What may a new customer cost? Most businesses can't answer that question straight away. Yet it's the most important number when it comes to advertising. Without it, every decision about budget, agency or price per appointment remains a gut feeling. The good news: three numbers are enough for a solid estimate.
Number 1: what a customer brings you
Start with the average order. Don't calculate with revenue, but with what's left after materials, subcontracted work and direct costs. That's the amount that pays for your time and your business.
If a customer buys more than once, multiply by the number of orders a customer places on average. For a practice that's several treatments, for a consultancy often a longer engagement, in the trades sometimes just a single project.
Customer value = margin per order × orders per customer
Number 2: how many conversations turn into orders
Not every appointment turns into an order. The close rate tells you how many of your first conversations lead to an order. If you don't know it, keep count for a few weeks. A rough estimate is enough to start with.
Value of an appointment = customer value × close rate
That's the number that matters. It tells you what a single booked appointment is worth to you on average.
Number 3: what an appointment costs you today
Finally, the comparison. What does an appointment cost you today? Add up everything you spend on new customers: ad budget, agency, portals, and your own time for acquisition and follow-ups. Divide that by the number of first conversations in the same period.
A worked example
The following figures are assumptions and only serve to show the calculation. Use your own.
In this example, a booked appointment is worth €750 on average. If an appointment costs significantly less, the advertising pays off. If it costs about the same or more, you earn nothing from new customers, no matter how good the ads look.
"Whoever knows the value of an appointment negotiates differently: about results instead of hours."
What the calculation changes
With this one number, decisions become simpler:
- Budget. You know how much an additional appointment may cost and can set your ad budget accordingly.
- Choice of provider. You compare agency, lead portal and pay per appointment on a common basis.
- Offer. If the close rate rises, the value of every appointment rises. Sometimes working on the first conversation pays off more than a bigger budget.
Conclusion
Three numbers are enough: what a customer brings in, how many conversations turn into orders, and what an appointment costs today. Once you know them, you no longer pay for advertising by feel, but by the result that ends up in your calendar and your accounts.
