Cost Per Call vs Cost Per Job: Why the Cheaper Lead Often Costs More

Cost per job is what you spend on a lead source divided by the jobs it closes. Cost per call is only the price of each contact. The first number tells you whether the source works, which is why the cost-per-job guide treats it as the main comparison. The second is the price of the ticket.

The formula:

Cost per job = Cost per lead / (Contact rate x Close rate)

Contact rate is the share of leads you actually reach and talk to. Close rate is the share of those conversations that become signed work. Both are yours to measure, and neither appears on a vendor's price sheet.

A worked example (illustrative numbers)

Say you compare two sources for the same trade. These figures are hypothetical and exist to show the math. Replace them with yours.

The $30 lead costs half as much per lead and about 69% more per job. Nothing odd happened. The cheap lead was shared, so you reached fewer homeowners before someone else did, and those you reached had already talked to other contractors. That drags both rates down at once.

Flip the numbers and the cheap lead can win. A shared lead at $15 that you reach 70% of the time and close at 25% costs about $86 per job. A pay-per-call source doesn't always win. You can't know until you divide.

Why contact rate is the hidden number

Most contractors track close rate. Fewer track contact rate, and it can differ a lot between lead sources.

• A form lead arrives as a name, a number and a note. You call back in minutes or hours, and the homeowner may already be on the phone with someone else.
• A pay-per-call lead arrives as a live conversation. Either you answered or you didn't.

That makes the answering side matter. If you miss a third of inbound calls, the cost of each call you do reach rises by half. See what to do with missed calls and speed to lead. The time you burn chasing shared leads has its own entry in the hidden costs of shared leads.

What to count in cost per job

1. Lead fees for the period.
2. Fees that aren't per lead: memberships, profile placement, setup, minimums.
3. Leads you paid for and couldn't use: invalid numbers, out-of-area calls, duplicates. Ask any source how it handles these.
4. Optional: time spent. If you or your office spend 20 minutes on each lead that goes nowhere, price it. The full CAC formula does this line by line.

Leave out jobs from past customers or referrals that happened to come through the same phone line. Counting them makes a source look better than it is.

How to measure it with what you have

You don't need software to start. For 60 days:

1. Give each source its own phone number or its own tracking label.
2. Log every lead: date, source, whether you reached them, whether you quoted, whether you won.
3. At the end, divide total spend by total jobs per source.

Call tracking makes step 2 automatic and keeps recordings. See call tracking for contractors and how to tell which leads became jobs.

The break-even close rate

Work the formula backwards. Given your price per lead and gross profit per job, what close rate do you need to break even?

Break-even close rate = Cost per lead / (Contact rate x Gross profit per job)

Suppose a job leaves you $2,400 in gross profit, you reach 90% of calls, and each call costs $60. You break even at 2.8% ($60 / (0.9 x $2,400)). At a 30% close rate, each call yields 0.27 jobs, which is $648 of gross profit for a $60 call, about 10.8 times what you paid. Put your own numbers into the break-even close rate calculator.

A trade with a $300 job needs a very different answer. Ticket size changes how much you can afford to pay for a call. That's why cost per lead means little without lifetime value by trade.

A second pass: what moves each rate

Once you've divided, the useful question is which rate to work on.

Contact rate moves with how fast you respond and how many calls you miss. If your answer rate is 70%, answering more calls raises every source's results at once. That can be worth more than switching sources.

Close rate moves with how well your office qualifies the caller, how the estimate visit goes, and how your quote compares. It also moves with lead type: a homeowner who called you directly is usually further along than one who submitted the same request to several companies.

Price per lead is the one you negotiate with the source. Run it against the table. Cutting the call price from $60 to $50 takes cost per job from $222 to $185 ($50 / 0.27). Raising your contact rate from 90% to 95% on the same $60 calls takes it to $211 ($60 / 0.285). Both help, and the second costs you nothing in fees. Test each change against your own log before you act on it.

Common mistakes

• Comparing price per lead across sources. Compare cost per job.
• Judging a source after 10 leads. Wait for enough volume that one bad week doesn't decide it.
• Ignoring seasonality. A roofer in a hail month and the same roofer in January have different close rates. Compare sources in the same period.
• Blaming the source for slow follow-up. If the same source works for some of your crews and not others, the lead isn't the variable.

Where exclusive calls fit

Exclusive inbound calls remove one variable, because no other contractor is racing you to the same homeowner. That tends to help contact rate and close rate, but only your own log can show by how much. Exclusive vs. shared leads explains the model, and what is a billable call explains what you pay for when you buy calls. RankLocal bills for qualifying calls, which means calls over 60 seconds. If you want to test it against your current sources, apply here and run the same division on both.

The short version

Price per lead tells you what you paid. Cost per job tells you what you got. Divide by signed jobs, for every source, over the same stretch of time. The cheapest lead on the invoice often isn't the cheapest in the books.

Frequently asked questions

Is cost per call the same as cost per lead?

Not always. A call can be a lead, but a lead may also be a form or a message. Pay-per-call sources bill for calls that meet a rule, such as a minimum length, so check how your source defines a billable call.

Should I pay more for exclusive leads?

Only if your cost per job comes out lower. Run the exclusive source and your current one side by side for 60 days, log the results, and divide spend by signed jobs for each.

What should I count in cost per job?

Lead fees, any memberships or minimums, and the leads you paid for but couldn't use, such as wrong numbers or out-of-area calls. If you want a fuller picture, add the staff time spent on leads that went nowhere.

How many leads do I need before judging a source?

There's no fixed number, but ten leads is too few for one unlucky week to wash out. Many owners wait for at least thirty per source and compare sources during the same season.