Calculator
What can you actually afford to pay for an enquiry?
Most arguments about whether advertising “works” are really arguments about a number nobody has calculated. Three inputs settle it. Nothing here is submitted anywhere, there is no email gate, and the arithmetic is printed underneath so you can check it on paper.
In short
The most a UK trade or service business can afford to pay for an enquiry is its average job value multiplied by its gross margin, multiplied again by the share of enquiries it actually wins. A business with a 2,000 pound average job, a 40 percent gross margin and a one-in-four close rate can afford 200 pounds an enquiry before it breaks even, and needs to pay meaningfully less than that to make a profit. The figure people usually get wrong is the close rate, because they count quotes sent rather than enquiries received, which flatters the number and hides the leads that were never followed up. This calculator does that arithmetic in the browser, shows its working, and asks for no email address.
Break-even cost per enquiry
What the number actually tells you
The break-even figure is the ceiling, not the target. It is the point at which an enquiry returns exactly as much gross profit as it cost to acquire, which means you did the work for nothing. Everything useful happens below it.
The gap between break-even and what you actually pay is your margin for being wrong. Close rates slip. A competitor starts bidding harder in March. A run of enquiries turns out to be tyre-kickers. A business paying £90 against a £350 break-even absorbs all of that without noticing. A business paying £300 against the same break-even does not.
The other thing worth reading off it is the enquiries-per-job figure. At a one in four close rate, three of every four enquiries you pay for produce nothing. That is normal, and it is also why the instinct to judge a campaign on the first handful of leads is so reliably wrong.
Where this calculation misleads
- It ignores repeat work and referrals. If a won customer typically brings another job or recommends you once, the true value of an enquiry is higher than this shows and you can afford more. See lifetime value.
- It assumes every enquiry is equal. They are not. A commercial enquiry and a domestic one from the same campaign can differ tenfold in value, which is the argument for splitting campaigns in the first place.
- It says nothing about whether the demand exists. An affordable cost per enquiry is worthless if only eleven people a month search for what you do in your area. That is a separate check, and it is the second thing covered on the methodology page.
- It uses gross profit, not cash. A profitable cost per enquiry can still be unaffordable this month if the job is invoiced in ninety days and the ad spend leaves your account on the fifteenth.
Want a second pair of eyes on your inputs?The number is only as good as the close rate you put in, and most people are optimistic about theirs. Two minutes on the phone usually settles it.
Call 07443 392243WhatsAppCommon questions
Where does the one third rule come from?
It is a working convention rather than a law. Spending about a third of the gross profit an enquiry is expected to produce leaves enough room for the enquiries that go nowhere, the quotes that get undercut and the months when the close rate dips. Some businesses run comfortably at a half. Very few survive long above two thirds.
Should I use gross margin or net?
Gross, meaning what is left after the direct cost of doing the job: materials, labour on the tools, plant, subcontractors. Overheads stay out of it, because they are being paid whether you win the job or not. Using net margin here will make almost every advertising channel look unaffordable when it is not.
My close rate changes a lot. What should I put in?
Use your worst realistic quarter rather than your best month. The calculation is deciding what you can afford to commit to, and a number built on a good run breaks the first time trading is slow. If you genuinely do not know, count the last twenty quotes you sent and how many became work.
Does this work for contract or retainer businesses?
Only if you change the job value to the contract value across its expected life rather than the first invoice. An IT support contract at £600 a month held for three years is an £21,600 job, not a £600 one, and treating it as the latter is why so many recurring businesses conclude advertising does not work for them.
Related
Talk to a human
Know your number now?
Tell us what it came out at and what you do. We will tell you whether there is enough search volume in your area to spend it.