When considering the best way to build a sales pipeline, a vital question every company eventually asks themselves is, “How much will it cost me and my company to acquire lead generation services?”
There's no set-in-stone answer to this question since B2B lead generation companies can vary greatly in terms of their services, the methods used to generate leads, and their pricing structures.
For example, purchasing lists of leads can be quite expensive, while generating leads through online marketing activities can be relatively low cost, and companies can structure their payment methods around either performance or flat rates.
Many businesses are faced with tough decisions when they are trying to determine their marketing budget, and there are a lot of factors to consider when setting the price they are willing to pay, and it can be tricky to find the right balance.
TAM, Lead Value & Competition
The first thing you need to think about is your target market. What are you willing to pay for your product or service to get out there? If you're targeting high-end customers, you'll probably need to pay more than if you're targeting budget-conscious consumers, as they are likely harder to find.
You also need to consider the value of your leads. How likely are they to convert into paying customers? If you have a high conversion rate, you can afford to pay more per lead. However, if your conversion rate is low, you'll need to pay less to make up for the lower number of sales.
You’ll also need to think about the competition. What are your competitors charging for their products or services? If you're significantly cheaper than your competition, you may not be able to afford to pay more for your lead generation. However, if you're more expensive, you can often justify the higher price per lead.
Quality Of Lead Generation
One of the most important factors in determining the cost of lead generation is the quality of the leads that are generated from lead generation services. High-quality leads are more likely to result in sales than low-quality leads, so businesses should be willing to spend more on lead-generation activities that are likely to produce high-quality leads.
There are various factors that can impact the quality of a sales lead, including the accuracy and completeness of the contact information, the level of decision-making authority held by the contact, the timeliness and relevance of the lead to current business initiatives, and the level of engagement and interest shown by the contact in the offered product or service.
Additionally, it is important to consider whether or not the lead fits within the target audience and ideal customer profile for your company.
Continuous evaluation and refinement of these criteria can help ensure that sales leads are high-quality and have a higher likelihood of conversion. Properly nurturing leads through personalized communication and targeted offers can also improve their quality.
Lifetime Value of The Lead Generation
Businesses should consider the lifetime value of a customer when determining how much to spend on lead generation.
There are a few different ways to determine the lifetime value of a sales lead. One way is to calculate the average revenue generated per customer and then multiply that by the average customer retention rate.
Another method is to track the revenue generated from a specific lead over time and project that number for future years. If a business knows that its customers tend to make repeat purchases or recommend products to others, then spending more on generating leads may be worthwhile since these customers can provide long-term value.
It's important to keep in mind that these calculations can be estimates and may not always reflect actual results. It's also important to regularly review and update these calculations as your business and industry changes.
Which ever you decide to focus on is up to you, but in general, businesses should expect to spend at least some money on lead generation activities in order to find new customers.
How much though?
Lead Generation Pricing Structures
Lead generation companies tend to charge either a flat fee or a pay-per-lead fee.
Flat Fee Style Lead Generation
Flat-fee lead generation pricing is when a company charges a set fee for generating leads, rather than charging on a per-lead basis. This type of pricing can be beneficial for both the company and the client, as it allows for more predictability and budgeting.
Flat fees are typically charged on a monthly or annual basis, and they usually cover a certain number of leads that the company promises to deliver.
Pay Per Lead Style Lead Generation
Pay-per-lead fees, on the other hand, are exactly as they sound - you only pay for the qualified leads that the company provides, and there's usually no minimum number of leads required.
This means that your business only pays when a potential customer provides their contact information or takes a desired action, such as filling out a form or making a purchase.
This pricing model can be advantageous for you because they are only paying for actual, qualified leads rather than potentially ineffective impressions or clicks. It can also benefit the lead generation company as it incentivizes them to generate high-quality leads.
However, pay per lead pricing does have its drawbacks as well. It often requires more time and effort on the part of both you and the lead generation company to generate qualified leads
What Is The Lead Generation Fee?
Of course, there are many other factors that can affect how much a lead generation company charges, however, in general, you can expect to pay somewhere between $500 and $5,000 per month for a good quality lead generation service.
