Most people who ask “what is a good cost per lead?” want a number. So here is one: across more than 13,000 Google and Microsoft Ads campaigns, the average cost per lead in 2026 is $66.69, according to WordStream’s 2026 search advertising benchmarks.
That number won’t tell you much, though. A £60 lead is a bargain for a firm that signs £20,000 contracts. For a business selling a £150 service, however, it is a slow way to lose money.
A good cost per lead is one that sits below the maximum your business can afford. You can work that figure out before you spend anything on ads. This guide shows you how, with a worked example and a simple calculator you can copy.
What is cost per lead (CPL)?
Cost per lead is the amount you spend on marketing to get one enquiry. The formula is simple:
Cost per lead = total ad spend ÷ number of leads
For example, if you spend £2,000 on Google Ads in a month and get 25 enquiries, your CPL is £80.
A lead needs a clear definition, though. For most service businesses, it means a form submission, a phone call or a booked meeting from someone who could become a client. Newsletter sign-ups and brochure downloads usually don’t count, because they sit much further from a sale.
Why industry averages don’t tell you what a good CPL is
Benchmarks are useful for a quick sense check. Here are a few figures from the same 2026 WordStream report:
| Benchmark (Google and Microsoft Ads, 2026) | Figure |
|---|---|
| Average cost per lead, all industries | $66.69 |
| Average conversion rate, all industries | 8.18% |
| Attorneys and legal services CPL (highest) | $131.63 |
| Real estate CPL | $102.51 |
These numbers come from US campaigns, mostly run by small and local businesses. As a result, they may not match a B2B firm in the UK, the UAE or Australia.
More importantly, averages ignore three things that decide whether a lead is worth buying:
- How much a new client is worth to you.
- How many leads turn into paying clients.
- How much profit you are willing to spend to win one.
Two companies can pay the same £90 per lead and get opposite results. One makes money on every campaign. The other goes broke slowly. The difference is in their own numbers, not the benchmark.
How to calculate your maximum cost per lead
Your maximum CPL is the most you can pay for a lead and still break even on acquisition. Anything below it is a good cost per lead for your business. Here is how to find it in four steps.
Step 1: Work out what a new client is worth
Start with gross profit, not revenue. Revenue flatters the numbers because it ignores the cost of delivering the work.
Take your average first-year revenue per client. Then subtract the direct cost of serving them, such as staff time, software and subcontractors. What remains is your gross profit per client.
If clients usually stay for several years, you could use lifetime value instead. However, first-year profit is safer when you are testing a new channel. It also means you get your money back sooner.
Step 2: Find your lead-to-client rate
Next, look at the last six to twelve months. How many enquiries did you get, and how many became paying clients?
If 60 leads produced 9 clients, your lead-to-client rate is 15%.
Be honest here. Count every lead, including the time-wasters and the ones nobody followed up. If you don’t track this yet, start now. Meanwhile, use a cautious estimate and revise it once you have real data.
Step 3: Decide how much profit you will spend to win a client
This is a business decision, not a marketing one. Some firms will spend their whole first-year profit to win a client who stays for five years. Others want every campaign to pay for itself within months.
A reasonable starting point for many service businesses is 25% to 40% of first-year gross profit. Pick a figure you would be comfortable defending to your accountant.
Step 4: Put it together
Now multiply the three numbers:
Maximum CPL = gross profit per client × lead-to-client rate × share of profit for acquisition
That’s the whole calculation. The example below shows how it works with realistic numbers.
An accounting firm planning Google Ads
The figures below are a hypothetical example, not client data. We use this kind of model when a business asks us whether paid ads make sense before it commits any budget.
A small accounting firm charges an average of £6,000 a year per business client. After staff time and software, it keeps 40% as gross profit.
| Input | Value |
|---|---|
| Average first-year revenue per client | £6,000 |
| Gross margin | 40% |
| Gross profit per client | £2,400 |
| Lead-to-client rate | 15% |
| Share of profit for acquisition | 35% |
| Maximum cost per client | £840 |
| Maximum cost per lead | £126 |
The firm can pay up to £840 to win a client. Since roughly one lead in seven becomes a client, it can pay up to £126 per lead.
In practice, you should aim below the maximum. Lead quality varies, and some months will be worse than others. A target CPL of 70% to 80% of your maximum gives you room for that. For this firm, the target would be roughly £90 to £100 per lead.
Copy this cost per lead calculator
You can rebuild the model above in a spreadsheet in about five minutes. Put your own numbers in column B:
| Cell | Label | Formula or input |
|---|---|---|
| B1 | Average first-year revenue per client | Your number |
| B2 | Gross margin (%) | Your number |
| B3 | Lead-to-client rate (%) | Your number |
| B4 | Share of profit for acquisition (%) | Your number |
| B5 | Gross profit per client | =B1*B2 |
| B6 | Maximum cost per client | =B5*B4 |
| B7 | Maximum cost per lead | =B6*B3 |
| B8 | Target cost per lead (75% of max) | =B7*0.75 |
Once you have B7 and B8, you have a clear line for every campaign. If a campaign’s CPL stays below B8, keep going. Above B7, something needs to change.
Check whether your target CPL is realistic before you launch
A maximum CPL is only useful if the ad platform can deliver leads below it. So test it against expected click costs.
Divide your target CPL by the cost per click you expect. The result tells you the conversion rate your landing page must hit.
Required conversion rate = cost per click ÷ target cost per lead
For instance, if clicks in your market cost around £5 and your target CPL is £95, your page needs to convert about 5.3% of visitors. That is achievable for a focused landing page with a clear offer. On the other hand, if clicks cost £15, you would need nearly 16%. Very few service pages manage that, so the channel probably isn’t right yet.
You can find expected click costs in the Google Ads Keyword Planner. Treat the estimates as a range, not a promise.
Cost per lead vs cost per qualified lead vs cost per acquisition
CPL on its own can mislead you. A campaign can produce cheap leads that never buy. Therefore, it helps to track three numbers side by side:
- Cost per lead (CPL): spend divided by all enquiries.
- Cost per qualified lead: spend divided by enquiries that fit your ideal client.
- Cost per acquisition (CPA): spend divided by new paying clients.
CPA is the number that decides profit. CPL is simply the earliest signal you get. If your CPL looks great but CPA is rising, the campaign is attracting the wrong people.
To track this properly, your ad platform needs to know which leads turned into real opportunities. Our guide to Google Tag Manager conversion tracking explains how to measure real leads instead of every form fill. Once that data flows back, Google’s Target CPA bidding can optimise towards the outcomes you care about.
What to do when your cost per lead is too high
If your CPL sits above your maximum, you have more options than cutting the budget. Each part of the formula is a lever.
Improve the landing page
A page that converts 6% instead of 3% halves your CPL at the same click cost. Start with one clear offer, a short form and proof that you have done this work before.
Tighten your targeting
Remove search terms that bring in students, job seekers or people looking for free help. Add negative keywords every week in the first month.
Raise your lead-to-client rate
Speed matters here. A lead contacted within the hour is far more likely to convert than one called back three days later. Better follow-up raises your maximum CPL without touching the ads.
Increase what a client is worth
Higher prices, a minimum engagement or a retainer option all lift gross profit per client. As a result, your affordable CPL goes up too.
Change the channel
Sometimes the numbers simply don’t work on search ads. In that case, SEO, referrals or LinkedIn outreach may win clients at a lower cost.
Common cost per lead mistakes
- Using revenue instead of profit, which makes almost any CPL look affordable.
- Counting every form fill as a lead. Spam and job applications inflate the count and hide your real CPL.
- Judging a campaign too early. Two weeks of data is rarely enough, especially with a long sales cycle.
- Copying someone else’s benchmark. Their margins and close rates are not yours.
- Ignoring sales follow-up. Poor follow-up makes good ads look bad.
Frequently asked questions
What is a good cost per lead?
A good cost per lead is any CPL below the maximum your business can afford. Calculate it as gross profit per client × lead-to-client rate × the share of profit you will spend on acquisition. For reference, the 2026 average across Google and Microsoft Ads is $66.69, but your own numbers matter more.
How do you calculate cost per lead?
Divide your total ad spend by the number of leads it produced. For example, £1,500 spent for 20 leads gives a CPL of £75. Use the same lead definition every month, or the numbers won’t be comparable.
Is a £50 cost per lead good?
It depends on what a client is worth to you. For a firm with £2,000 gross profit per client and a 20% close rate, £50 is excellent. For a business earning £100 profit per sale with the same close rate, it would lose money.
What is the difference between CPL and CPA?
CPL measures the cost of an enquiry. CPA, or cost per acquisition, measures the cost of a paying client. CPA decides profitability, while CPL is an earlier signal you can act on sooner.
Know your number before you spend
The right cost per lead is not an industry average. It comes from what a client is worth, how many leads you close and how much profit you will spend to win one. Work that out first, and every campaign decision gets easier.
If you want a second opinion, we offer a free paid advertising viability review. We will check your numbers, estimate realistic click costs for your market and tell you whether paid ads make sense for you right now. Book a strategy call or read more about our paid advertising service.