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February 26, 2016 By Hendrik-Jan Francke

What is CPL: How to Calculate Cost Per Lead

Knowing your Cost Per Lead will help you make more strategic marketing decisions

Cost Per Lead is the first formula in a string of marketing metrics that will help you gauge the effectiveness of your marketing.

Whether you are purchasing a list, collecting names at trade shows, or driving leads through inbound marketing efforts, identifying Cost Per Lead will help you keep an eye on your marketing budget.

Calculate your Cost Per Lead:

You can calculate your Cost Per Lead by dividing your Marketing Spend by the total number of New Leads:

Step 1: Add up your marketing spend

Step 2: Add up your new leads

Step 3: Divide your marketing spend by new leads

Total Marketing Spend / Total New Leads = Cost Per Lead (CPL)

For Marketing Spend, it’s important to add up the sum of your time, ad spend, and any third party expenses.

Example of Calculating Cost Per Lead in a Marketing Campaign

Imagine Mr. Monopoly, the VP of Marketing at Monopoly Inc., is building an inbound marketing campaign around “5 Reasons the Hospitality Industry Needs to Move Accounting to the Cloud”.


Hotels are popping up all over Park Place and Boardwalk! Cloud accounting makes sense for these growing businesses.

Step 1: Sum up your marketing expenses

One Month Marketing Spend

2,000 Monopoly Dollars

Includes a whitepaper, landing page, emails, Google Ads, and a 1 month click budget

Step 2: Add up your new leads

New Leads in One Month

60 new leads

Step 3: Divide total marketing expenses by total new leads for your Cost Per Lead

2,000 Monopoly Dollars ÷ 60 new leads = 33 Monopoly Dollars Per Lead

* Is this good or bad? See full disclosure

Pro Tip: Set up goals in Google Analytics to make it easier to track the source of your leads. Goals can help you segment leads from advertising, email, and social media - you know exactly which measures are effective.

Make strategic marketing decisions when you know Cost Per Lead

When you know how much leads cost, you can make strategic decisions on where to target your marketing efforts. Print ads vs. Google ads. Trade shows vs. Webinars.

Inbound marketing can deliver a much lower Cost Per Lead than outbound marketing. Once you calculate Cost Per Lead for different campaigns, you can focus on improving marketing efficiencies in those areas.

Is a $33 Cost Per Lead Good or Bad for Mr. Monopoly? *

Full disclosure: We used Mr. Monopoly as an example because the definition of “good” or “bad” CPL depends. Cost Per Lead differs for different industries, different campaigns, and leads at different stages of the buyer’s journey.

As a marketer, you will have to figure out what Cost Per Lead works for your company. If you want quality, a higher Cost Per Lead might mean a higher quality lead, and a lower overall customer acquisition cost. If you want quantity, you might want to lower your Cost Per Lead, even if the leads aren’t as qualified.


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