What is cost per lead?
Cost per lead is marketing spend divided by the number of leads it produced. It can be measured for one campaign, one channel or all of marketing. Google Ads treats the cost of getting a lead as a cost per action. The same term also names an online advertising pricing model in which the advertiser pays only when a qualified sign-up is generated, regardless of impressions or clicks.
Why it matters to a revenue leader
Cost per lead is easy to measure and easy to misuse. A channel with cheap leads that never buy costs more in the end than one with expensive leads that do. For a revenue leader, the better questions are cost per qualified opportunity and cost per signed agreement, with cost per lead as an early check on a campaign. In commercial services, where one agreement can renew for years and pull repair work behind it, paying more for a lead from the right buyer is often the better deal.
How to calculate it
Cost per lead equals total spend on the campaign or channel divided by the number of leads it generated in the same period.
Common mistake: leaving out costs such as agency fees, event staff time or software, which makes some channels look cheaper than they are.
Example
Fictitious numbersA security services company spends $20,000 on paid search and $15,000 on a trade show in one quarter. Search produces 200 leads at $100 each, and the show produces 50 leads at $300 each. Search leads turn into 4 agreements and show leads into 6, so the cost per agreement is $5,000 for search and $2,500 for the show.
"What does a signed agreement cost us by channel, and does that match what cost per lead suggests?"
Sources
- About return on investment (ROI) (Google Ads Help) checked 9 Oct 2026
- Cost per lead (Wikipedia) checked 9 Oct 2026