Guide
Cost per lead tells you what you spent. Cost per booked job tells you what a customer actually cost — including the quoting time nobody bills for. Here's how to work it out and what "good" looks like.
Cost per lead is the number every ad platform shows you because it makes them look good. It counts every click, call and form fill, whether it turned into a job or not. A plumber running shared-lead services can have a brilliant cost per lead and a terrible business, because most of those leads never book.
The number that actually tells you if a channel is worth keeping is cost per booked job:
Cost per booked job = total channel spend ÷ jobs actually booked
Not enquiries. Not estimates sent. Jobs on the calendar, ideally jobs invoiced. Everything else is vanity maths.
Ad spend and lead fees are the easy part to count. The part almost every plumber skips is the labour cost of chasing leads that don't close — driving out, measuring up, writing quotes, following up, and getting nothing for it.
Say you send 20 quotes a month and each one takes 50 minutes on average (drive time, assessment, writing it up, a follow-up call). That's:
20 × 50 minutes = 1,000 minutes = 16.7 hours
At a loaded labour rate of $65/hour (wages plus burden — not your billable rate), that's:
16.7 × $65 = $1,085 a month in quoting time alone.
That's often bigger than the ad spend that generated the leads in the first place. If you're not adding it in, your real cost per booked job is understated — sometimes by half.
The mistake most owners make is benchmarking cost per booked job against revenue, or against the invoice total. That's wrong because a $2,000 water heater install and a $2,000 job with $1,600 of parts have very different room to spend on getting the customer in the door.
Benchmark against gross profit per job instead — revenue minus materials, subcontractor cost and any job-specific direct costs. If you don't have that number handy per job type, run it through a job profitability calculator first.
Healthy ceiling: cost per booked job should sit between 10% and 20% of gross profit per job. Below 10% is great, and rare. Between 10-20% is a sustainable channel. Above that, the channel is eating your margin faster than it's building your business.
Example: if the average job on a channel has $600 gross profit, a healthy cost per booked job is $60-$120. If it's costing you $300 to book that job, the channel is not sustainable at that mix — even if the job itself looks profitable on paper.
Here's the maths for three common plumber lead sources, using close rate (percentage of leads that turn into a booked job) and per-lead cost to get to cost per booked job.
| Channel | Cost per lead | Close rate | Cost per booked job |
|---|---|---|---|
| Shared leads (Angi/HomeAdvisor-style) | $50 | 12% | $417 |
| Google LSA (Local Services Ads) | $35 | 35% | $100 |
| Referral bonus programme | $75 flat | 70% | $107 |
The formula for the shared leads row: $50 ÷ 0.12 = $417. That's not a typo — shared leads look cheap per lead and turn brutal per job because so many are duplicate, out-of-area, or price-shopping five other plumbers at once.
LSA and referrals cost roughly the same per booked job in this example ($100 vs $107) but for opposite reasons: LSA is cheap per lead with a mediocre close rate, referrals are expensive per lead but close at 70% because the customer already trusts the person who sent them.
Match these against your gross profit per job. On a $600 gross-profit job, shared leads at $417 is 70% of gross profit — miles over the 20% ceiling. LSA and referrals at ~$100-107 sit at 17-18%, right at the edge of healthy.
Don't kill or crown a channel on five leads. A 12% close rate on 5 leads means either 0 or 1 booked job — you can't tell the difference between a bad channel and bad luck. You need a minimum of 30 leads before the close rate and cost per booked job numbers mean anything. Under 30, treat the number as a rough signal, not a verdict.
Set a rule in advance so you're not making emotional decisions mid-month. A workable one:
Three months also gives you enough leads to clear the 30-lead sample size threshold on most channels, so the kill rule and the sample size rule reinforce each other.
The 10-20% ceiling assumes each booked job stands alone. If a channel brings in customers who come back — a maintenance plan customer, a landlord with multiple properties, a homeowner who calls you every time something breaks — the first job isn't the whole return. It's the deposit on a relationship.
Where your repeat rate on a channel's customers beats 40% (meaning 4 in 10 book again within, say, 12-24 months), you can justify a ceiling of 60-80% of gross profit on that first job, because you're really buying a customer, not a job. This is common with referral programmes and with maintenance agreements sold off a first-time job — the acquisition cost gets paid back over two or three visits, not one.
The trap is applying this logic to shared leads, where the customer has no loyalty to you and shopped five competitors to find you. Don't stretch the ceiling on a channel with no repeat data to support it.
Run this monthly, per channel:
If a channel is close to the edge and you're not sure the business can absorb a bad month while you wait it out, run your numbers through a break-even calculator so you know exactly how much room you have before cutting it.
The Small Business Operations Kit ($19) turns guides like this one into fill-in-once worksheets: rate card, quoting sheet, job costing, payment terms and follow-up templates. Built by the same people who write these guides.