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Marketing + Math = Power
A few simple equations can help you create a marketing machine
Simon Trask
November 21, 2025
From budget to revenue.
You cannot determine whether a campaign is successful unless you know what you would pay per lead.
What is acceptable to pay per lead changes wildly from one business to the next. For example, real estate agents pay thousands of dollars in commission to a buyer’s agent for a lead if the sale goes through.
Every industry is different.
If you don’t know where to start, just begin with one dollar.
Would you pay one dollar to get a chance to sell your product or service to someone? What about a thousand dollars? A hundred? Ten? Keep bracketing down the high and low numbers until you are comfortable with the price range.
This is now your official Cost Per Lead (CPL).
Then, if you know your average close rate (percentage of leads that become sales), you can divide your CPL by your close rate percentage to calculate your Customer Acquisition Cost (CAC).
Cost Per Lead / Close Rate % = Customer Acquisition Cost
Example: If you’re paying $100/lead, and you close about 1 out of 4 into sales, then it looks like this:
$100 Cost Per Lead / 25% Close Rate = $400 Customer Acquisition Cost
Divide your average sale price by your CAC and then you can report Return On Ad Spend (ROAS).
Average Sale Price / Customer Acquisition Cost = Return On Ad Spend
Example: it cost $400 to get the sale, but the ticket price for that sale is $2,000 – so you have a 5x ROAS. In marketing terms you’d say you have “5:1 ROAS:CAC” (which would be pretty darn good).
If you know your average customer Lifetime Value (LTV), or how much they will spend with you after all of their future repeat purchases, then you can report your cost of new revenue.
Combine that with your profit margin, and you now have your ROI for actual profit, dollar-to-dollar.
If you’re good with that number, NOW you can finally scale your marketing program and know that you’re actually making money!
By the way, I have an entire toolbox of these calculators for Profit Hiker Program members.
Very few small businesses are set up to report each link in this chain, but if you can, then you will have a winner.
 | Onward and upward, (I’m a small business owner, advisor, and advocate – learn more here) |