by spend, and gross profit after ad spend is revenue × margin − spend.
The reverse question is often more useful. Each lead is worth, on average, average sale × margin × close rate in gross profit. Pay more than that per lead and you lose money on the ads; pay less and you keep the difference. The same logic per customer is simply average sale × margin.
Close rate moves the answer as much as lead cost does. Raise your close rate from 20% to 30% and the most you can afford per lead goes up by half, with no change to the ads at all. That's why a cheaper lead source is not automatically a better one — if those leads close less often, they can cost more per customer.
Two cautions. This uses one sale per customer; if customers come back or sign up for recurring service, their real value is higher and you can afford more. And a blended close rate hides the fact that different campaigns close at different rates — the number that matters is close rate by source. For the revenue side alone, try the ROAS & break-even calculator, and for why lead costs rarely compare across businesses, read Is My Cost Per Lead Any Good?
Book a demo and we'll show you how AuriaTrack works out cost per customer and close rate for each campaign from your actual closed jobs, instead of one blended guess.