8 {{ upvoteCount | shortNum }}
8 {{ upvoteCount | shortNum }}

Pricing Leads

by PaulintheSticks
6 replies
In order to figure out how to price leads, I'm trying to figure out what local service based business net margins are. I'm guessing that 10% average in any industry (other than maybe pharmaceuticals and insurance) is probably on the high side.

I assume asking a prospect would be a little risky. Most business owners probably don't know themselves.

Anyone know of any research available on the subject?

Thanks.
#leads #pricing
  • Profile picture of the author Hugh Thyer
    Paul, that info is not info you'd ever get and would never dream of asking.

    Pricing leads is a funny area. Basically it comes down to:
    - what each new client is worth to you in $ terms, factoring in long term work as well, and
    - how likely you are to convert each lead

    So a list of leads who convert highly and are worth thousands of dollars to you would be much more valuable than leads who are less likely to convert and have little long term value.

    Some businesses have been known to send real $100 bills to prospects. In a lot of cases, these have converted at 60%+ and worth tens of thousands of dollars.

    Others only pay a few cents per lead, with a much lower expectation of conversion and future earning.

    Don't undervalue your leads though. Depending on your business, good quality leads are worth the money as long as you have a strategy to convert them.
    Signature

    Ever wondered how copywriters work with their clients? I've answered that very question in detail-> www.salescomefirst.com
    {{ DiscussionBoard.errors[2834903].message }}
    • Profile picture of the author John Callaghan
      There are a lot of things to factor into the lead pricing info. But to simplify the process check out competing lead generation companies.

      Here's a link to a company that generates leads for various service companies. They are nice enough to post their prices on their website.

      Remodeling, Construction, Home Improvement, Insurance Leads

      If nothing else this should give you a starting point

      John
      Signature

      "I am the master of my fate: I am the captain of my soul."
      from Invictus by William Ernest Henley

      {{ DiscussionBoard.errors[2835344].message }}
    • Profile picture of the author PaulintheSticks
      Originally Posted by Hugh Thyer View Post

      Paul, that info is not info you'd ever get and would never dream of asking.
      Hugh, I was joking when I mentioned asking a prospect. You're mistaken that you could never get the info though. I used to work in the health industry and our trade publications printed avg net margins. I also just found articles that talked about plumbers and doctors net margins. Guess I'll just have to keep searching.
      Signature
      {{ DiscussionBoard.errors[2842828].message }}
    • Profile picture of the author tryinhere
      Originally Posted by Hugh Thyer View Post

      Paul, that info is not info you'd ever get and would never dream of asking. .
      ?? are you saying not to ask a person the margins ? / it is something i have no problems in asking every time if need be / how can you establish a profitable return for a client of you have no idea of the numbers to play with or at least a ball park to work from.

      ? or did i read that all wrong
      Signature
      | > Choosing to go off the grid for a while to focus on family, work and life in general. Have a great 2020 < |
      {{ DiscussionBoard.errors[2844559].message }}
  • Profile picture of the author J Bold
    Sounds complicated.

    I would just ask those you want to sell leads to, "Hey, what do you usually pay for leads?"

    Pretty simple, and there's no reason not to ask that question.
    Signature
    {{ DiscussionBoard.errors[2844644].message }}
    • Profile picture of the author PaulintheSticks
      Originally Posted by redicelander View Post

      Sounds complicated.

      I would just ask those you want to sell leads to, "Hey, what do you usually pay for leads?"

      Pretty simple, and there's no reason not to ask that question.
      The problem is that most small businesses don't buy leads.

      Secondly, you're relying on them being honest about how much they pay for the leads they buy. You will also have to know what the quality and conversion rate of those leads is.

      Have you ever noticed when you get quotes from insurance companies, cell service providers, cable tv companies they always ask you how much you are currently paying. If you're smart, you don't tell them unless you are paying a ridiculously low price. Let them give you a quote first.

      Do you think business owners are not that smart? The ones I'm targeting are. They might think they are currently paying way too much and would never want you to know that. They know that the higher the number they give you, the higher your quote will be. If you know what their net margins are, there is no problem pricing the leads. You make sure there's a good profit for the business owner and everyone is happy.

      And you can use that info as leverage when they say they don't want to pay that much. You just explain the principle of lifetime customer value and net margin so that they will understand why they should pay $200 per lead if half of the leads convert to customers ($400/customer) and they net $500 on the customers initial purchase. They are already $100 richer and they keep all of the net profits from any repeat business or referrals.

      The other thing is if you've done your market research and go into your meeting armed with a good idea of what their net margins are, lifetime customer value, etc., they know you're professional and not a schmuck because you took the time to understand their business instead of just walking in without any knowledge and asking them what their margins are how much they pay for leads.

      This is another good reason to target prospects who are leaders in their field. 1. There is a much better chance that they will understand the concept of lifetime customer value and know their net margins. And 2. If you target prospects that have poor business management, their margins, no doubt, will be significantly below avg and they will not be able to pay as much for those leads.
      Signature
      {{ DiscussionBoard.errors[2844967].message }}

Trending Topics