Every contractor who has tried a lead site has the same complaint. The leads cost more than they said, and fewer of them turn into work than you expected.
Both of those are true, and they are the same problem. The number on the invoice is the cost per lead. The number that decides whether this works for you is the cost per job. Those two are not close to each other, and nobody selling you leads is going to do that second calculation in front of you.
Here is how to run it yourself before you spend anything.
Cost per lead is the wrong number
A lead is not a job. It is a phone number and a maybe.
What matters is how many of those maybes you convert, because every lead you do not close is still paid for. Your real acquisition cost is the lead price divided by your close rate.
Say leads run you fifty dollars and you close one in ten. That is five hundred dollars of lead spend for every job you book, not fifty.
Here is the whole thing in one table.
| Cost per lead | Close 5% | Close 10% | Close 20% | Close 33% |
|---|---|---|---|---|
| $25 | $500 | $250 | $125 | $76 |
| $50 | $1,000 | $500 | $250 | $152 |
| $100 | $2,000 | $1,000 | $500 | $303 |
Read down a column and the close rate is doing more work than the lead price. A fifty dollar lead at a 20 percent close rate is cheaper per job than a twenty five dollar lead at 5 percent. Which means the question is not "how much are leads," it is "how many of these can I actually close."
Now put it against your job size
Five hundred dollars per booked job sounds survivable until you know what the job is worth.
On a three thousand dollar average ticket, a fifty dollar lead at a 10 percent close rate costs you 17 percent of the revenue before you have bought a single board. If your margin on that job was 25 percent, you just handed over two thirds of your profit to find the customer.
On a twenty thousand dollar job, that same five hundred dollars is two and a half percent and barely registers.
This is the actual rule. Lead sites work on big tickets and bleed you on small ones. A full roof replacement or a kitchen remodel can carry the acquisition cost. A service call, a repair, a small fence section usually cannot.
If you have not worked out what your margin actually is, that comes first, because acquisition cost comes straight out of it. We covered that in markup versus margin.
How the different platforms charge
Pricing on these platforms changes constantly and varies by trade, by market, and by how many contractors in your zip code are bidding. Anybody quoting you an exact current number is guessing. What does not change is the shape of the models, and the shape is what you need to understand.
Pay per lead. You get charged when a lead comes through, whether or not you ever speak to the person. Price scales with how valuable the job type is, so a bath remodel lead costs multiples of a handyman lead.
Pay per contact or per quote sent. You get charged when you reach out to the homeowner. Feels fairer. In practice you are still paying to enter a race you often lose.
Membership or subscription. An annual or monthly fee to be listed, sometimes on top of per lead charges. Watch the renewal terms on these specifically.
Lead credits or budgets. You load money, leads draw it down. The danger is a budget that refills automatically while you are on a job and not watching.
Whatever the model, find out before you sign: is the lead exclusive or shared, how many other contractors get it, what the refund policy is for bad leads, how you pause spend, and what it takes to cancel.
Shared leads are the real problem
Most of these leads go to three or four contractors at once. Sometimes more.
So you are not being evaluated on your work. You are being evaluated on who called first and who came in lowest, by a homeowner who now has four quotes and no way to tell them apart. That is a price race, and the guy who wins it is often the one who should not have.
It also explains the close rate. If four of you get the lead and one job exists, the average close rate across all four is 25 percent before anything else happens. Then subtract the homeowners who were shopping, the ones who went with a neighbor's guy, and the ones who never pick up.
That is how a close rate lands at 10 percent and why nobody warns you.
Speed is the only lever you fully control
With a shared lead you are in a race that starts the second it hits your phone. Calling in five minutes versus calling in two hours is most of the difference between a 20 percent close rate and a 5 percent one, and the table above shows what that does to your cost per job.
If you are going to buy leads, have a plan for answering them before you turn the tap on. Not a plan to check your email at lunch. We wrote about why responding faster wins the job, and on bought leads it is not an edge, it is the whole thing.
The same goes for the ones who do not answer the first call. Most contractors try once and give up, which means they paid for the lead and abandoned it. A simple follow up sequence on leads you already bought is the cheapest close rate improvement available to you.
Track it for ninety days, then decide
Do not run this off a feeling. Feelings about lead sites are usually shaped by the one terrible lead you remember.
For ninety days, write down four things. How many leads you were charged for. What you paid in total. How many turned into booked jobs. What those jobs were worth.
Then: total spend divided by jobs booked is your cost per job. Divide that by your average job value and you have acquisition cost as a percentage of revenue. Compare it against your margin.
If acquisition is eating more than a third of your gross margin, the platform is your business partner and you did not agree to that. If it is under ten percent, it is working and you should probably spend more.
Run the same math on every other source you use. Referrals, your own site, truck signage, repeat customers. Most contractors find their website and their referrals cost a fraction per job of anything bought, which is useful to know with a number attached rather than as a hunch.
When they genuinely make sense
Lead sites are not a scam. They are an expensive tool that fits a few specific situations.
You are new, you have no reputation yet, and you need volume to build a review history. Buy leads, do good work, collect reviews, and plan to wean off.
You have a hole in the schedule. Buying work to fill a dead two weeks beats paying a crew to do nothing, even at a thin margin.
You are entering a new town or a new service and have no presence there.
Your average ticket is big enough that the acquisition cost rounds to nothing.
Where they stop making sense is when they become the whole pipeline. Every lead you buy is a customer who belongs to the platform, not to you. Rent that long enough and you have a business with no asset underneath it, and the price goes up whenever they decide it does.
The short version
- Cost per lead is marketing. Cost per job is the number
- Cost per job equals lead price divided by close rate
- Close rate moves the number more than lead price does
- Measure acquisition cost as a share of your average job, then against your margin
- Big tickets absorb it, small tickets do not
- Most leads are shared with three or four contractors, which is why close rates are low
- Speed of response is the one lever you control, and it is a big one
- Follow up on leads you already paid for instead of abandoning them
- Track ninety days before deciding, and run the same math on your other sources
- Good for building early volume or filling a gap, bad as the whole pipeline
The contractors who do well with these platforms treat them like a line item with a known return. The ones who get burned treat them like a phone that rings. Same product, different math.
For the broader question of whether to use them at all, including what homeowners think of these sites, see our honest look at Angi, Thumbtack, and the rest.