how much to charge for lead generation?

by wb_man
15 replies
if you do lead generation for businesses, how do you decide how much to charge?

do you charge per phone call? per real lead? use something like callfire to track calls?

lets say you generate leads for dentists, how do you decide whether you should charge something like $75/lead vs $100/lead? it adds up fast once you start generating a lot of leads

what traffic sources do you use to generate leads? something like google adwords, facebook ads? or maybe seo?

how do you convince businesses to work with you? offer them a free trial?

what niches work best for lead generation? dentists, plumbers...too saturated maybe?
#charge #generation #lead
  • In regards to your original question, I will have to say that it all depends on your lead. I have sold leads for $10 a lead, $2 a lead, and $50 a lead. It all depends on the niche, and what exactly they get form each lead. If they only earn $80 from a single lead on average, don't expect to earn much unless it is a super targeted lead that has literally been properly checked up on to see that they're in the right niche.
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    • Profile picture of the author Goalie35
      I haven't dealt with dentists, so I don't know specifically, but I can tell you I personally know 2 general practitioner doctors who pay $100 per lead (they both use the same lead gen service).

      If you can find out the average revenue of dentists in your area, here's an interesting formula you can try: How Much Should You Spend On Lead Generation?
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      • Profile picture of the author Wildfire Results
        Originally Posted by Goalie35 View Post

        I haven't dealt with dentists, so I don't know specifically, but I can tell you I personally know 2 general practitioner doctors who pay $100 per lead (they both use the same lead gen service).

        If you can find out the average revenue of dentists in your area, here's an interesting formula you can try: How Much Should You Spend On Lead Generation?
        Do you know the name of that lead gen service?
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  • Profile picture of the author CaliCopy
    Well, to figure out the value of your leads,
    you should probably look at conversion rates.

    Let's say that for every 100 good leads, 10
    become paying clients. So that's a 10%
    conversion rate.

    Now let's say each paying client is a profit of $100.
    So for every 100 leads, you're bringing $1000 of
    profit into the business.

    Of course, this profit only exists because you brought
    in quality leads. How much % of the profit do you want?
    If you split it 50/50 for this example then you could
    charge $5 per lead.

    That way, every time you bring in 100 leads and have
    a 10% conversion rate, you'll earn $500.

    If anyone else has a better way to value leads, I'd love to
    learn a different perspective. And I'm sure every market is
    different. I don't sell leads for a living. Just thought this
    would be the best method for figuring how much to price
    leads.
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    • Profile picture of the author DABK
      In theory, that's awesome. In practice, however, you need to qualify that statement. Because some lead buyers convert 1 in 10, others 1 in 34. In addition, some have great ways to get buyers to buy again. So, the value of a lead is higher for them since the value of a client is higher.

      You could do some research and find out what's average or reasonable. Better yet, you can try selling them for $x, $x+2, $x+42.

      Then, there's the type of lead... Exclusive or not? People calling in vs people filling in an email address to get some freebie...

      Keep in mind things like this: Amazon.com pays affiliates 6% for local purchases. Not leads, purchases.

      Service Magic - Online Leads Services - Contractor Talk (a conversation between contractors about leads from servicemagic).

      https://katz.co/service-industry-niche-guide/

      http://www.warriorforum.com/offline-...pay-leads.html



      Originally Posted by CaliCopy View Post

      Well, to figure out the value of your leads,
      you should probably look at conversion rates.

      Let's say that for every 100 good leads, 10
      become paying clients. So that's a 10%
      conversion rate.
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      • Profile picture of the author CaliCopy
        Originally Posted by DABK View Post

        In theory, that's awesome. In practice, however, you need to qualify that statement. Because some lead buyers convert 1 in 10, others 1 in 34. In addition, some have great ways to get buyers to buy again. So, the value of a lead is higher for them since the value of a client is higher.

        You could do some research and find out what's average or reasonable. Better yet, you can try selling them for , +2, +42.

        Then, there's the type of lead... Exclusive or not? People calling in vs people filling in an email address to get some freebie...

        Keep in mind things like this: Amazon.com pays affiliates 6% for local purchases. Not leads, purchases.

        Service Magic - Online Leads Services - Contractor Talk (a conversation between contractors about leads from servicemagic).

        https://katz.co/service-industry-niche-guide/

        http://www.warriorforum.com/offline-...pay-leads.html

        Thank you for qualifying my statement and demonstrating
        how it can work with different variables.
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  • Profile picture of the author apocalypsejay
    I am also interested in this subject granted I am new to sales and internet marketing (but learning fast!). Anyways, What I want to add to this post is this : Try security officer businesses. I myself have considered finding a way to generate leads in the security industry (I am familiar with it and it is growing). Every time a new construction project pops up, the contractor company will eventually need someone to guard the facility from copper thieves and such. Every time a crime happens at a retail establishment and the property manager learns that police generally do not patrol their property unless they are dispatched or an alarm goes off, a new opportunity presents itself.

    For me, in this niche (and every major city has its own niche), I would use a web site to sale it along with simple business cards. Maybe do intel on property managers through facebook or linked in or go to the trade shows and make some contacts for future proposals. The two main hurdles are money / budgets and sometimes people simply will not work with you if they do not know you or know someone who refers you to them.
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  • Profile picture of the author krzysiek
    Charge a separate management fee plus an ad spend which you control. That way, you get an agreed fee for your service every month, and you get to work within their ad spend budget to produce the best possible combination of quality & volume to suit their needs.

    This will probably work out a lot better than charging per lead and then having to try and optimise like crazy just so you get to earn some money on the leads you generate.
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  • Profile picture of the author boberdoo2013
    Learn your vertical and learn your buyers. There's no standard prices set because there is no standard in lead quality. A lot depends on who your leads are and how you generated them. Talk to your buyers. How much are they currently paying for their leads and what kind of leads are they buying. It can take a little while, but when you work with your buyers, build trust and continue to supply them with good, quality leads, you will always be able to charge more.

    Best of luck!
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    boberdoo.com Lead Distribution Software. "Automating and improving the lead industry since 2001."
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  • Profile picture of the author livi
    I'm new for warriorforum . But i already thing that.


    cheers

    livi
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  • Profile picture of the author sj1234
    Here in London - there are a series of business models that lead generation firms use.

    The most popular I believe is when they actually make a business meeting for their client, with the key decision maker. In order to confirm that this is the main man - the call will more than likely have been recorded.

    They charge around £250 (approx $480) per one of these leads - but these are HOT leads.

    I would say a good niche to go after would be the smaller sales firms which cannot afford a fully fledged inhouse sales team...

    Everybody wants to sell something - but many cannot afford the staff - and that's where you would come in..


    Hope this helps buddy

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  • Profile picture of the author wings2341
    I'm interested in buying sales leads, inbound phone calls.

    I flip real estate through finding wholesale deals.

    PM me if you think you can service my needs.
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  • Profile picture of the author CageyVet
    When deciding how much to charge for lead generation, there are many avenues you can take.

    A very simple method to calculate lead cost is to simply do a multiplier of the Adwords CPC cost for a range of keywords that revolve around the services you are providing leads. So if you are in the dental niche in Chicago. If you look at the CPC cost for 10 keywords like Dentist Chicago, Dentist in Chicago, Dentists Chicago, etc. The average is around $9. So then depending on how greedy you are, you just take that number and multiply it by saw 10 for example. Giving you a $90 per lead price for general Dental Leads in Chicago. This allows you to easily utilize a simple Adwords campaign to a landing page without overspending per lead, even if your landing page does not covert the best.

    Another method is a simple calculation that involves the client's own conversion numbers. So take the price of the service, example $1000 and you ask them how many leads out of 10 could they convert to paying customer. Here are 2 examples, first is where the business owner says he converts 4 out of 10 and the second he says he can convert 7 out of 10. The formula is Price of Service * # of converts * 25% / 10. So first example, $1000 * 4 *.025 / 10 = $100 per lead, costing him $1000 to make $4000. The second example is $1000 * 7 *0.25 / 10 = $175 per lead, costing him $1750 to make $7000.

    A third method involves a lengthy discussion with each individual business owner. Find out how much their services are worth. Say they have 3 major services they want to promote and 5 minor services(add-on, value add extras). Each service is worth $1000 per customer and each minor is work $250 per service. Now find out how many MORE of the primary services they want to be doing in the next year. Say that number is 10 a month equally 120 more in the year. That is a total of $120,000 in primary services. Then for every primary add on 2 minor add-ons on average, which is $500 per client...for another $60,000 in minor value add services, totally $180,000 in more revenue. Now simply take that total revenue number, multiply by 10-15% (the average of what large companies spend in marketing to gain more market share), which is $18,000-$27,000. Now divide that by the 120 more customers and it is $150-$225 per lead.

    As you can see all of these come out to a similarly close number...and are three easy ways to calculate cost per lead. Btw, these are exclusive leads, you can charge less for shared leads and even more for high quality, exclusive and ultra targeted leads.
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    • Profile picture of the author Yourname
      Originally Posted by CageyVet View Post

      When deciding how much to charge for lead generation, there are many avenues you can take.

      A very simple method to calculate lead cost is to simply do a multiplier of the Adwords CPC cost for a range of keywords that revolve around the services you are providing leads. So if you are in the dental niche in Chicago. If you look at the CPC cost for 10 keywords like Dentist Chicago, Dentist in Chicago, Dentists Chicago, etc. The average is around $9. So then depending on how greedy you are, you just take that number and multiply it by saw 10 for example. Giving you a $90 per lead price for general Dental Leads in Chicago. This allows you to easily utilize a simple Adwords campaign to a landing page without overspending per lead, even if your landing page does not covert the best.
      But then you're assuming that every click ($9 cpc) converts and so an example like $90 per lead wouldn't make sense.

      I'm guessing that's because you didn't elaborate on this simple method. Would you please be so kind to go a little in depth please?
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      • Profile picture of the author CageyVet
        Originally Posted by Yourname View Post

        But then you're assuming that every click ($9 cpc) converts and so an example like $90 per lead wouldn't make sense.

        I'm guessing that's because you didn't elaborate on this simple method. Would you please be so kind to go a little in depth please?
        This "simple method"(not putting to much advanced tactics into play) is based on the current price it takes to market on a paid platform, in this case Google Adwords. The current average price for 10 keywords around the term Dentist Chicago are around $9 per click on average. So on average right out of the gate, the starting point to get into adwords would be around that price point per click. We will give a conservative number of 0.05 for conversions, so 1 out of 20 people convert to a phone call. We will say that 1/2 of those "calls" are even a lead or something they can close on. So with these quick numbers, it would take around 40 clicks to get a decent call that is a lead that can be closed. So 40 * $9 = $360 in ad spend. These are all quite up in the air numbers but easily projected on a business that has no clue about running an adwords campaign or what a landing page actually is...

        So in comes my 10 times multiplier or actually what ever multiplier you want. I like to keep math simple and as such, start out with 10 for this formula. You can easily go up or down depending on the business niche. SO if you multiple that $9 adwords CPC by 10, you get the $90. I would hope that if you are using adwords to generate leads for a business, you should be able to generate a lead on average for every 10 clicks of your ad, since you have a much better understanding of landing pages and target audiences. Plus with a better writing ad copy, quality score, etc you should be able to keep your ad costs lower if you go the adwords route. Not all niches work with the times 10 rule, some have pickier clients and it is more of a 15-20 times rule, while some niches can convert at 50% and it is like printing money with a multiple of 10.

        Also remember, this pricing model is only a simple method of figuring out a decent price per lead based on current market values that businesses in that niche can be expected to pay through online advertising. If you use this method to price a lead, it does not mean you need to use Adwords to source that lead.
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