Skip to content

CPL Calculator, Formula: Cost Per Lead Guide

If you're in the business of generating leads, you know that the cost per lead (CPL) is a crucial metric. This CPL Calculator is a tool that can help you determine the cost of each lead, so you can know exactly how much you're spending to generate leads.

Cost Per Lead Formula

Cost Per Lead Formula

When it comes to advertising, you want to make sure you're spending your money in the best way possible. And one of the most important measurements of an advertising campaign is the cost per lead.

In this article, we'll break down everything you need to know about cost per lead, including what it is, how to calculate it, and why it matters. We'll also discuss some tips for reducing your cost per lead. Read on to learn more!

What Is Cost Per Lead?

Cost per lead (also written as CPL) is the amount of money a company spends to generate a lead.

Okay, great! But what’s a lead? A lead is a potential customer who has shown interest in your company's product or service. Companies use various marketing strategies to generate leads, such as advertising, content marketing, and event marketing.

You’ll find that different marketing agencies and companies might have different definitions of what actually qualifies as a lead. Usually, however, it counts as a lead when you’ve captured information about the person through a lead capture form.

It’s important here to note that the cost per lead metric is different from the cost per acquisition metric. The latter measures the amount of money spent to generate a sale.

While both metrics are important, cost per lead is more closely aligned with the top of the sales funnel, while cost per acquisition is more closely aligned with the bottom of the funnel.

However, depending on the platform you're working with, you might find that cost per lead can sometimes be the same as your conversion rate. Definitely work to define what constitutes a full "conversion" or "lead" for the business you're working with before you start running campaigns.

Why You Need to Know Your Cost Per Lead

In order to run a successful business, it is essential to understand your costs. This includes understanding your cost per lead.

As established, your CPL is the cost of acquiring a new lead, and it can vary depending on the methods you use to generate leads.

For example, if you rely on online advertising to generate leads, your CPL will be the cost of the ad divided by the number of leads generated. If you use more traditional methods, such as print advertising, your CPL will be higher.

However, understanding your CPL is not just about understanding how much it costs to acquire a new lead. It is also about understanding which methods are most effective in generating leads.

Let’s say you’re an advertiser working for a brand new business. You’re not quite sure which marketing method is going to work best for this new business. So, you try Facebook ads, email marketing, and sales calls.

In order to figure out which method is the most cost-effective and lucrative for this business, you’d need to calculate the cost per lead for each option.

By understanding your CPL, you can make informed decisions about where to allocate your marketing budget in order to maximize ROI.

Average CPL Across Industries in 2022

Now that you understand what cost per lead means and why it’s important to measure, you’re probably wondering what the average cost per lead is.

The average CPL varies depending on the industry, as some industries are more expensive to market to than others.

In general, businesses that serve consumers (B2C) have higher CPLs than businesses that serve other businesses (B2B). This is because it generally costs more to reach and persuade individuals than it does to reach and persuade businesses.

Some industries come in at just over $80 per lead. Average CPLs across all industries, however, tend to be between about $20 to $50.

Other industries where you can expect high average CPLs include Career & Employment, Business Services, Furniture, and Finance & Insurance.

Just two industries have reported costs per lead that are under $20:

  • Animals & Pets: $17.46
  • Automotive (Repair, Parts, etc.): $18.73

Ultimately, it’s also important to consider the cost of the service or product you’re selling, too. If one customer is worth $500 to you or the business you’re marketing, acquiring them for $100 isn’t that bad of a deal!

How to Calculate Your Cost Per Lead

In marketing, the cost per lead formula is the total cost of acquiring a new customer, divided by the number of leads. For example, if it costs you $100 to acquire 10 new customers, your CPL is $10.

To calculate your CPL, simply take your total marketing costs for a given period of time and divide by the number of leads generated during that same period.

Keep in mind that your CPL will vary depending on the type of customer you're trying to attract and the channels you're using to reach them.

If you're focused on high-value customers, for example, your CPL will be higher than if you're focused on lower-value customers.

Similarly, if you're using more expensive marketing channels, such as television advertising, your CPL will be higher than if you're using less expensive channels, such as online display advertising.

Don’t have enough data to calculate your cost per lead? Focus on more detailed metrics, such as your cost per click or cost per engagement. If you’re not getting leads yet, those metrics can help you optimize your campaigns until the leads start to come in.

6 Ways to Get a Low CPL

A low CPL is essential for any business that wants to be successful in today's competitive marketplace. There are a number of ways to lower your CPL, and the most effective method will vary depending on your specific situation. Try out a few of these tips to get started.

Understand Your Audience

In order to be successful in online marketing, it is essential to understand your audience. After all, if you don't know who you're trying to reach, it will be very difficult to craft effective campaigns that resonate with them.

Luckily, there are a number of ways to get to know your target market.

Start by looking at your website analytics to see who is already visiting your site. You can also use tools like Google Adwords and Facebook Insights to get detailed information about your potential customers.

Once you have a good understanding of who your target audience is, you can start thinking about ways to reach them. For example, if you're trying to reach a low CPL audience, consider using PPC or retargeting advertising.

With this type of marketing campaign, you’re targeting people who have already interacted with a business online, which shows some sort of pre-interest or knowledge of the brand.

Research the Competition

Want to reduce your cost per lead? Check out the competition!

What keywords are they targeting? What type of ad copy are they using? How much are they spending on customer acquisition?

Once you have a good understanding of their marketing strategy, you can start to develop a plan to beat them.

This may include changing your target audience, developing more compelling ad copy, or increasing your budget. By researching the competition, you'll be able to achieve a low CPL and be more competitive in your industry.

Write Catchy Headlines

Creating catchy headlines is an essential skill for any campaign with a low cost per click and low cost per lead.

After all, the headline is the first thing that potential customers will see. If it doesn't grab their attention, they're likely to move on to something else.

So how can you write headlines that are both effective and result in a low CPL?

  • Use strong verbs. Verbs like "boost," "explode," and "triple" convey a sense of urgency that can be very effective in getting readers to take notice.
  • Make a promise. Headlines that make a promise of what the reader will gain by reading the article are more likely to be successful than those that don't.
  • Be specific. Vague headlines are often less effective than those that are specific and to the point.
  • Use numbers. Numbers tend to stand out in headlines, so including them can help your headline catch attention. Just be sure to use them appropriately - don't just add them for the sake of it.
  • Ask a question. Questions can be very effective in getting readers to stop and think about what you've written.

Now, if you’re not engaging in search ads or pay-per-click ads in general, you can still use these tips! Simply apply them to the headlines in your emails and on your landing pages.

Offer Something Valuable

When it comes to online marketing, one of the most important things you can do is offer something of value to your potential customers.

Whether it's a valuable piece of content, a helpful tool, or an exclusive discount, providing something of value to potential customers is a great way to increase conversions and build a relationship with your audience.

Of course, it's important to make sure that what you're offering is truly valuable and relevant to your target market. Otherwise, you risk coming across as spammy or irrelevant, which can quickly turn people off.

What might this look like? Let’s say your target audience is interested in crypto investing. Develop a 15-page guide about the basics of crypto investing and how they can improve their investment strategy.

Offer it for free on a landing page in exchange for their email address. They get something super valuable that’s packed with high-level strategies. You get a new lead.

In short, if you take the time to create something that your audience will appreciate, you'll be well on your way to success.

Understand User Intent

Users click on ads for all sorts of reasons. Some are looking to buy a product, others are just researching their options. Some are ready to make a purchase, while others are just beginning their search.

As a marketer, it's important to understand the intent behind each user's click in order to better target your ads and improve your conversion rate and CPL.

One way to segment users is by their stage in the buying cycle. Those who are just starting their research are more likely to be interested in low-cost or free products, while those who are ready to make a purchase are more likely to be willing to spend more.

Another way to segment users is by their level of interest. Some users click on an ad because they're genuinely interested in what you're offering. Others may click simply out of curiosity, or because they were enticed by a clever ad or an interesting offer.

Understanding user intent is essential for any successful marketing campaign and can ultimately lead to reduced acquisition costs.

Use A/B Testing to Improve Performance

A/B testing is a powerful tool that can help improve the performance of your low CPL advertising. By testing different versions of your ads, you can identify which elements are most effective in driving conversions.

For example, you may find that a certain headline or image is particularly effective in catching people's attention. Once you have identified the elements that work best, you can focus on optimizing your ads for maximum impact.

A/B testing can be time-consuming, but the insights you gain can be invaluable in helping your high CPL campaigns perform at their best and lead to reduced costs.

Don’t Forget About Your Conversion Rate

Calculating your cost per lead allows you to understand exactly how much you’re paying to acquire new customers. However, that doesn’t mean you should let other metrics go without monitoring.

In fact, we’d argue that your conversion rate is another extremely important metric to measure. Why? It tells you how effective your marketing efforts are in terms of generating leads or sales.

More specifically, it tells you what percentage of people who saw your ad or visited your website ended up taking the desired action.

For example, let's say you're running a campaign to promote a new product. You spend $100 on ads and generate 1,000 clicks to your website. Of those 1,000 visitors, 100 people end up buying the product. In this case, your conversion rate would be 10%.

In general, the higher your conversion rate, the more successful your campaign is. That's why it's so important to track and optimize for this metric.

Start Measuring Your Conversion Rate

Now that you know how to measure your cost per lead, it’s time to start measuring your conversion rate.

Not sure how to measure conversion rate? We’ve created a tool to help you do just that. Check out our conversion rate calculator to start measuring the success of your campaigns.