Pay per lead: how it works, what leads cost and what to ask a seller
Pay per lead means you pay a set price for each inquiry that reaches you, instead of paying for clicks, impressions or a monthly retainer. The price reflects what the inquiry is worth to the buyer, how many other buyers receive the same one, and how often it ends in a sale. About 390 searches a month in the US look for the phrase itself, and about 110 more add "real estate."
What counts as a lead
A lead is a person who asked for something: a phone call, a form entry, a booking request or a quote request. The seller and the buyer have to agree in writing which of these count, because the invoice follows the definition.
Four details change the price of the same inquiry:
- Type. A call from someone ready to hire can be worth more than a form sent at midnight.
- Verification. A lead with a confirmed phone number can be worth more than a raw one.
- Exclusivity. A lead sold to one buyer can close more often than the same lead sold to several.
- Area and timing. A lead outside your service area, or one that arrives a day late, is worth little.
Many disputes between sellers and buyers come from these four.
Pay per lead compared with the other ways to pay
Each model puts the risk on a different side. The table shows who carries it and where each one tends to break.
| Model | You pay for | Who carries the risk | Where it breaks |
|---|---|---|---|
| Pay per lead | each inquiry that meets the agreed definition | The seller carries the traffic cost, you carry the closing | Arguments over what counts as valid |
| Pay per call | each call over a set length | Same split, with a recording as proof | Short calls and wrong numbers |
| Pay per sale | each closed job | The seller carries almost all of it | Fewer sellers accept it, so it costs more |
| Monthly retainer | a service, whatever the result | You | Months pass without a lead and the fee continues |
| Rank and rent | rent for a site and its phone number | You carry the result, the owner carries the ranking | The site drops, or the rent rises |
About 90 searches a month in the US are for "pay per call leads," so the call version is searched for by name.
Shared and exclusive leads
A shared lead goes to several buyers at once. The first to answer may win, and the others pay for a lead they never had a fair chance at. An exclusive lead goes to one buyer, at a higher price.
Compare cost per job, not price per lead. Say a shared lead costs $60 and 1 in 12 becomes a job: twelve leads cost $720 for one job. Say an exclusive lead costs $150 and 1 in 5 becomes a job: five leads cost $750 for one job. The cost per job is close. The exclusive buyer needs fewer leads, handles less volume and answers fewer dead ends. The shared buyer pays less for each attempt and runs more of them.
Neither is better by default. Which one fits depends on how fast your team answers and how many leads you can handle in a week.
Pay per lead programs and affiliate programs
A pay per lead program is the other side of the same deal. A business publishes an offer and pays partners for each qualified lead they send. About 90 searches a month in the US look for "pay per lead affiliate programs" and about 30 for "pay per lead programs."
If you join one, read four lines of the terms before anything else:
- the definition of a qualified lead;
- how long the buyer may reverse a lead after paying;
- the cap on leads per month;
- how many days pass between a lead and the payment.
The payout is set below what the lead is worth to the program, or the program would lose money on every lead.
Pay per lead in paid search
Search ads bill per click, not per lead. A cost per lead in your ad account is a result you work out afterward, spend divided by leads, not a price you were quoted.
That result runs high when part of the spend goes to searches from people who will never buy. In one freight factoring market, 272 of 1,569 searches looked relevant but came from the wrong audience, about 24,460 of about 309,080 US searches a month, and negative keywords for search ads take that spend out.
Demand for lead terms by trade
US monthly searches for the lead terms of a trade differ widely: about 2,900 for real estate leads and about 1,000 for roofing leads. The counts show how many people ask for leads in each trade, and nothing more. The full list of lead terms by trade is on the markets page.
A national figure says little about one city. Monthly search volume by area and need is what a seller or a buyer should ask for.
Where each topic is covered
- Rank and rent: how the model works covers renting a ranked site with its phone number.
- Local lead generation as a business covers what it takes to sell leads to local businesses.
- The value of a lead shows how to turn job value and close rate into a price ceiling.
- Home service leads covers leads for roofing, HVAC, plumbing and similar trades.
What to ask a lead seller before you pay
- Is each lead exclusive to me, or sold to others? How many others?
- What exactly is billed: a call, a call over a set length, a form, a booking?
- Can I hear the recordings and read the form entries for last month's leads?
- What happens to a lead that is a wrong number, a duplicate or outside my area? Is there a credit?
- How many leads can you deliver in my area in a month, and how was that number reached?
- How fast does a lead reach me after the person asks?
- What is the minimum term, and who owns the phone numbers and pages if I stop?
Get the answers in writing.
What to do with it
- Work out the most a lead can cost you before you talk to a seller. The value of a lead gives the formula.
- Start with a small volume for one month and keep a table of each lead against the job it became.
- Judge a seller by cost per job, not by leads delivered.
- Exclude searches from the wrong audience before spending more on any paid channel.
FAQ
What is a pay per lead affiliate program?
It is an offer where a business pays partners a fixed amount for each qualified lead they send. The terms define what qualifies, how long a lead can be reversed and when the payment arrives.
How is pay per lead different from pay per call?
Pay per call bills for phone calls, often above a minimum length, and the recording is the proof. Pay per lead can include forms and bookings as well, so the definition of a valid lead matters more.
Is pay per lead cheaper than running ads?
Sometimes, and sometimes not. A seller has to price a lead above its own traffic cost, so the price per lead can be higher than your own ad cost per lead. What you buy is that the seller carries the traffic risk. Compare both by cost per job.
What is a fair price for a lead?
One below what the lead is worth to you. Multiply the average job value by the share of leads that become jobs, then keep a margin. The worked examples are on the value of a lead page.
For lead sellers and buyers who want the search demand behind a trade and a market, see Querytally for lead generation. Back to the Querytally home page.
Checked by a person and delivered within 24 hours, with a link and a search number behind every row.