Cost per lead vs cost per acquisition: what is the difference?

Cost per lead vs cost per acquisition: what is the difference?

Cost per lead vs cost per acquisition: what is the difference?

THE SHORT ANSWER

Cost per lead is the invoice price of one enquiry. Cost per acquisition is what a signed job actually costs you, and it is the only figure that belongs in a decision. Convert between them by dividing cost per lead by your overall conversion rate. At EUR 70 per lead with a 60 percent quote rate and a 30 percent win rate, overall conversion is 18 percent, so acquisition costs EUR 389 per job. A cheaper lead with worse conversion is frequently the more expensive purchase.

Suppliers quote cost per lead because it is the small number. Contractors compare cost per lead because it is the visible number. Neither habit survives contact with a spreadsheet, because two sources at identical prices can differ by a factor of two in what they cost you per job won, and nothing on the invoice tells you which is which.

The bridge between the two is your own conversion rate, which means the comparison cannot be made from the supplier's pricing page alone. It has to be made after the fact, on delivered volume, per source. That is inconvenient, and it is also the single highest-return piece of admin in a contracting business. Nobody else can do it for you, because the rate that matters belongs to your sales process rather than to the supplier.

The numbers, at a glance

  • Cost per lead: total spend on a source divided by enquiries delivered, so EUR 2,100 for 30 enquiries is EUR 70 each

  • Cost per acquisition: the same EUR 2,100 divided by the jobs signed from it, so four wins puts acquisition at EUR 525

  • The conversion between them: cost per lead divided by the product of your quote rate and win rate, so EUR 70 at 18 percent is EUR 389

  • Typical spread: two sources at the same EUR 70 price can land between EUR 250 and EUR 700 per job won

The arithmetic, written out

Take a source charging EUR 70 an enquiry. You reach 85 percent of them, you quote 60 percent of those you reach, and you sign 30 percent of the quotes. Overall conversion is 0.85 times 0.60 times 0.30, which is 15.3 percent. Dividing EUR 70 by 0.153 gives EUR 458 to acquire one customer.

Now take a source charging EUR 45. You reach 60 percent, quote 40 percent of those, and sign 22 percent. Overall conversion is 5.3 percent, and EUR 45 divided by 0.053 is EUR 849. The cheaper lead is 85 percent more expensive per job. This is not a hypothetical shape; it is what shared and recycled volume does to the denominator.

Why the cheap source wins on the spreadsheet a contractor never builds

Cost per lead is available on day one and cost per acquisition is available eight to twelve weeks later, after the quotes have aged out. Human beings optimise what they can see. That lag is the entire reason the low-price end of this market exists, and it is why the discipline that matters is not negotiation but attribution.

The fix is a single field on your quote record naming the source, filled in every time without exception. Everything else in this article is arithmetic you can do in a spreadsheet; that one field is the only thing that cannot be reconstructed later.

The third number: cost per acquisition against gross margin

Cost per acquisition is meaningless in isolation. EUR 458 is excellent against a heat pump job carrying EUR 3,200 of gross margin and ruinous against a painting job carrying EUR 550. Always express it as a percentage of margin.

  • Under 10 percent of gross margin. Comfortable. You can buy more volume at this price without argument.

  • 10 to 20 percent. Workable, and normal for a firm actively growing. Watch it monthly.

  • 20 to 30 percent. Only defensible as a deliberate, time-boxed investment in filling a new crew.

  • Over 30 percent. The channel is subsidising itself out of your profit. Either conversion improves or the source goes.

What each metric is genuinely good for

Cost per lead is the right metric for one job only: forecasting spend against a volume target. If you need thirty enquiries next month and they cost EUR 70, you need EUR 2,100. That is a budgeting question and cost per lead answers it cleanly.

Cost per acquisition is the right metric for every other decision, including which supplier to keep, whether to expand a territory, and whether to hire. Confusing the two produces the classic failure mode of this industry: a business that has driven its lead price down for three years while its cost per job quietly doubled.

Set up the comparison properly

  1. Add a mandatory source field to every enquiry and every quote record.

  2. Group leads into cohorts by source and month rather than reporting a blended average.

  3. Wait a full sales cycle before judging a cohort, then calculate cost per acquisition on it.

  4. Express each result as a percentage of gross margin, not as a raw amount.

  5. Kill any source above thirty percent of margin unless you can name the conversion fix and its deadline.

How these figures were built

These figures are a benchmark model, not a survey. They combine an industry base range observed across Western European home-improvement campaigns with a country multiplier for local auction pressure. Treat them as a band to negotiate against, not a quote.

How Flock Leads prices this

Because acquisition cost depends on conversion, the only thing a supplier can honestly fix in advance is the lead price, and Flock publishes it rather than quoting per enquiry.

  • Starter - 10 leads for EUR 750, which is EUR 75 per lead

  • Growth - 25 leads for EUR 1,750, which is EUR 70 per lead

  • Scale - 45 leads for EUR 2,925, which is EUR 65 per lead

  • Pro - 70 leads for EUR 4,340, which is EUR 62 per lead

  • Max - 90 leads for EUR 5,400, which is EUR 60 per lead

No retainer, no contract term, and no lead sent to a second business. Unused volume rolls over under the Flock Lead Promise.

Want leads like this in your pipeline?

Flock runs the campaigns, screens the enquiries and hands you only the ones that match your service area, job size and capacity. You pay per lead, not per month.

Book a 15-minute fit check  |  See lead package pricing

Related answers

Frequently asked questions

Should I track cost per quote as well?

Yes, and it is underrated. Cost per quote sits between the two and isolates whether a problem is upstream or downstream. If cost per quote is fine but acquisition cost is poor, your pricing or your closing is the issue, not the lead source.

How long should I wait before judging a cohort?

One full sales cycle plus two weeks. For interior trades that is roughly six weeks; for solar and heat pumps allow ten to twelve. Judging early systematically favours whichever source produces impulsive buyers rather than valuable ones, which is how firms end up cancelling the supplier that was quietly delivering their largest projects.

What sample size makes cost per acquisition trustworthy?

Around sixty leads per source gives a usable signal, and a hundred gives a stable one. Below thirty you are mostly measuring luck, which is why a ten-lead trial can only detect a supplier who is obviously bad rather than one who is merely mediocre.

Does cost per acquisition include my sales time?

Not by default, and it should for internal decisions. Add the loaded cost of surveys and quotations to get a fully loaded figure. It typically increases the number by 40 to 120 percent and changes which sources look attractive. Keep both versions: the narrow one for comparing suppliers, the loaded one for deciding whether the channel earns its place at all.

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