Every home service owner asks the same question before spending a dollar on ads. How much will I get back?
Most agencies answer with a guess. Or they show you a case study from a business that isn't yours. Case studies help. Your market is still different, and you know it.
There's a better answer. You can forecast your results with real numbers before you spend anything. We call it the profitability equation. It takes about four numbers, and you already know two of them.
Key takeaways
Start with one question. What can you afford to pay to get one new customer? Only your business can answer that.
Take your average job value. Subtract what it costs you to do the job. What's left is your profit per job. Part of that profit is what you can spend to win the job and still come out ahead.
Say your average job is $4,000 and it costs you $2,800 to complete. That's $1,200 in profit. If you'd happily spend half of that to land the job, you can afford $600 per new customer. And that's before repeat work and referrals.
We never quote a price that fails this math. If a prospect tells us our price is too high, it usually means we did a poor job walking them through it.
This is the short version. If your customers come back for more work, read The Profitability Equation: How to Know What to Spend to Acquire a Customer. It covers lifetime value and the LTV to CAC ratio, which can raise what you're able to spend per customer.
Here's the example from above, start to finish.
A worked example
| Number | Example |
|---|---|
| What you can afford per customer | $600 |
| Cost per lead | $150 |
| Closing rate | 1 in 4 |
| Cost per customer | $600 |
| Monthly ad spend | $1,500 |
| Leads per month | 10 |
| Jobs sold per month | 2 to 3 |
| Revenue from ads | $8,000 to $12,000 |
Example numbers. Yours will be different, and that's the point of running them.
Cost per customer lands right at $600. That's a yes. If it came out at $900, it's a no. Or we fix something first, like a better landing page or a faster reply to every lead.
Put in your job value, your costs, and your closing rate. The calculator does the math. It shows what you can afford per customer, what ads will likely cost, and whether it works.
Loading the calculator. If it doesn't show up, refresh the page.
$1,000 a month in ad spend is the lowest we recommend. That's on top of our retainer, which starts at $749 a month. Our pricing is public.
Below that, there aren't enough leads to learn from. A business spending $100 a day on ads gets enough leads to grow. A business spending $10 a day gets one lead every couple of weeks. Then the owner decides ads don't work.
This depends on the business. A pool builder with $60,000 jobs needs fewer leads than a pest control company. The equation tells you where your floor is.
If you'd rather not run the math yourself, we'll build it for you. Our free ad budget forecast takes your numbers and live search data for your market and returns three budget scenarios with a straight recommendation.
Start with the math, not a number. Figure out what you can afford to pay for one new customer, then what ads will cost you per customer. For most businesses we work with, $1,000 a month in ad spend is the lowest that produces enough leads to grow.
Divide your cost per lead by your closing rate. If a lead costs $150 and you close 1 in 4, each new customer costs $600.
Fix the inputs before you spend. A better landing page lowers cost per lead. Calling every lead back fast raises your closing rate. If the numbers still don't work, ads aren't the right move yet.
