The most you can pay for an enquiry, a qualified lead and a closed sale without going backwards. Built for businesses that sell off leads rather than a checkout.
Pay more than $324.00 for an enquiry and you are buying customers at a loss. Your target sits lower again.
| Cost per enquiry | Ad spend | Profit |
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A lead is not a sale, and the gap between the two is where most lead generation advertising quietly goes wrong. The only figure a bid strategy can act on is a cost per enquiry, but the only figure that matters to the business is a cost per customer. This calculator connects them.
The break-even cost per enquiry is your ceiling. It is the point where the gross profit from the customers those enquiries eventually produce exactly equals what you paid for them. The target figure is what you should actually bid to, because break-even means running a sales team for nothing.
Google Ads optimises toward the conversion you send it, which for most service businesses is a form fill or a call. That is the enquiry-level figure, and it is always the lowest of the three. Feeding the platform a cost per customer as a target CPA is a common and expensive mistake.
Working it stage by stage makes the logic obvious. If a won customer produces $2,700 of gross profit and you close 30 percent of qualified leads, a qualified lead is worth $810. If 40 percent of enquiries become qualified leads, an enquiry is worth $324. Nothing more complicated than that.
The direct cost of delivering the work, and nothing else. Materials, subcontractors, the labour hours booked to the job, product cost. Not rent, not admin salaries, not software, not your own time running the business. Those are fixed costs covered by total gross profit across all jobs.
If you want the ceiling to carry overheads as well, that is what the target net profit margin field does. Set it to the share of revenue you need to keep after acquisition, and the target ceilings drop accordingly.
This is the input people guess, and guessing it wrong invalidates everything downstream. A close rate remembered rather than measured is almost always too high, because losses are forgettable and wins are not.
Pull it from the CRM across at least six months, and be strict about the denominator. If 200 enquiries arrived and 24 became customers, the overall rate is 12 percent, regardless of how many were judged unqualified along the way. Splitting that into an enquiry-to-qualified stage and a qualified-to-close stage is useful for diagnosing where the funnel leaks, but the two multiplied together must still equal the honest end-to-end number.
A close rate calculated across all sources is flattered by referrals, repeat customers and word of mouth, who arrive warm and pre-sold. Paid search enquiries are colder and usually close at a materially lower rate. Segment by source before using the figure, or the ceiling you calculate will be too generous.
The target cost per enquiry is what goes into a Target CPA bid strategy, or what you manage toward on Maximise Conversions. Three practical notes before you type it in.
A commercial trades business in Sydney averages $6,600 including GST per job, at a 45 percent gross margin. Around 40 percent of enquiries are genuine prospects, and they close 30 percent of those.
So $324 is the ceiling. To keep a 25 percent net margin, they need $1,500 of profit per job, leaving $1,200 to acquire a customer, which works back to $144 per enquiry.
At 100 enquiries a month that is $14,400 of media spend producing twelve customers and $32,400 of gross profit, for $18,000 of net profit. At the break-even figure of $324 the same hundred enquiries cost $32,400 and produce nothing. Figures are illustrative and returns vary by industry.
A $6,000 job is not $6,000 of value. Bidding against revenue rather than margin is the fastest way to buy a full pipeline and an empty bank account.
If 60 percent of enquiries are never going to buy, an enquiry is worth 40 percent of what you thought. Businesses that skip this stage consistently set their target CPA more than twice as high as it should be.
Newsletter signups, brochure downloads and contact-page visits are not enquiries. If they are firing as conversions, the cost per conversion in the platform is not comparable to the ceiling calculated here, and the bid strategy is optimising toward the wrong thing.
Quoting, site visits, commission and the hours spent chasing a deal are real acquisition costs. If they are material, put them in the sales cost field. A business spending four hours quoting a job cannot treat the whole gross margin as available to buy the lead.
Start with the gross profit a won customer produces, then multiply down through your funnel. If a customer is worth $2,700 in gross profit, you close 30 percent of qualified leads and 40 percent of enquiries are qualified, then an enquiry is worth $2,700 times 0.30 times 0.40, which is $324. That is your break-even. Your target should sit below it by whatever profit you want to keep.
Cost per lead is what you actually paid for an enquiry. Target CPA is the figure you give a bid strategy to aim at. They only mean the same thing when the conversion you are counting is the enquiry itself. If your account counts newsletter signups or page views as conversions, the target CPA in Google Ads is measuring something different from your real cost per lead.
Gross profit. Revenue includes the cost of delivering the work, which you never get to keep. A $6,000 job at a 45 percent margin gives you $2,700 to spend on acquisition, overheads and profit. Bidding against the $6,000 figure will produce a full pipeline and no money.
Not the break-even figure, and not the target figure on day one. Start on Maximise Conversions with no target until the campaign has around 30 conversions, then set a target close to what it is already achieving and tighten by roughly 20 percent at a time, leaving two to three weeks between changes. Setting an aggressive target immediately usually stops the campaign spending altogether.
Use the enquiry-to-qualified rate in this calculator, and watch it as you tighten the target. Cheaper leads are frequently worse leads, so a falling cost per enquiry alongside a falling qualification rate is not an improvement. The durable fix is sending qualified-lead or closed-sale data back to the platform through offline conversion imports so bidding optimises toward outcomes rather than form fills.
It affects the starting figure. If you are registered for GST, the 10 percent you collect on a sale is remitted to the ATO and is not revenue, so the calculation should run on the ex-GST value. A $6,600 job including GST is $6,000 of revenue. Getting this wrong inflates every ceiling by 10 percent. Confirm your GST position with your accountant.
Yes, if it is material. Commission, quoting time, site visits and any other cost incurred converting a lead are part of acquisition cost, and they reduce the amount available for media spend. The sales cost field deducts them from gross profit before the ceilings are worked out.
Take at least six months and use the blended figure, segmented by traffic source. Monthly close rates on low deal volume swing wildly for reasons that have nothing to do with marketing, and building a bid target on one good month is how accounts end up scaled into losses. If paid search closes materially worse than referrals, use the paid search number.
This calculator is an educational estimating tool. It is not advice. The results are illustrative only and must not be relied upon as financial, accounting, taxation, investment, legal or professional advice of any kind. Nothing on this page takes into account your objectives, financial situation or particular needs.
The output is only as good as the inputs. Every figure returned is calculated solely from the numbers you enter. If those numbers are estimated, out of date, incomplete or incorrect, the result will be too. Paid Media Plus does not verify, and cannot verify, any figure you enter.
The model is deliberately simplified. Among other things, it does not account for:
Results are not a forecast, projection, guarantee or prediction of performance. No outcome is promised or implied. Advertising results vary by industry, offer, market conditions, competition and execution, and figures shown anywhere on this site are illustrative of well-optimised accounts rather than typical or expected results.
Verify independently. Before making any business, budgeting, bidding or investment decision, reconcile these figures against your own accounting records and obtain advice from a qualified accountant, tax agent or licensed financial adviser who understands your circumstances. If a figure produced here disagrees with your accounts, your accounts are right.
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A cost per lead ceiling is only as good as the tracking underneath it. These are the next things worth checking.
The return on ad spend an order has to produce before it makes you a cent.
How much budget it actually takes to hit a lead or sales target, or what a fixed budget will realistically return.
Working back from gross margin to an allowable cost per acquisition, and choosing channels that can hit it.
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