Lead Generation Cost: The Complete Breakdown
You're buying leads. You're comparing $15 vs $50 vs $75 per lead. You're choosing the cheapest option. You're losing money. The problem isn't you. The problem is the metric.
Lead generation cost isn't about cost per lead. It's about cost per sale. A $15 lead that converts at 3% costs $500 per sale. A $50 lead that converts at 40% costs $125 per sale. The cheaper lead is 4x more expensive. Most agents don't understand this math, which is why 80-90% of agents lose money on lead generation.
Cost per lead is marketing. Cost per sale is reality. Calculate the right metric.
The Lead Generation Cost Reality
Most agents don't understand how to calculate true lead generation cost. Here's what they're missing:
The Cost Per Lead Trap
What Vendors Want You to Focus On:
- Cost per lead: $15 vs $50 vs $75
- "Get more leads for less money"
- "Cheaper is better"
- "Volume over quality"
What Actually Matters:
- Cost per sale: $500 vs $125 vs $250
- "Get more sales for less money"
- "Quality over quantity"
- "Conversion over volume"
The Math:
- $15 lead × 3% close rate = $500 per sale
- $50 lead × 40% close rate = $125 per sale
- The $15 lead is 4x more expensive
Most agents choose $15 leads because they're cheaper, then lose money because they can't convert them. They focus on the wrong metric.
The Hidden Costs Problem
Cost per lead is just the beginning. Here are the hidden costs that destroy your ROI:
Hidden Cost #1: Time Investment
- Researching prospects: 5-10 minutes per lead
- Making calls: 3-5 attempts per lead
- Education and trust-building: 15-20 minutes per contact
- Follow-up and nurturing: 10-15 minutes per contact
- CRM entry and task management: 5-10 minutes per lead
Total Time Per Lead: 35-50 minutes, even if they don't answer.
Hidden Cost #2: Low Contact Rates
- 30-40% of leads answer or respond
- 20-30% have wrong numbers or disconnected lines
- 10-20% are on the Do Not Call list
- 10-20% don't remember filling out the form
You're paying for 20 leads, but you're only reaching 6-8 people. Your effective cost per contact is 2.5-3x the per-lead price.
Hidden Cost #3: Unqualified Prospects
- 50-60% of contacts are unqualified
- No budget for insurance
- Already purchased from another agent
- Filled out form by accident
- Not the decision-maker
You're spending time and money on prospects who can't buy.
Hidden Cost #4: Low Close Rates
- Shared leads: 3-8% close rate
- Exclusive leads: 8-15% close rate
- Branded leads: 40-60% close rate
Most agents buy shared or exclusive leads and close at 3-15% rates, requiring 7-33 leads to close one sale.
The True Cost Per Sale Calculation
Here's how to calculate your true lead generation cost:
Formula: Cost Per Sale
Cost Per Sale = (Cost Per Lead × Number of Leads) ÷ Number of Sales
Example 1: Shared Leads
- Cost per lead: $35
- Number of leads: 20
- Total investment: $700
- Number of sales: 1.5 (7.5% close rate)
- Cost per sale: $700 ÷ 1.5 = $467
Example 2: Exclusive Leads
- Cost per lead: $100
- Number of leads: 20
- Total investment: $2,000
- Number of sales: 3 (15% close rate)
- Cost per sale: $2,000 ÷ 3 = $667
Example 3: Branded Leads
- Cost per lead: $45
- Number of leads: 20
- Total investment: $900
- Number of sales: 10 (50% close rate)
- Cost per sale: $900 ÷ 10 = $90
The Result: Branded leads cost 29% more per lead but convert 3-6x higher, reducing cost per sale by 81-86%.
The Complete Lead Generation Cost Breakdown
Here's the true cost per sale across all lead types:
Life Insurance Leads
Shared Leads:
- Cost per lead: $35-$75
- Close rate: 8-15%
- Cost per sale: $500-$1,875
- Time per sale: 30-40 hours
Exclusive Leads:
- Cost per lead: $75-$150
- Close rate: 20-30%
- Cost per sale: $250-$750
- Time per sale: 15-20 hours
Branded Leads:
- Cost per lead: $30-$60
- Close rate: 45-60%
- Cost per sale: $50-$133
- Time per sale: 6-10 hours
Auto and Home Insurance Leads
Shared Leads:
- Cost per lead: $25-$40
- Close rate: 5-8%
- Cost per sale: $500-$800
- Time per sale: 4-6 hours
Exclusive Leads:
- Cost per lead: $50-$75
- Close rate: 8-12%
- Cost per sale: $625-$938
- Time per sale: 3-5 hours
Branded Leads:
- Cost per lead: $30-$60
- Close rate: 25-40%
- Cost per sale: $75-$240
- Time per sale: 1-2 hours
ACA Health Insurance Leads
Shared Leads:
- Cost per lead: $40-$60
- Close rate: 8-12%
- Cost per sale: $500-$750
- Time per sale: 4-6 hours
Exclusive Leads:
- Cost per lead: $70-$100
- Close rate: 12-18%
- Cost per sale: $583-$833
- Time per sale: 3-5 hours
Branded Leads:
- Cost per lead: $45-$65
- Close rate: 25-35%
- Cost per sale: $129-$260
- Time per sale: 2-3 hours
Commercial Insurance Leads
Shared Leads:
- Cost per lead: $75-$125
- Close rate: 3-5%
- Cost per sale: $2,500-$4,167
- Time per sale: 40-60 hours
Exclusive Leads:
- Cost per lead: $125-$175
- Close rate: 5-8%
- Cost per sale: $2,083-$3,500
- Time per sale: 35-50 hours
Branded Leads:
- Cost per lead: $80-$120
- Close rate: 12-18%
- Cost per sale: $444-$1,000
- Time per sale: 20-30 hours
Medicare Leads
Shared Leads:
- Cost per lead: $50-$100
- Close rate: 10-15%
- Cost per sale: $667-$1,000
- Time per sale: 35-50 hours
Exclusive Leads:
- Cost per lead: $75-$125
- Close rate: 12-18%
- Cost per sale: $694-$1,042
- Time per sale: 30-45 hours
Branded Leads:
- Cost per lead: $60-$90
- Close rate: 20-28%
- Cost per sale: $321-$450
- Time per sale: 20-30 hours
Final Expense Leads
Shared Leads:
- Cost per lead: $15-$50
- Close rate: 5-10%
- Cost per sale: $500-$1,000
- Time per sale: 30-40 hours
Exclusive Leads:
- Cost per lead: $75-$150
- Close rate: 8-15%
- Cost per sale: $500-$1,875
- Time per sale: 25-35 hours
Branded Leads:
- Cost per lead: $50-$150
- Close rate: 40-60%
- Cost per sale: $83-$375
- Time per sale: 6-10 hours
The Cost Per Sale vs Commission Analysis
Here's how cost per sale compares to first-year commissions:
Life Insurance
Average Commission: $1,200 per sale Shared Leads Cost Per Sale: $500-$1,875 (42-156% of commission) Exclusive Leads Cost Per Sale: $250-$750 (21-63% of commission) Branded Leads Cost Per Sale: $50-$133 (4-11% of commission)
Verdict: Shared and exclusive leads consume 21-156% of commission. Branded leads consume 4-11% of commission.
Auto and Home Insurance
Average Commission: $200 per sale Shared Leads Cost Per Sale: $500-$800 (250-400% of commission) Exclusive Leads Cost Per Sale: $625-$938 (313-469% of commission) Branded Leads Cost Per Sale: $75-$240 (38-120% of commission)
Verdict: Shared and exclusive leads lose money (cost exceeds commission). Branded leads are profitable (cost is 38-120% of commission).
Commercial Insurance
Average Commission: $1,500 per sale Shared Leads Cost Per Sale: $2,500-$4,167 (167-278% of commission) Exclusive Leads Cost Per Sale: $2,083-$3,500 (139-233% of commission) Branded Leads Cost Per Sale: $444-$1,000 (30-67% of commission)
Verdict: Shared and exclusive leads lose money (cost exceeds commission). Branded leads are profitable (cost is 30-67% of commission).
The Time Investment Cost
Time is money. Here's how time investment affects your true cost:
Formula: True Cost Per Sale (Including Time)
True Cost Per Sale = Lead Cost + (Time Per Sale × Hourly Rate)
Example: Shared Life Insurance Leads
- Lead cost: $700 (20 leads × $35)
- Time per sale: 35 hours
- Hourly rate: $50 (opportunity cost)
- Time cost: $1,750
- True cost per sale: $700 + $1,750 = $2,450
Example: Branded Life Insurance Leads
- Lead cost: $900 (20 leads × $45)
- Time per sale: 8 hours
- Hourly rate: $50
- Time cost: $400
- True cost per sale: $900 + $400 = $1,300
The Result: When you factor in time, branded leads are 47% cheaper than shared leads ($1,300 vs $2,450).
The ROI Calculation
Here's how to calculate your return on investment:
Formula: ROI
ROI = ((Revenue - Total Cost) ÷ Total Cost) × 100
Example: Shared Life Insurance Leads
- Revenue: $1,800 (1.5 sales × $1,200 commission)
- Total cost: $2,450 (lead cost + time cost)
- ROI: (($1,800 - $2,450) ÷ $2,450) × 100 = -26.5% (negative ROI)
Example: Branded Life Insurance Leads
- Revenue: $12,000 (10 sales × $1,200 commission)
- Total cost: $1,300 (lead cost + time cost)
- ROI: (($12,000 - $1,300) ÷ $1,300) × 100 = 823% (positive ROI)
The Result: Branded leads generate 823% ROI, while shared leads generate -26.5% ROI (losing money).
The Bottom Line
Lead generation cost isn't about cost per lead. It's about cost per sale. Most agents focus on the wrong metric and lose money.
The math is clear:
- Shared leads: $500-$4,167 per sale (lose money)
- Exclusive leads: $250-$3,500 per sale (break-even to loss)
- Branded leads: $50-$1,000 per sale (profitable)
The choice is simple: keep focusing on cost per lead and lose money, or focus on cost per sale and build a profitable system.
Ready to stop losing money on lead generation? Learn how to generate your own branded leads that convert at 40-60% instead of 3-15%. Or explore our done-for-you service if you want warm appointments without the learning curve.
Cost per lead is marketing. Cost per sale is reality. Start with understanding exclusive lead pricing, then explore all insurance types to see which model works best for you.