How Do You Calculate Pay Per Lead Costs?

February 26, 2024

ViB Editorial Team

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Figuring out how much you should be paying for each new lead sounds confusing, doesn’t it? But don’t worry – it’s actually pretty simple! 

Let me show you a super easy way to calculate pay per lead costs. 🙋

The Demand Generation Benchmarks Report by Marketing Charts states that the pay per lead average cost is $208. 

This is not an exact cost, of course. In fact, a single lead’s cost can vary by hundreds of dollars depending on the industry and the difficulty of obtaining that lead.

However, there is a simple formula that can help you calculate the cost of your lead. By using this formula, you can get a more accurate cost. Are you aware of the formula? 

If not, don’t worry, I am here to make you understand, so let’s get into it!

How to calculate cost per lead

Typically, most B2B demand generation companies charge fees that are around 1-3% of your average deal size. For example, if your product sells for $10,000, your pay per lead cost could be anywhere from $100 to $300.

You can then calculate pay per lead costs by multiplying the lead price with the number of leads you got:

Lead price x lead volume

So, if you acquired 20 leads and the average lead price is $200 (taking the average from $100 to $300), your total cost for lead generation will be $4000.

What Is an example of cost per lead?

As we already know, pay per lead model comes in various subsets. Breaking it down in simple language, depending on the industry you operate in and the type of leads you want to generate, the cost of leads in every subset (and even within a single subset!) can vary by a lot:

Average cost for a meeting (pay per appointment)

Pay per appointment campaigns see average prices of anywhere between $50 and $3000. That’s a huge difference but it makes sense if you consider the level of resources and effort needed to generate a lead

For example, if you want a meeting with managers in the martech industry, they could probably go for $50 to $100 leads. However, if you are more interested in the C-suite level, then you can expect a pay rate of $3000 per lead – or even more in some cases.

But, hey, you pay for quality.

Average cost for a syndication lead (pay per download)

Content syndication solutions prices per lead can fall anywhere around $40 to $100 across all platforms. But here’s the catch: the cost typically depends on the type of leads you want to target so it is important to reach out to your lead generation team for an exact pricing quote.

At ViB, you can start getting leads via content syndication for $30. What’s more, we offer a guarantee of qualified leads, which means you will get what you pay for.

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Attendee standard cost (pay per attendee)

Again, calculating the cost of a webinar attendee is not as clear-cut and depends on a variety of factors. At ViB Tech, though, we offer a price of \$15,000 per webinar with a minimum guarantee of 100 attendees.

This means a single lead can cost you as little as $150 – or even less if the attendees are more than 100 – which is often the case with us.

Email marketing median cost

The email open rate standard for the IT industry was just 33.5%, reported HubSpot. The main reasons emails remain unopened is they may appear very corporate or generic – or that the recipients do not want to receive your emails.

It can be very tough to find professionals who are already warmed up to receive your emails. This is where email marketing lead generation comes in.

According to Visitor Queue, the average cost for a single email marketing lead is $53. At ViB, our email solution starts at $2,200 per send, usually driving 30-70+ engaged leads.

 A single email send is delivered to 75,000 highly targeted tech professionals who are part of our ViB community. This means they are already warmed up to receive your emails and are more likely to convert!

What is a reasonable cost per lead?

There is no cookie-cutter answer for this. A reasonable cost per lead varies by industry but the common factor is that it should be significantly less than your gross profit per sale. For example, if your sale yields $2000, your cost per lead should be less than this amount.

Factors influencing the cost of leads in pay per lead

There are several factors that come into play that can affect your cost per lead. Let me break them down for you:

1 – Industry dynamics

Different industries have varying levels of competition and demand. In highly competitive sectors, getting leads can be pricier because everyone’s vying for the audience’s attention.

2 – Target audience specificity

How you define and pinpoint your perfect audience plays a role in how much leads cost. If you’re going for really specific audience segments, it might need more work and resources, and that can bump up the overall cost for each lead.

3 – Geographic considerations

The geographical scope of your target market plays a role in lead costs. If you’re targeting a local crowd, it might be easier on the wallet compared to going big with national or international campaigns.

4 – Lead quality and qualification

The level of lead qualification and quality you want will also naturally impact costs. If you’re after highly qualified leads who are more likely to convert, you might need extra resources to find them.

5 – Marketing channels

Your choice of marketing channels also significantly influences costs. Some platforms or methods might cost more upfront, but they bring in better-quality leads, affecting the overall cost per lead.

6 – Campaign scale and scope

The size and scope of your lead generation campaign matter. If you’re going all out with a massive campaign and lots of goals, it might end up costing more. This is even more true if there’s a ton of outreach or marketing work involved.

7 – Marketing creativity and effectiveness

The effectiveness of your marketing strategies and creativity in capturing audience attention can impact lead costs. If your campaigns (or vendors) are top-notch and highly effective, you might end up with better results at a lower cost.

8 – Competition and demand fluctuations

Changes in the market, like ups and downs in demand and shifts in competition, can affect your lead costs. To keep things in check, it’s crucial to adjust your strategies based on what’s happening in the market. Adaptability is the key to optimizing costs.

How much should you pay for a lead?

Figuring out the right amount to pay for a lead involves a thorough assessment of various factors.

Let’s look at them:

  • Look at your business’s unique considerations, like budget constraints, target market specifics, and overall marketing goals. This can help you determine an acceptable cost per lead.
 
  • While it’s tempting to focus solely on minimizing costs, it’s equally important to consider how much potential value each lead brings to your business.
 
  • Quality often surpasses quantity when it comes to leads. Higher-quality leads are more likely to convert into paying customers and offer a better ROI. Striking a balance between lead cost and quality ensures that you’re not compromising on the potential for conversion.
 
 
  • Qualified leads are more likely to turn into actual customers than unqualified ones.
 
  • Make sure the leads match your ideal customer profile (ICP). Decision-makers are the ones who can actually make a purchase, so they’re more valuable.
 
  • Take a peek into the lead generation provider’s case studies. These success stories give you the lowdown on what the company has successfully pulled off before. This can help you see whether they can deliver you the results that you need.
 
  • Use our 15 questions at them when you’re evaluating the marketing agency. These questions cover everything from strategy to experience, helping you dig deep into what they bring to the table.
 
  • Before you sign any contract, it’s really important to try out the lead generation service first. This means giving them a test run to see how well they perform. During this trial period, watch how quickly they respond, communicate, and adjust to the specific needs of your business.
Making an informed decision when evaluating the right B2B lead agency doesn’t have to be rocket science. Get the one-page checklist of the 15 must-ask questions, to cover all your bases, easily.

Ways to optimize lead costs

Striking the right balance requires ongoing optimization efforts, leveraging targeted strategies, and continuous monitoring of campaign performance. Let’s go over some strategies to optimize lead costs:

1 – Targeted audience segmentation: Get highly focused on specific audience segments. This way, you’re not throwing resources at recipients who aren’t interested. It’s fine-tuning your campaigns to be cost-effective.

2 – Efficient use of marketing channels: Figure out which marketing channels work best for your audience. Put your energy into platforms that actually get you results, saving you from splurging on less effective ones.

3 – Continuous monitoring and analysis: Set up a solid tracking and analytics system to keep tabs on how your lead generation is doing. Regular check-ins let you tweak things fast, allowing you to optimize things fast.

4 – Refining lead qualification processes: Keep refining and improving how you qualify leads. Pin down what makes a top-notch lead for your business. This way, you’re channeling resources where they’ll likely pay off the most.

5 – A/B testing campaigns: Throw some A/B testing into the mix. Try out different things in your campaigns, even your gated assets on your paid content syndication efforts. Marketing requirers for you to test ongoing experiments to help you figure out what works best and fine-tune your approach over time.

6 – Choosing the right with lead generation providers: If working with lead generation services, do your research! Inspect how your vendor is generating leads, and ensure a fair balance between cost and quality. Make sure the deal strikes a fair balance between what you’re paying and the quality of leads you’re getting. Set clear expectations and metrics to measure how well those leads perform.

Ready to get started with pay per lead generation?

Teaming up with leading pay per lead companies is a smart move to meet your KPIs, stay within budget, and secure high-quality sales leads.

Partnering with a top-notch lead generation company can deliver impressive results, saving you time and helping you stay on budget. 

Discover your most promising leads through our community-centric approach. Engage with a vast and targetable pool of community members using ViB, where leads self-qualify. Connect with community members who already share an interest in your offerings.

For customized solutions that pinpoint gaps in your lead generation strategy, reach out to our team members and get started today!

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