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3 Ways To Charge Clients For Your Leads | PPL Model 

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. 

 

Let me give you an example:

My offer would be: 30 leads a day, 7 days a week @ $20/lead.

You can generate leads @ $10/lead = $300/day in advertising costs.

You will then sell these leads to the client @ $20/lead = Total Revenue = $600

Profit = Total Revenue – Advertising Costs = $600 – $300 = $300 profit/day

Do this over 30 days/month, and you will be clearing $9,000 profit per month.

BUT

If your cost per lead is higher, you get a different calculation:

My offer would be: 30 leads a day, 7 days a week @ $20/lead.

You can generate leads @ $25/lead = $750/day in advertising costs

You will then sell these leads to the client @ $20/lead = Total Revenue = $600

Profit = Total Revenue – Advertising Costs = $600 – $750 = $150 loss/day

Do this over 30 days/month, and you will be losing $4500 per month.

The front end model is an extremely profitable way of doing business and very easy to scale. However, because of the risks, I do recommend that you have experience generating leads in the niche first. 

Remember, though the profits initially sound enormous, you need to take into account your company overheads – staff salaries, office rental, business insurance, etc. A $9,000 profit a month can soon go if you’re not making these margins consistently. 

 

Charge Clients Using The “Hybrid” Model 

This model is preferred by Pay Per Lead beginners as the risk is much smaller. 

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. 

Say a $25 lead is worth $3000 dollars once converted into a customer. The client agrees to pay you 10% per converted lead. That means you’ll get paid $300 per lead. 

And 10% is pretty low – I wouldn’t recommend going any lower. I’ve worked with the hybrid model on a number of occasions and, sometimes, I get paid up to 25% of the worth of the converted lead. It’s all about good negotiation.

That said, don’t push too hard. Clients also have to pay for their overheads, and they’ve already shelled out for advertising spend. So, anything between 10%-25% commission is a fair deal.  

Of course, as with all models, there is an element of risk. 

Number one, and this is the most important: if your leads don’t convert, you’ll get paid nothing. This is unlikely, but I’ve seen people with bad creative or shoddy funnels come out of these deals looking worse off. 

Number two: you need to have a good relationship with your client OR will need access to their CRM system. I’ve only heard of clients stiffing lead agencies once or twice, but it can happen. They’ll claim that only X amount of leads have converted, whereas the figure is closer to Y. Access to the CRM means you’ll be able to keep an eye on conversions. 

Number three: you may have generated some red hot leads, but the sales team fail to convert them. One hangover, a bit of sickness, or an absence, and you can say “goodbye” to your money. 

 

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. 

However, this model comes with plenty of risks. 

Firstly, you’re paying for the advertising spend. If something goes horribly wrong and your leads fail to convert, you could be thousands of pounds out of pocket. 

The other risks are the same as with the hybrid model: you must trust your client, or have access to their CRM system. Conversions depend on the competency of the sales team. 

You’ll also need to wait longer to get paid. Depending on the sales cycle, you could be waiting for a week to a month. 

However, if you’re up to date on your lead segmentation skills, a back end deal could come in useful. 

 

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 clients, then check out my free case study.

Inside you’ll find how I:

  • Severed ties with retainer contracts once and for all
  • Moved away from local businesses
  • Started working with national B2C companies
  • Land high-ticket clients
  • Found the verticals we work in
  • Consistently generate leads of the highest quality

Click below to watch it now:

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