The Ultimate Guide to Lead Generation Pricing for High ROI
With 34% of marketers and sales professionals stating that leads are their top priority in 2024, it’s no surprise that lead generation is a competitive market. However, leads cost money, and measuring lead costs against budgets and ROI has become a science that salespeople should quickly master.
This article discusses pricing your lead generation efforts, measuring key metrics, and planning them against your budget and business goals for a good ROI.
4 Top Lead Generation Pricing Models
Pricing your lead generation spend starts with understanding the different approaches used to assess the cost of generating those leads. Some of the most common models (cost per lead, cost per appointment) are dynamic and granular, providing a deeper understanding of your potential ROI. Bulk lad purchasing and retainers, however, give you more control over costs and eliminate some of the swings that can come with other approaches.
1. Cost Per Lead (CPL)
The CPL model measures how much a buyer pays (in a fixed amount) for individual leads. It’s a good way to drill down into a per-lead view of costs and ROI, with the understanding that what constitutes a “lead” may change based on the channel or your specific sales pipeline.
The general equation used to calculate CPL is:
For example, if the total spend for lead generation campaigns is $4,000 and you pull 55 satisfactory leads, the CPL would be:
$4,000/55 = $72.72
CPL differs from similar metrics like Cost Per Click (CPC) or Cost Per Acquisition (CPA) in that CPL measures costs associated per lead, CPA measures costs related to obtaining new customers, and CPC measures expenses related to general engagement on social media or search advertising.
2. Cost Per Acquisition (CPA)
Much like CPL measures the costs for leads, CPA measures the costs for scheduled appointments. In this definition, an “appointment” is a bit more in-depth than a simple lead. Where a simple lead is just that–a lead gained from outreach or marketing–an appointment suggests a one-on-one meeting with a qualified lead who meets the criteria of your Ideal Customer Profile (ICP).
The equation is similar to CPL:
An appointment can be seen as a more valuable lead, and CPA measures these critical events. The overall costs might be higher and more complicated to predict, but these are much more advanced leads.
3. Bulk Data Purchasing
As the name suggests, bulk data purchasing involves an organization buying one or several contact information databases and using that information for its sales pipeline.
Unlike CPL or CPA, bulk data purchasing is a direct approach to lead creation–you aren’t building marketing or sales ads to reach potential customers; you’re just grabbing a ready-made pool of potential leads and using them to fuel outreach.
Typically, you’ll purchase or gather this data through one of a few ways:
Buying the data in bulk from a data broker to import into a CRM. This can include behavioral data and metrics from a service provider or anonymized metrics.
Tapping into public databases like government records, social media profiles, and websites.
First-party data gathering through developing your databases and analytics.
Getting a handle on pricing here can be more difficult because how you pay for this data can change depending on the source and your needs.
This approach is much more straightforward than finding external leads and provides a stable way to measure ongoing costs (since you’ll most likely pay for the data upfront).
4. Retainer
If you don’t want to handle your lead generation, you can outsource this function to a third-party sales or marketing outfit for a monthly retainer. Unlike a pay-per-lead model, a retainer gives you a stable monthly cost that you can count on, with the understanding that you don’t have any control over how many leads you get or the quality of those leads.
Maximize your lead research and budgeting with powerful automation and insights with our AI SDR, Ava. Try Ava Now.
Factors Influencing Lead Generation Pricing
A critical factor in how much leads cost (and the cost you’re willing to accept) is where they come from. Industry, market, product, and location all significantly impact lead pricing. Depending on how these factors interact, lead generation in one area or line of business can be much more costly than in other areas.
Your Industry Type
Lead prices aren’t stable across industries; lead prices will change to match these variations and the challenges that come with them. Accordingly, the cost of lead generation (even hiring lead generation companies) will vary.
Some of the factors that will boost these costs (and the price you pay) include:
Competition for leads, where higher competition can drive higher lead costs.
Complex sales cycles related to different industry purchasing practices. For example, B2B tech sales will have a much more complex purchasing cycle than subscription-based SaaS sales.
Company sizes, especially if industries tend to have massive corporations rather than a network of small businesses.
Regulations around data privacy can limit the kinds of information you can get about prospects, making certain types of lead generation more expensive.
Lead Generation Methodology
The methods you use to generate leads can also empower or hinder your efforts. Your lead generation strategies can encompass the channels you use, your target audiences, and the techniques you use to attract leads.
Inbound marketing methods, including digital marketing, content creation, Search Engine Optimization (SEO), and organic social media engagement, are cost-effective approaches for prospecting that don’t require much direct engagement. However, most of these (especially content marketing and SEO) are also slow and unpredictable.
Outbound prospecting can include traditional approaches like cold calling and direct mail and digital tactics like cold email marketing and direct messaging on social media platforms. This approach is more effective for generating leads but requires more energy and attention.
Paid advertising includes pay-per-click (PPC) ads on platforms like Google Ads or social media platforms like LinkedIn, driving potential conversions through a CTA on a landing page. It is built around tracking costs and budgets and lends itself well to more targeted prospecting… if you trust your ability to craft compelling audience demographics to serve your ads.
Depending on the strategy, lead generation tools, and area of expertise, your lead generation efforts will yield a (sometimes radically) different ROI.
Lead Quality
Simply put, it doesn’t matter how many leads you generate if they never convert to a sale. If your lead gen pipeline can return leads that turn into appointments and, eventually, paying customers, you will get a much better ROI on your lead efforts. Conversely, if your conversion rate isn’t great, then the costs of leads will become prohibitive.
Geographic Consideration
Not all markets are equal, and this is especially true when considering a lead's location. Depending on the product or service you offer, certain areas will have much more competition (and, thus, higher costs per lead).
Urban areas will often have higher levels of competition for products like technology or healthcare, for example. Likewise, different cities reflect more or less mature markets for certain services, making them harder to prospect than up-and-coming tech cities.
Following this logic, if you prospect for leads in competitive markets, your lead costs will often increase.
Your Business Overhead and Operational Costs
Other investments also play a role in your market spend, and these costs can become complex and amorphous. Costs like:
Salaries for salespeople
Resources (offices, computers, utilities) used by these salespeople, and
Costs for the creative development of outbound sales or marketing assets (paying designers, licensing software, etc.)
All play a role in acquisition. If your sales and marketing teams can attract high-quality leads, you can offset these costs by expanding your entire operation (70% of marketers say they do, according to HubSpot).
Your Business Profit
Finally, ask yourself what kind of profit you want to generate. Can your target market support your revenue expectations? Ensure that after everything is said and done, your business makes money that can support growth without expending that profit on lead generation.
Cost of Lead Generation Examples From Lead Generation Companies
Artisan - AI sales assistant
Artisan is a lead generation and sales enablement platform that helps clients scale their sales pipelines by combining robust automation tools, a deep database of over 300+ million B2B contacts, and our AI SDR, Ava.
Services
Outbound lead generation powered by AI and our extensive database.
Data enrichment that helps you secure better leads at a higher volume.
Proprietary sales playbooks that help you tailor outbound marketing messages to specific industries, companies, and locations, increasing your ability to bring high-quality leads into your pipeline.
Pricing Model
We provide a tiered pricing approach based on our different offerings. You can sign up for products like Email Deliverability, Sales Automation, Playbooks, Lead Discovery, and Full Agency Management.
Contact the Artisan sales team for custom pricing based on your targets, strategies, and support needs.
UpLead - lead generation SaaS tool
UpLead is a B2B lead generation platform that provides access to a vast database of business contacts. It allows users to search for and connect with leads based on various criteria such as industry, company size, job title, and more. UpLead emphasizes data accuracy and offers features like real-time email verification to ensure the quality of leads.
Services
A database with +155M B2B contacts to support lead generation.
An automated “Prospector” tool that works with their database to give you higher open rates.
A competitive technology prospecting tool that identifies companies using competitor tools or suites of complementary solutions so that you can target them for adoption.
Pricing
UpLead uses a tiered, subscription-based model based on credits that unlock lead information that you can import into your existing CRM.
The Martal Group - lead generation agency
The Martal Group is a sales and lead generation company helping tech companies expand their reach in the North American market. They offer outsourced sales services, focusing on building and executing customized sales strategies to generate qualified leads and close deals.
Services
Sales outsourcing services that can bolt on to existing sales and marketing teams.
Lead generation that focuses on B2B appointment setting to increase lead conversion.
A broad range of served industries, including healthcare, B2B SaaS, and cybersecurity.
Pricing
The Martal Group offers a tiered pricing model based on performance-based metrics. Each tier focuses on growing services, from outbound lead generation to customer onboarding and account management.
Trust Your Lead Generation Management with Artisan
The key to managing lead generation costs is partly understanding how those prices fit into your sales funnel and budget. While salespeople have increasingly refined their ability to see the big picture, modern pros are turning to automation and trained AI to help them map lead prices with budgets and ROI goals.
If you’re ready to get deep insights into how leads are priced and how those prices align with your business objectives, then it’s time to work with our AI SDR, Ava.
Are you ready to automate lead generation, streamline price assessments, and get a bird’s-eye view of ROI over your entire pipeline? Try Ava Now.