People often ask how they can determine how they should be paying for leads. There’s actually a really simple equation for you to be able to figure that out.
(Profit from a Successful Transaction/Conversion) x (Percentage of Leads that Convert) = The Most You Should Pay per Lead
First, you need to figure out of the current leads you get in what percentage of those leads actually convert into a transaction. Let’s say that it’s 2%. Then you need to determine what the average profit you make off of a completed transaction or conversion. Let’s say that you’re a real estate agent and a completed transaction for you typically nets you a commission of $10,000.
$10,000 x 2% = $200
So you take that $10,000 and multiply it by 2% and that will give you $200 so you know that you if you spend $200 per lead that you are breaking even. Obviously you don’t want to breakeven because you want to make a profit for your efforts. So anything below $200 per lead is actually netting you a profit and so the lower you pay per lead the higher your profit is going to be.
We’re excited to be launching a brand new pricing structure at Tatum Digital. Now you can select how many leads you want per month and you’ll only pay an affordable, flat monthly fee. We’ll be releasing more details this week and next week.