Paid leads are worth it only when your fully loaded cost per booked job — lead fees plus the unpaid hours spent quoting — stays comfortably below the gross profit of the average job they bring in. The break-even test is one line: your close rate must exceed the lead price divided by your gross profit per job. Below that line, every lead you buy pays the platform to let you work.
"Are paid leads worth it" gets answered with vibes in every contractor forum on the internet. It's an arithmetic question. Here's the arithmetic — one formula, then one hypothetical month walked twice — with every assumption visible so you can rerun it on your own numbers.
The break-even close rate: one formula
Minimum close rate = average lead price ÷ gross profit per booked job.
That's the whole test. Say — hypothetically, since no platform publishes a rate card — leads run $80 and your average lead-sourced job grosses $400 in profit after materials. Break-even is 80 ÷ 400 = 20%. Close exactly 1 in 5 and your entire gross profit goes to the platform; you worked the month for free. Close 1 in 4 and you keep a quarter of your profit. And that's before counting your quoting time — load the lead price with the unpaid hours each lead consumes (at your billable rate) and the real break-even climbs fast. A $80 lead that also eats an hour of your $100/hr time is effectively a $180 lead, and break-even jumps to 45%. On shared leads, where four contractors race for one homeowner, sustained close rates like that are rare air.
A month with leads — hypothetical, assumptions stated
Meet our invented solo: licensed, insured, one van, $100/hr when billing. Every number below is made up to be plausible; the structure is what's real.
| Line | Amount |
|---|---|
| Revenue: 5 lead-sourced jobs @ $1,400 avg | $7,000 |
| Materials (call it 30%) | −$2,100 |
| Lead spend: 20 leads @ $80 | −$1,600 |
| Cash margin from the channel | $3,300 |
| Install hours: 5 jobs × 8 hrs | 40 hrs |
| Quoting, chasing, no-shows (unpaid) | 25 hrs |
| Effective rate: $3,300 ÷ 65 hrs | ≈ $51/hr |
Fifty-one dollars an hour — before the van, the insurance, the tools, the license renewals, or a single dollar of profit for the business itself. Our solo bills $100/hr for his labor; the lead channel structurally pays him half that, because half his hours in the channel are sales hours nobody pays for, and the platform takes its cut off the top whether he wins or loses.
The same month, restructured
Now rerun the month with one structural change: the acquisition cost and the quoting hours go to zero, because the work arrives already sold. Say those same 40 install hours go to jobs from repeat customers, referrals, and a job network that hands over scoped, fixed-price work — and say the pricing is honestly a bit lower per job than retail, call it $1,200 equivalent where he grossed $1,400 chasing, because somebody else did the selling.
| Line | Amount |
|---|---|
| Revenue-equivalent: 5 jobs @ $1,200 | $6,000 |
| Materials borne by him | −$1,400 (network jobs arrive with materials handled) |
| Lead spend | $0 |
| Cash margin | $4,600 |
| Install hours | 40 hrs |
| Quoting hours | ~2 hrs (a referral walkthrough) |
| Effective rate: $4,600 ÷ 42 hrs | ≈ $110/hr |
Less revenue, more margin, at double the effective rate — and 23 hours handed back, which is another two or three billable jobs if he wants them or a weekend if he doesn't. The restructured month doesn't win because the numbers are generous (we priced its jobs lower); it wins because it deleted the two costs that don't show up on any invoice: the platform's cut of every booking and the unpaid sales shift.
Push back on the comparison — you should. "The restructured month depends on having referrals and a network to fill it." True, and that's the honest limit: a brand-new shop can't conjure repeat customers in week one, which is exactly the calendar-bridge case for paid leads covered in the pillar. But notice which direction the two structures move over time. The leads month looks the same in year five as in year one — same fees, same footrace, same reset to zero every month. The restructured month gets easier every year, because its channels compound. You're not choosing between two months; you're choosing which trajectory you're on.
Where the margin actually goes
- The platform fee — captured by the platform, win or lose. The only party in the system paid on every inquiry.
- The discount-to-win — captured by the homeowner, when four visible bids drag your quote down. Never appears in your books as a cost; just as revenue that isn't there.
- The unpaid sales shift — captured by nobody. Pure evaporation: hours that could have billed, spent producing quotes that mostly lose by design, since only one bidder can win.
- Collections and callbacks — retained by you, since the platform's involvement ends at the introduction.
The honest conclusion
Are paid leads worth it? Sometimes, genuinely: high tickets, strong close rates, and a capped budget can clear the break-even line with room to spare, and an empty calendar changes the math for any new shop. The point isn't that leads are always a con — it's that "worth it" is a number, not a feeling, and most electricians buying leads have never computed theirs. Run the formula above, keep the monthly ledger from the pillar post for one quarter, and let the trend decide. If your number comes back on the wrong side of the line, the restructured month isn't a fantasy — it's a structure, and joining it costs you nothing, which is rather the theme.