How the calculator works
Customer revenue = first purchase × (1 + extra purchases)
Break-even cost per customer = customer revenue × margin %
Target cost per customer = customer revenue × (margin % − profit %)
Target cost per lead = target cost per customer × lead-to-customer rate
The break-even figure is the point where the ad spend uses up all the gross profit from the customer. The target keeps your chosen profit share back.
Example
A first job is worth $1,200 at a 50% margin, and customers typically buy 1.5 more times. Lifetime revenue is $3,000 and gross profit $1,500. To keep 20% of revenue as profit, you can spend up to $900 to win a customer. If one in five leads becomes a customer, you can afford up to $180 per lead.
First purchase or lifetime value?
Using repeat purchases raises the amount you can spend, but it also means waiting longer to get the money back, and relying on customers actually returning. Many businesses set two figures: a target based on the first purchase for cash-flow safety, and a ceiling based on lifetime value. Run the calculator with and without the repeat figure to see both.
Using it with Meta Ads
- Compare the target cost per lead with your actual cost per lead, but only after measuring how many leads really become customers. Cheap leads that never close are expensive. The Lead Cost & Quality Calculator shows where they drop out.
- If you use a cost cap or bid strategy, start a little below the target to leave room for leads that do not convert.
- Plan budgets from the target, not the other way round. The Meta Ads Budget Calculator works backwards from your goals.
What it does not include
Fixed overheads, sales team time and refunds are left out. If a salesperson spends hours on each lead, that cost is real; reduce the target to reflect it.