3 Ways To Charge Clients For Your Leads | Pay Per Lead Model
There are three key ways to charge clients for leads on the Pay Per Lead Model.
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Pay Per Lead | Profit Margins | How To Charge Clients
There are three key ways to charge clients for leads on the Pay Per Lead Model.
So, first up…
Charge Clients Using The “Front End” Model
This is the best option if you’re working in an industry you’ve already got experience in. It’s also the most used method of charging clients at Flexxable - one I highly recommend.
For example, you may be generating leads for a debt consolidation company, and you know you can get leads for about $10 each.
In this case, you can confidently speak to a new client about how many leads you can generate, the quality of the leads, and how much you would want to be paid for them.
Because you have already had experience in this industry, and you know how much to charge per lead, this is a super easy sell.
How This Works
The client will confirm the number of leads they are looking to buy for the following week, i.e. 100. You will then invoice them for the total amount of the leads at the agreed price.
In this model, the client is paying for the leads upfront. I usually ask the client to put the money in my account by Friday. I’ll then switch on all ads and funnels by Monday morning.
No money? No ads.
You’ll then spend the week generating the leads.
By the end of the week, the client should have the rest of your leads in their CRM system. If they’re satisfied with the contact and conversion rates so far, confirm with the client how many leads they want for the next week.
Rinse, wash and repeat.
If the client wants 210 leads/week @$20 a lead, you know you need to be generating around 30 leads a day.
You need to make sure that you’re generating leads below the invoice price ($20).
If you generate leads above the invoice price, you still need to give them to the client. You’ll also have to absorb the additional costs.
Charge Clients Using The “Hybrid” Model
This model is preferred by Pay Per Lead beginners as the risk is much smaller. Profit Margins
With this model, you ask the client to pick up the advertising spend. You’re still responsible for building the funnels and running the ads, but you don’t have to shell out from your own wallet.
Say your client is paying $5000 per week for advertising spend. It’s then up to you to generate as many high-quality leads as possible for that amount of money.
When the client receives the leads, their sales team will try to convert them. For every lead they convert, you’ll get paid an agreed fee.
Clients love this kind of deal because they know they’re getting plenty of bang for their buck.
Charge Clients Using The “Back End” Model
So, this is the ultimate “paid on performance” model.
When you’re in a back end deal with a client, you pay for the advertising spend and however much you agree for that to be.
You know you can generate 100 leads for roughly $50 or less per lead in a week. So you pay the $5000 advertising spend, set up the funnels, build the ads, etc. You deliver as many leads as you can for that spend. The client will try and convert the lead, then will pay you commission for each lead converted into a customer.
If they’re a high-ticket client, they could be making as much as $20,000 per conversion. If you get 10% of that, that’s $2000.
Ten converted leads out of 100 = $20,000. Minus your ad spend ($5000), and you have a $15,000 profit per week.
Using The Front End And Back End Deals Together With Lead Segmentation
Say you’ve got a client in the debt consolidation niche, but they’re only interested in leads ready to take action right now.
That’s okay. They’ve paid for the leads upfront, and you’ve managed to generate far more leads than you thought. However, only 50% of those leads reach the client’s requirements: they must be willing to act immediately.
Instead of writing off the other 50% as “wasted leads”, you could sell them to another client in the same niche on a back end deal. As you’ve already made your money back (and more) with Client A, you won’t lose any money.
Client B agrees to take the leads, work them, and pay you commission for any converted leads. They manage to convert 10% of the back end leads, and all your commission is pure profit.
If you’re smart and know how to successfully segment leads, you could make a 100% margin on those back end leads.
These are the three model we use when charging clients. All of them have their place, and all of them can net a great profit.
If you want to find out more about the Pay Per Lead model, how we charge for leads, and how we find the high-ticket client, then check out my free case study.
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