There is a wealth of information available online about launching a lead generation company. Techniques for keeping clients? Indeed. Techniques for generating leads? Indeed. Channels for generating leads? Indeed. However, individuals tend to keep quieter when it comes to specifics like prices.

Perhaps this is a result of the current lead generation firms’ reluctance to divulge a crucial aspect of their competitive advantages. Perhaps it’s because talking about money is still somewhat frowned upon.

In any case, we’re exposing the cost of lead generation. We’ll be sharing our analysis of over 100 lead-generating agencies’ pricing tactics with you in this article.

The most important thing we learned — hands down — was that most lead generation agencies don’t reinvent the wheel with their pricing. 

And while using the same pricing strategy as many of your competitors is kinda lame, there is logic to it. Namely:

• Clients know exactly what to expect (and transparency is very important to lead generation clients)
• You don’t have to waste time explaining your pricing model in depth
• It’s easier for agency owners to compare their margins to other agencies 
• It’s easier for your management and finance teams 

From our research, we discovered that the majority of lead generation agencies use one of these four pricing models:

Cost per lead

Cost per lead is a very effective pricing model because clients only pay for actual, real leads. We’ve noticed this model is also very approachable for clients who are new to lead generation because they can easily justify the cost.

Here’s how it works: 

1. You work out how much it costs to obtain a lead for a client. Then, you add a profit margin and arrive at a “per lead” price. Typically, this price ranges from $30 to $400 per lead (industry dependent).
2. You enter into an agreement with the new client. 
3. You get the client leads. 
4. The client pays you for those leads. 

Cost per appointment

This pricing model only applies to agencies that help clients schedule demos or sales appointments for their leads — though many of these agencies offer cost-per-lead services as well.

Here’s how it works:

1. You determine how much it costs to get a single appointment for a client. Then, you work in a profit margin and arrive at a “per appointment” price. 
2. You enter into an agreement with a client.
3. You get the client appointments, and the client pays you for each appointment (regardless of the outcome, of course).

Your “per appointment” price should ideally be higher than your “per lead” price because leads who make an appointment are lower down in the sales funnel (and thus, they are higher quality). 

Bulk data purchasing 

This pricing model is for agencies that offer clients leads from a pre-existing database. 

Here’s how it works:

1. You collect contact information (name, phone number, email address, etc.) from hundreds to thousands of potential customers. 
2. You determine the cost of collecting this information and add in a profit margin. Let’s say, for example, this figure is $1,830,000.
3. You divide this total figure ($1,830,000) by your projected number of clients (let’s say, for example, 450). In this example, that gives you $4067.
4. You charge clients $4067 for a list of leads. 

Typically, agencies charge less for bulk data purchasing because the leads are very low quality. Thus, they’ll have a low conversion rate.

Retainer

This is the most popular form of pricing by far. This pricing model is for agencies that do ongoing lead generation work for clients. Typically, these contracts last from three months to two years. 

Here’s how it works:

1. You determine the cost of one month’s worth of work for a client and add in a profit margin. 
2. You enter into an agreement with the client.
3. You complete one month’s worth of work for the client. 
4. They pay you the monthly fee (either in advance or at the end of the month). 

Agencies that use this model offer Search Engine Optimization (SEO), traffic-driving activities, sales funnel building, analytics, and results monitoring, and lead scraping, generation, and nurturing. 

Typically, the “per month” cost is between $3000 and $20,000.

Data from the DeTorres Group shows that the average sales price differs by industry, company size, company revenue, and marketing channel. 

Overall, it’s $198 per lead. 

Here’s a breakdown by industry…

Industry	Cost per lead
IT and services	$370
Healthcare and medical	$286
Financial services	$272
Industrial and manufacturing	$235
Media and publishing	$191
Consumer products	$182
Marketing agencies	$173
Education	$66
Non-profit	$43

And by company size…

Company size (by the number of employees)	Cost per lead
2-50	$147
51-200	$180
201-1000	$212
1000+	$349

By company revenue…

Company size (by revenue)	Cost per lead
Under $1 million	$166
$1 million – $10 million	$185
$10 million – $500 million	$179
$500 million+	$429

And by the B2B channel used:

Lead generation channel	Lowest possible cost per lead	Highest possible cost per lead
SEO	$30	$175
Pay Per Click (PPC)	$40	$150
Content creation	$80	$300
Display advertising	$65	$85
Webinars	$50	$110
Video marketing	$175	$225
Public relations	$300	$400
LinkedIn	$75	$125

The average cost per appointment ranges from $150 to $250. Now, the “average” figure might not be the best price for you to charge. You should take into account the age/reputation of your agency, the quality of your leads, and your clients.

What Are The Types of Lead Generation?

In simple words, lead generation costs are all the expenses incurred to get one lead. For example, if you spend $1,000 on LinkedIn ads and buy a cold calling list for $1,000 to generate 100 leads, your lead cost is $20. 

Read Also: The Future of Data-driven Marketing: Trends and Predictions

Here are other types of lead generation costs to consider:

1. Using lead generation tools

It lets your sales teams get rid of the manual labor involved with generating qualified prospects, which significantly speeds up the sales process. The tools may include marketing and email automation platforms, CRMs, sales intelligence platforms, and more.

2. Buying lead lists

Buying qualified lead lists may be a boost your company needs to grow. However, the lead quality varies depending on the B2B data provider. It is a good idea to purchase leads verified by humans because accurate data produces the highest ROI.

Getting outdated contact lists from unreliable companies is simply a waste of time and money.

3. Lead generation agencies

You don’t have to build a team of lead-gen specialists in-house. You can outsource your lead generation efforts to marketing specialists and tap into new lead sources. But the downside is that you might be getting non-exclusive lead lists. To lower lead price, pick services that prioritize lead quality rather than quantity. 

4. Paid ads and promotion costs

These types of lead gen costs involve social media marketing, email marketing google ads costs, etc. The budget for digital ads can be a significant cost of your lead generation efforts. It also involves the cost of salaries of a team of marketing specialists who run and monitor the campaigns.

5. Funding incentives and immediate rewards

Nothing adds a human touch to lead generation like a personalized gift sent to your most valuable leads. There are plenty of gifting platforms that deliver physical gifts or experiences to your target customers around the world. 

6. Hiring and training marketing specialists 

This type of cost involves paying experts in-house who have the necessary experience and know-how to run campaigns on different platforms and learn your product inside out. It is a great investment, but it might take time to hire and train the team properly.

How to Optimize the Cost of Lead Generation?

The majority of entrepreneurs choose to obtain leads for free or at a reduced cost. But money is needed for lead generation initiatives to be successful. It is time to rethink lead generation tactics if you discover that the cost per qualified lead exceeds the lead’s value.

See the following top suggestions for minimizing lead creation costs:

1. Use a high-quality lead data provider

Instead of creating a database of prospects manually or, worse, purchasing generic lead lists online, buy a compliant contact database from a reputable provider. Different providers source their leads differently, which impacts the lead cost—inaccurate data means higher CPL.

Cognism is one of the best lead providers because we make sure our company and contact data is up to date and compliant. They provide B2B emails and verified cell phone numbers so you can email CEOs and speak to decision-makers in companies directly. 

2. Target leads when they are ready to buy

Sometimes lead gen cost is not just about the channels and how you distribute the message. It’s more about intent. Considering the fact that only 3% of leads are ready to buy and up to 7% of them are open to it, even the best sales pitch will fall flat if you don’t reach the “buying now” segment. 

To find qualified leads who are actively looking for your or your competitors’ solutions, use intent data tools and sales triggers. Both help you combine “who” with “when” and amplify your sales and marketing efforts.

Lower your lead generation costs with targeted email lists:

• CMO email lists
• CFO email lists
• C-level executive’s email lists
• IT-decision-makers email list
• CTO email lists
• Marketing directors’ email lists

3. Narrow down your target audience

It’s hard to get optimal CPL when targeting broad audiences with the same messaging. A clear understanding of your ideal customer profile and different audiences’ pain points and needs improves the cost-effectiveness of our lead gen efforts and ensures a quicker return on investment.

Depending on the size of your audience, adjust the campaign’s objectives—are you aiming at reaching a broad audience or conversions?

4. Adjust ad frequency and messaging on different channels

Analyse if higher ad frequency translates to higher company revenue. You might notice different patterns for different campaigns or channels. For example, Canberk Beker, Cognism’s Head of Paid, noticed higher ad frequencies might cause ad fatigue in the social proof ads but not in product value ads.

That’s why it’s important to diversify content for different channels—the audience intent on LinkedIn is different from Facebook or Instagram.

5. Use inbound marketing methods

SEO content marketing is a great way of capturing qualified leads who are more likely to convert. For example, you can create an organic content strategy that aims at attracting leads with high purchasing intent. BOFU content, like comparison pages and listicles, allows you to simplify your sales funnel. It has a low lead cost if your content is evergreen.

You can offer different types of content—from video to podcasts—for every stage of the funnel and nurture contacts through to the sale. It doesn’t always have to be a landing page with gated content!

6. Improve your landing page design

If you’re paying for traffic on any channels, make sure your landing page is optimized for conversions. Make sure you’re using above-the-fold space and sidebars. Try out different messaging, such as product-led, social proof, etc.

Test the landing page before launching! For example, you can show it to someone and ask if they understand the offer at first glance.

7. Eliminate poorly performing marketing channels

Whatever method of capturing potential customers you choose, always monitor the cost of leads in each campaign. It will help you focus your resources on the most effective ones and get rid of those that drive up the cost per lead.

At this point, you have nearly all of the information that you need to set your agency’s prices. I say “nearly” because there’s one major thing we haven’t covered: the direct and indirect costs you need to account for in your prices. If you don’t account for these expenses, they’ll eat into your profits. 

What do these costs include?

• Overhead — Including the cost of renting or buying an office, electricity costs, printing costs, water costs, and business insurance costs.
• Staff costs — Including the cost of hiring, training, managing, retaining, and paying staff. You should also include your salary as the CEO. 
• Campaign costs — Including the cost of LinkedIn outreach (like $99 per seat per month for Expandi), SEO, cold calling, PPC, content marketing, social media marketing, and any other costs required to generate leads and demand.
• Client maintenance costs — Including the cost of a Customer Relationship Management (CRM) system, reporting and analytics tools, sales prospecting tools, customer success activities, and whatever you spend on your marketing efforts.  

Of course, you should also account for your profit margin. 

Bottom line

Generally speaking, a good cost per lead is less than your gross profit per sale. For example, if your average sale is $5,000 after subtracting costs and expenses, a good CPL should be less than that. In other words, the lower the lead cost, the better. 

In SaaS and B2B, to determine whether lead generation cost is a good deal, you can also consider your customer’s lifetime value or average deal size.

Let’s follow a simple lead cost example.

If your clients spend on average $3,000 on your products or services from the time they first become your paying customers to the time they churn, and your gross profit is, say, 50%, it leaves you with $1,500.

Next, consider the rate at which your sales team closes deals. For the sake of simplicity, let’s assume they convert one in 10 leads, so their conversion rate is 10%. 

In this example, a good CPL would be below $150.