Calculate your cost per customer
Worked example
A service business spends $5,000 a month on ads, pays a $5,000 fee, gets 125 leads and converts 4% of them.
- Cost per lead: $5,000 ÷ 125 = $40.
- Customers: 125 × 4% = 5 a month.
- Cost per customer (spend plus fee): $10,000 ÷ 5 = $2,000.
- With a lead-to-customer rate 1.5 times higher (6%): 7.5 customers, so $10,000 ÷ 7.5 = about $1,333.
The $40 lead looks cheap; the $2,000 customer is the number to compare with what a customer is worth. Improving the rate, through faster follow-up and better qualification, cut cost per customer by a third with no change in spend.
Methodology
- Cost per lead = ad spend ÷ leads.
- Customers = leads × lead-to-customer rate.
- Cost per customer = (ad spend + fee) ÷ customers.
- Improved scenario = the same formula with the rate multiplied by 1.5, capped at 100%.
The 1.5 multiplier is an illustration of sensitivity, not a forecast of what any change will deliver. All other values come from you; the pre-filled numbers are the worked example. The calculator excludes sales time, software, refunds and tax. To get your true lead-to-customer rate, match each lead to your CRM outcomes (how to measure real ROI). The metric itself is explained in cost per lead vs cost per customer.
What next?
If cost per customer is higher than a customer is worth, work on the rate before the spend: why leads go cold and the follow-up diagnostic. To run it on your own account, Book A Free Call.
