The question of what a good cost per lead is in Google Ads can be difficult to answer. It all depends on the price of your product, its profitability, and your overhead costs.
Every business will find that a good cost per lead is a different number. And even once you reach that number, you should aim to lower your cost per lead by focusing your advertising even more.
But if you want to start understanding how your Google Ads stats and results compare to other companies.
According to WordStream’s Google Ads country email list Benchmarking Report , here are the average metrics for Google ads in 2022.
- Cost per click (CPC): $2.96
- Cost per lead (CPL): $40.74
- ROI: $2 for every $1 spent
But the report also found huge differences in these figures from one industry to another. For example, the industry with the lowest cost per lead was pet and animal retail ($17.46), while the highest was careers and employment ($81.45).
Calculating a Good Google Cost Per Lead for Your Business
With such a wide range in average cost per china business directory lead in Google Ads, businesses may not know where to start optimizing their campaigns and achieving a fair cost per lead. Here’s how to calculate a good cost per lead for your business.
The first step is to figure out how much the average customer brings to your business. The average deal size will tell you how much a new customer is worth. To find this number, you’ll take your total gross revenue and divide it by the number of customers you earned in a year. So, if you earned $500,000 and had 550 customers, your average deal size would be $909.
Now you need to figure out the ROI on that $909 deal. To find this, you take your total gross revenue of $500,000 and subtract your expenses. Let’s say your expenses were $300,000, including all your marketing and overhead costs. So you’re now making $200,000 a year from 550 clients. So your ROI is $363 per deal. Now you know you can’t spend more than $363 to acquire a client through Google Ads. But you’re not done with the math yet.
Not all leads will become customers. Now you need to look at your lead-to-close ratio. On average, a company closes 20 percent of all leads . That means you need to get five leads to make that $363 per customer. Divide $363 by five and you get $72. In this scenario, as long as your cost per lead is below $72, you know you’ll still make money per lead.
This calculation is based only on a good c improve your quality score ost per lead from the initial revenue of the deal. You should also consider the overall lifetime value of acquiring a new customer. So, while you may realize that you break even in the first year with a new customer, you will know that the ROI comes in the second year when they renew or when they place their second order with you.
How to Lower Your Cost Per Lead in Google Ads
If you run the numbers and find that you’re paying too much per lead in Google Ads, you should evaluate how best to lower that cost. Just because your cost per lead is currently too high doesn’t mean you should quit Google Ads and put your money elsewhere. It just means it might be worth rethinking your strategy.
1. Check if your campaigns are limited by budget
When you look at your Google Ads account, you may notice that some ad groups have a “Limited by budget” warning. This means that your bids are high enough to be included in the auction for Google Ads space, but you won’t be included in many auctions each day because of the restrictions you’ve placed on your ads.
In this case, the following actions can be considered.
- Increase your budget: If you can afford to pay more for this campaign, you will have many more opportunities to get in front of your potential customers if you increase your budget.
- Lower your bid price: This way, you will appear in auctions with a lower bid. This way, you will be able to participate in more auctions and get in front of more potential customers.
