Hypothetical example
An agency buys 100 opportunities at $50 each ($5,000). It contacts 50%, qualifies 50% of contacts and closes 20%, giving 5 sales. At $1,000 revenue per sale with a 10% chargeback rate and $100 operating cost per sale, adjusted revenue is $4,500 and net contribution is −$1,000. CPA is $1,000, ROI is −20%, the maximum affordable cost per opportunity is $40, and the break-even close rate is 25%.
This example is for illustration only and is not an FMG client result.
How insurance lead economics work
Every opportunity passes through a funnel: contact, qualification and close. Each step multiplies the one before it, so a small change in contact rate can change the result as much as a big change in price.
Why CPL alone can be misleading
Cost per lead ignores what happens next. A cheaper lead with a low contact rate can cost more per sale. Compare sources on cost per acquisition. See conversion metrics.
Why contact rate matters
You can't sell to someone you never reach. Contact rate is often the biggest lever an agency controls, through speed and follow-up.
Why speed-to-lead changes economics
Faster response generally means more contacts from the same spend. Measure delivery and response time separately with our speed-to-lead guide.
How to calculate break-even CPL
Break-even cost per opportunity equals net revenue per opportunity: (adjusted revenue − operating cost) ÷ opportunities. Paying more than that loses money at your current rates.
How chargebacks affect lead economics
Chargebacks reduce real revenue. Even a modest cancellation rate can turn a profitable-looking campaign negative, especially in final expense.
Web leads vs calls vs transfers
Each format has different contact rates and costs. Compare them in web leads vs inbound calls vs live transfers.