The formula, and why most contractors get it wrong
Lead value is not what you are willing to pay. It is a calculation: average job value × close rate × gross margin. Everything else is guesswork.
The mistake is using revenue instead of margin, which makes leads look far more valuable than they are, or using an optimistic close rate rather than a measured one. Use the numbers from your last 90 days, not the numbers you wish were true.
Worked examples by trade
These use conservative national ranges. Substitute your own figures — the point is the method, not the averages.
Plumbing
Average job across a realistic mix of drain calls, water heaters and repairs: roughly $900. Close rate on an exclusive inbound call: 50%. Gross margin: 45%. That gives a lead value near $200.
Skew the mix toward repipes and sewer work and the same calculation runs past $500 per lead.
Roofing
Average replacement: $12,000. Close rate on exclusive inbound: 25%, since roofing buyers do compare. Gross margin: 30%. Lead value lands around $900.
This is why roofing lead prices on marketplaces are so high — and why contractors overpay for shared versions of the same lead.
HVAC
Mixed service and replacement average: $2,200. Close rate: 40%. Margin: 35%. Lead value around $300.
Add the lifetime value of a maintenance agreement and the figure climbs meaningfully, because HVAC customers are unusually sticky.
Water damage restoration
Average mitigation job: $4,500, frequently insurance funded. Close rate on an urgent exclusive call: 55%. Margin: 40%. Lead value near $1,000.
Restoration is the clearest case for exclusivity: response speed determines who wins, so sharing the lead effectively means losing it.
Why exclusivity changes the close rate input
The close rate in the formula is not a fixed property of your business — it depends on how many competitors were handed the same opportunity. A shared lead sold to four contractors might close at 15%. The identical homeowner calling you directly might close at 50%.
That single variable usually moves lead value by a factor of three, which is why comparing a shared lead price to an exclusive lead price like-for-like is misleading.
Turning lead value into a lease decision
Once you know your lead value, evaluating a leased site is arithmetic. If plumbing leads are worth $200 to you and a ranked site produced 18 calls last month, of which 12 were genuine service opportunities, the site generated roughly $2,400 of value.
Any lease priced meaningfully below that is profitable. Any lease priced above it is not, no matter how good the site looks. This is precisely why a trial period exists — you should be running this calculation on real volume from your own market rather than a projection.
Numbers worth tracking from day one
Without these, every marketing decision is a guess.
- Calls received, by source
- Calls answered within 30 seconds
- Qualified opportunities (right trade, right area, real intent)
- Booked jobs and their revenue
- Gross margin by job type
- Cost per booked job, by channel