The Durham ad budget worksheet: what you can afford to pay for a lead

Step 1: Work out what a lead is worth

A lead is worth the gross margin it brings in, multiplied by the chance it turns into a job.

Lead value = average job value × gross margin × win rate

Here's an example for a Whitby plumbing company:

• Average job value: $1,200
• Gross margin: 45% → $540 per job
• Win rate on qualified leads: 50%
• Lead value: $540 × 0.50 = $270

So a qualified lead is worth about $270 in gross margin. Pay $270 per lead and you break even on marketing. Pay less and you profit.

Decide your target

Most owners shouldn't spend the full break-even. A common starting point is to aim for a third to a half of lead value. For the plumber above, that's $90 to $135 per lead.

These are made-up figures. Use your own.

Step 2: Turn lead value into a maximum cost per click

Not every click becomes a lead. If one in ten clicks calls, texts or emails, your conversion rate is 10%.

Maximum cost per click = target cost per lead × conversion rate

For the Whitby plumber: $108 × 0.10 = $10.80 per click. For the Oshawa roofer: $378 × 0.10 = $37.80.

If the going rate for your keyword in your town is higher than your maximum, you have three options:

1. Improve conversion. A better landing page that converts 15% instead of 10% raises the plumber's ceiling to $16.20.
2. Narrow targeting. Pick towns, hours or services where clicks are cheaper.
3. Accept that this keyword isn't for you, and put the money into local SEO instead.

Step 3: Stop paying for Toronto clicks

This step often saves more money than any bid change. Google Ads has two location options, described on its help page about location options:

• Presence or interest (the default): reaches people in your area plus people elsewhere showing interest in it.
• Presence: reaches only people in, or regularly in, your chosen locations.

For a contractor who has to drive to the job, choose Presence. Then:

• target the Durham municipalities or postal areas you serve
• add exclusions for places you don't want, such as Scarborough or Markham
• check the location report monthly and exclude anything that slipped through

A Durham campaign left on the default can spend a noticeable share of its budget on people who will never hire a Durham contractor.

Step 4: Size a test budget you can trust

A campaign needs enough leads to tell whether it works. A rough rule: aim for at least 20 to 30 leads before judging.

Test budget = target cost per lead × leads needed

For the Oshawa roofer: $378 × 25 = $9,450. Over two months, about $4,700 a month.

That may be more than you planned. If so, narrow the test: one service, two towns, best hours only. A smaller, focused test beats a thin spread across all of Durham.

Step 5: Shift budget by town

Once you have data, compare cost per lead and cost per booked job by town. A typical pattern for a lakeshore-based contractor:

In this example Courtice produces jobs most cheaply. Moving budget there, and away from Pickering, lowers average cost without losing volume. Use your own report to make the same comparison.

Step 6: Adjust for repeat value

If customers come back or sign maintenance agreements, a lead is worth more than one job. Say 30% of the Whitby plumber's customers book again within two years, adding about $160 margin each on average. Lead value rises from $270 to roughly $318, and the target cost per lead rises with it.

Only count this if you can actually track repeat work. Guessed lifetime values lead to overspending.

Step 7: Read the search terms every week

The search terms report shows the exact words people typed before clicking your ad. In Durham campaigns it regularly turns up searches you never intended to pay for: job-seekers looking for "roofing jobs Oshawa", DIY questions, supply-store searches, and towns outside your area. Add these as negative keywords every week in the first two months, then every two weeks after that.

A simple check: if more than one in five clicks in a week came from searches you'd never want, the campaign needs tighter keywords before it needs more money.

Step 8: Judge on booked jobs, not leads

Leads are only a stand-in for the thing you care about. Ask your office to note the source of every booked job, even roughly, and share it monthly. If Ajax produces cheap leads that rarely book, while Whitby leads cost more but close twice as often, Whitby is the better buy. Cost per booked job is the number that should move your budget.

Common mistakes

• Judging by clicks or impressions instead of leads and jobs.
• Missing calls. An unanswered ad call is a lead you paid for and lost. A missed-call text-back tool helps if crews can't answer.
• Sending clicks to your home page instead of a page for that service and town.
• Stopping too early. Ten leads is not enough to decide.
• Leaving location targeting on the default.

Putting it together

Fill in the five numbers: job value, margin, win rate, target share and conversion rate. You'll have a target cost per lead, a maximum cost per click and a test budget. That is the basis of every Google Ads plan we build.

If you want help running your numbers, call, text or email. Plan costs are on the pricing page, separate from ad spend. The seasonal calendar guide shows when in the year to spend more and when to pull back.