What a Drainage Lead Is Actually Worth

A contractor in North Carolina ran Meta lead ads for six weeks last spring. Forty leads came in. He quoted nineteen of them and signed six. Total ad spend was $3,400.

He wanted to know whether to keep going. The honest answer is that the ad spend number by itself tells you nothing. You need three of your own numbers before $3,400 means anything, and most contractors can find all three in an afternoon.

This post is the arithmetic. Substitute your numbers as you go.

A lead is worth your gross profit per job times your close rate

That's the whole formula. Everything else is refinement.

If you sign one job in five, and a signed job leaves you $2,400 after materials, labour, equipment and disposal, then every lead that enters the top of your funnel carries $480 of expected gross profit. Pay less than $480 and you're ahead on that lead. Pay more and you're buying work at a loss, no matter how busy the crew looks.

Run it with the North Carolina numbers. Six signed jobs out of forty leads is a 15% close rate. Say his average drainage job bills $9,200 and his direct cost on that job runs 62% — materials, crew hours, machine, dump fees. Gross profit is $9,200 × 0.38 = $3,496 per job.

Expected gross profit per lead: $3,496 × 0.15 = $524.

He paid $3,400 for forty leads, which is $85 a lead. Against $524 of expected gross profit, that's not close. He should be spending more, not wondering whether to stop.

Three numbers you need:

• Average signed job value. Not average quote. Add up what you actually invoiced on your last ten or fifteen jobs from this lead source and divide.
• Gross margin on those jobs. Revenue minus everything that only happened because the job happened. If you've never measured it, tracking four numbers by hand on three jobs will get you a workable figure inside a month.
• Close rate from lead to signed job. Signed jobs divided by total leads in the same window. Total leads, not leads you liked.

Count every lead, including the ones you never called back

This is where most contractors' math quietly breaks. They count the leads they quoted, not the leads they received.

Go back to the forty. He quoted nineteen. If you calculate close rate as 6 of 19, you get 32% and an expected value per lead of $1,119 — more than double the real number. That inflated figure is what makes people overpay for lead sources and then wonder why the bank balance doesn't match the enthusiasm.

You paid for all forty. The twenty-one you didn't quote — wrong side of the county, renter, someone who wanted a $400 fix, someone who never picked up — cost the same as the six who signed. They belong in the denominator.

There's a useful exception, and it's worth separating out. If you didn't quote someone because you never reached them, that's not a bad lead, that's a slow response. Those two failures look identical in a spreadsheet and have completely different fixes. Sort your unquoted leads into couldn't reach and reached and disqualified, because the first pile is money you're leaving on the table and the second pile is a targeting problem.

What the same numbers look like at three different close rates

The close rate does more work in this formula than anything else. Here's one contractor's numbers with the close rate moved and everything else held still — $9,200 average job, 38% gross margin, $3,496 gross profit per signed job.

Break-even is the ceiling, not the target. You don't want to spend your entire gross profit acquiring the job — that leaves nothing for overhead, the truck payment, your own pay, or the fact that some jobs go sideways.

A reasonable working rule is to cap lead acquisition somewhere between 10% and 20% of gross profit per signed job, which is the same as saying cost per lead should land between 10% and 20% of that expected-value number. At 15% close rate and $524 expected GP per lead, that's roughly $52 to $105 a lead. The $85 he was paying sits right in that band.

Where you land in that band depends on how much overhead you're carrying and how badly you need the volume. A two-truck operation with a shop lease and an office person needs a wider gap than an owner-operator working out of a driveway.

Cost per lead is the wrong number to shop on

Lead vendors, ad platforms and lead-gen agencies all quote cost per lead, because it's the number that makes them look cheapest. It's the least useful number in the chain.

Two sources at the same cost per lead can differ by 4x in what they're actually worth. Run it. Source A delivers leads at $60 and you close 8% of them. Source B delivers at $60 and you close 30%.

• Source A: $60 ÷ 0.08 = $750 per signed job.
• Source B: $60 ÷ 0.30 = $200 per signed job.

Cost per signed job is the number that matters. Cost per lead is an input to it. If a source quotes you a cost per lead and won't talk about what closes, you're being sold a volume metric.

This is also where channel choice gets decided rather than argued about. Search-intent leads and interruption leads usually sit at very different close rates and very different costs, and the ranking between them flips depending on your market, your crew size and how much phone time you're willing to spend. We worked through that comparison in Google Local Services vs Meta Ads. The arithmetic here is what you'd use to settle it for your own business rather than take anyone's word for it.

Two levers move your number more than ad spend does

Once you've got the formula, you can see that buying more leads is the expensive way to grow. The cheaper moves are on the other side of the equation.

Close rate

Go back to the table. Moving from 10% to 15% raises what each lead is worth from $350 to $524 — a 50% increase in the value of traffic you're already paying for. You didn't spend a dollar more on ads.

Most of that gain is available in the first hour after a lead arrives and in the week after a proposal goes out. Those are the two places where contractors reliably lose work they'd already paid to find. Response time is covered in what happens after thirty minutes; the proposal side is a matter of having a follow-up sequence instead of a vague intention to check in.

Average job value

If your average job moves from $9,200 to $11,000 at the same 38% margin and the same 15% close rate, gross profit per signed job goes to $4,180 and expected GP per lead goes to $627. That's a 20% increase in what you can afford to pay for the same lead.

This usually isn't about raising prices. It's about quoting the whole fix — the downspout tie-ins and the cleanouts and the restoration line — instead of quoting the trench and discovering the rest on site. Presenting a good-better-best structure moves averages too, and it moves them without anyone feeling upsold.

You need the leads and the signed jobs in the same record

All of this depends on being able to answer one question: of the leads that came in during a given window, which ones turned into signed work.

That sounds trivial and it usually isn't. The leads live in a Meta notification or a form email. The quotes live in a folder of PDFs. The signed jobs live in whatever you use to invoice. Nothing joins them, so the close rate gets estimated from memory, and memory is generous about the jobs you won and forgetful about the twenty-one you never called.

If you're keeping a spreadsheet, the fix is one tab with one row per lead and four columns: date in, source, quoted yes or no, signed yes or no. That's enough to run every calculation in this post. It stops working around the point where two people need it at once, but until then it's fine.

ScapesHQ keeps the lead, the estimate, the proposal and the signature on one timeline, so the close rate is countable rather than remembered. What it won't do is calculate your gross margin for you — job costing against actuals isn't built, and you'll be finding that number from your own invoices and receipts either way.

Run it on your last ninety days before you change anything

Don't start with this quarter's plan. Start with what already happened, because you've got the data whether or not it's organised.

1. Pick a window — ninety days is usually enough for a drainage business to have a meaningful number of leads.
2. Count every lead that came in from the source you're testing. Every one, including the ones you'd rather not count.
3. Count how many of those became signed jobs. Use the lead date, not the sign date, so a job signed in month four still counts against the month-one lead.
4. Divide to get your close rate.
5. Average the signed job values. Multiply by your gross margin to get gross profit per signed job.
6. Multiply gross profit per signed job by close rate. That's what a lead from that source is worth to you.
7. Divide your total spend in the window by total leads. Compare the two numbers.

If your cost per lead is under 20% of that expected value, the channel is working and the constraint is how much volume you can get, not whether to keep paying. If it's over 50%, something upstream is broken — usually targeting or response time — and adding budget will just lose money faster.

Between those, you've got a channel that works but doesn't have much room in it. That's where form questions, geography and offer language earn their keep, and it's the argument in the real setup for Meta lead ads.

One more thing worth saying. These numbers move with the season. A lead that arrives in November when the crew is light is worth more than the identical lead in May when you're booked five weeks out, because the May lead displaces work you'd have gotten anyway. Run the math twice a year rather than once, and expect the answer to change.

FAQ

What's a good cost per lead for drainage work?

There isn't a universal number, because it depends entirely on your close rate and your gross profit per job. A $150 lead is cheap for a contractor closing 25% on $14,000 jobs and ruinous for one closing 8% on $4,000 jobs. Calculate your expected gross profit per lead first, then judge any quoted cost per lead against that.

Should I count leads I never called back?

Yes. You paid for them, so they belong in the denominator when you calculate close rate. Excluding them can easily double your apparent close rate and lead you to overpay for lead sources. It is worth separating the ones you couldn't reach from the ones you reached and disqualified, because those are different problems with different fixes.

How long a window should I measure over?

Ninety days is usually enough for a drainage business to accumulate a meaningful number of leads. Shorter windows get distorted by one big job. If you run seasonal swings, measure a busy quarter and a slow quarter separately rather than blending them, because the value of a lead genuinely changes when your schedule is full.

What if I don't know my gross margin?

Track it on your next three jobs rather than guessing. Record contract value, material cost, crew hours times your loaded labour rate, and equipment and disposal. Revenue minus those four gives you gross profit, and dividing by revenue gives the margin. Three jobs is a rough figure but far better than a number pulled from memory.

Does a lead that signs six months later count?

Count it against the month it arrived, not the month it signed. Otherwise you'll understate the value of older lead cohorts and overreact to a slow-looking recent month. This is also why you shouldn't judge a channel until the window you're measuring has had time to mature — a ninety-day window judged at day thirty will always look worse than it is.

The short version

A lead is worth your gross profit per signed job multiplied by your close rate across every lead you received, not just the ones you quoted. Work out those two numbers from your last ninety days, multiply them, and cap what you pay per lead at somewhere between 10% and 20% of the result. Cost per lead on its own tells you nothing — cost per signed job is the number that decides whether a channel works.

Book a walkthrough and we'll run the close-rate math on your own last ninety days of leads.