Buying leads as a contractor: shared vs exclusive, and what they really cost

What you are actually buying

A shared lead is one homeowner's request sold to several contractors. One lead seller's page says its shared roofing leads go to 4 to 6 roofing companies at once. Another describes a shared lead as competing with 5 others. In our view, whoever calls first usually gets to give the estimate.

An exclusive lead is sold to one contractor only. That's a promise about the seller, not the homeowner. Nothing stops the homeowner from also calling two roofers they found on Google. Exclusive means no other buyer got the same contact from that seller.

Marketplaces sit in between. On Thumbtack, a customer can contact up to five pros in the first four hours of their search, and more after that. Each lead shows how many pros the customer contacted. You set an exact price per lead for each service you offer, and a weekly budget caps your total spend.

The price gap between the two kinds shows up inside a single price list, too. The FTC's 2022 complaint against HomeAdvisor describes two lead types. "Market Match" leads came from an automated system that sent a homeowner's request to matching providers in the network. "Exact Match" leads came from homeowners who picked one specific provider in the directory. The complaint says Exact Match and Instant Booking leads cost 50% more than Market Match leads for the same project type and location. That's the trade-off in one sentence: you pay more for a homeowner who chose you.

The cost-per-won-job calculation, step by step

You need four numbers. The seller gives you one. The other three come from your own phone and your own records.

1. Lead price. Use the price in your account or the seller's written quote. Check whether it's per lead or per booked appointment.
2. Contact rate. Out of every 10 leads, how many do you actually get on the phone? Wrong numbers, voicemails that never call back and people who already hired someone all count against you.
3. Close rate. Out of the people you reach, how many sign?
4. Leads per won job. Divide 1 by (contact rate × close rate). Reach 50% and close 20% of those, and 10% of leads become jobs. That's 10 leads per job.
5. Lead cost per won job. Lead price × leads per won job.
6. Fixed fees per job. Add memberships, setup fees and required software, divided by the jobs you expect from the source in a year.
7. Your hours. Count the calls, the drives to estimates and the time writing quotes for every job you didn't win.
8. Compare with profit per job. Profit is the invoice minus materials, labor and fuel. If the total from steps 5 to 7 is higher, the leads lose money no matter how many you buy.

In this example the shared lead wins on fees: $400 against $458. It loses on time. It takes five estimates per job instead of about three. At an assumed 1.5 hours per estimate, drive included, that's 7.5 hours against 5. If an hour of your time is worth $60, the extra 2.5 hours cost $150, which more than wipes out the $58 difference in fees.

The booked appointment looks expensive per job, but a roof replacement can leave several thousand dollars of profit. A $300 appointment can make sense for that job and lose money on a $400 leak repair. Run the math per service, not per seller.

Here's a quick test before any calculator. Divide the exclusive price by the shared price. At $110 and $40, that's 2.75. The exclusive lead only wins on fees if it turns into a job 2.75 times as often as the shared one. In our example it converts 2.4 times as often (24% of leads against 10%), so it only wins once your hours count.

The costs that aren't in the lead price

Ask about each of these in writing before you enter a card number:

• Membership fees. FTC documents put HomeAdvisor's annual membership at $287.99, on top of a fee for each lead. The complaint also says a $347.98 package included a month of field service software that renewed at $59.99 a month unless you cancelled. Spread $287.99 over 12 jobs a year and it adds $24 to each one.
• Setup fees and ad spend. One seller of exclusive leads lists a $2,000 setup fee, marked down from $4,000, and shows ad spend paid directly to Meta as a separate line. If your first 10 jobs carry that setup fee, that's $200 more per job.
• Budgets and minimum prices. Thumbtack stops sending leads for the week once you hit your weekly budget. It may also raise its minimum lead prices, and prices at or near the minimum can rise automatically when that happens, with notice.
• Credits that expire. Some marketplaces sell credits instead of leads. Bark says its credits are valid for 3 months from the date of purchase, so a big credit pack bought in a slow month can run out before you use it.
• Bad leads. Refund rules differ. Thumbtack says you can request a refund if a paid lead has a disconnected or invalid phone number. The seller above says it credits leads reported as invalid "99% of the time", which is its own claim. Find out what counts as invalid: a wrong number, someone outside your area, or someone who was never planning to hire.
• Your hours. Every lead that doesn't sign still costs a call, often a drive, and sometimes a written estimate. Shared leads multiply those hours.

Why a seller's close rate is a sales claim

In January 2023 the FTC ordered HomeAdvisor to pay up to $7.2 million over how it marketed leads to service providers. The FTC alleged several things. HomeAdvisor described its leads as people who planned to hire soon, when many didn't. Providers got leads that didn't match their services or area. Many leads were bought from other websites, from people who might not have known their details would be shared. And providers were told that leads turned into jobs at rates much higher than the company could back up.

That case covers one company's sales practices from 2014 on. It says nothing about how any seller works today. What it shows is that a close rate you hear on a sales call is a claim until your own numbers back it up. Plan your budget on the price and your own close rate, not on the rate the salesperson quotes.

When buying leads makes sense

This is our view, for a shop of 1 to 10 people. Buying leads can work when all of these are true:

• Your calendar has open days and you can take the work that comes in.
• The job you're buying leads for leaves several times your cost per won job in profit. Full replacements and installs usually do. Small repairs rarely do.
• Someone calls every lead back within minutes, not hours. Shared leads go to whoever is first. Thumbtack also lists how quickly you respond as one of the factors behind how many leads you get.
• You write down every lead and what happened to it, so you know your real contact and close rates after a month.

Skip it if you're booked out for weeks, if calls go to voicemail during the day, or if your Google Business Profile isn't finished yet. The free profile brings contacts that nobody else paid for, and our marketing on a small budget guide puts it first for that reason.

Compare the other paid options with the same formula. Local Services Ads also charge per lead, but the lead is a homeowner who contacted your business. Google Ads charge per click, so the math there starts one step earlier, with the click price.

Track your first 30 leads

Before you commit to a bigger budget or a contract, buy a small batch and write down every lead in a notebook or a spreadsheet. One row per lead:

• Date, source and the price you paid.
• Reached or not, and how long after the lead came in you called.
• Estimate given or not, and the hours it took.
• Won or lost, and the profit on the job if you won it.

After 30 leads, work out your cost per won job with the steps above. If it's higher than your profit per job, change something: the service you buy leads for, the price you pay, how fast you call back. If that doesn't help, stop. Thirty leads at $40 is $1,200, which is a cheap way to learn that a source doesn't work for you.

Next step: write down your profit on your three most common jobs. That number decides which leads, if any, you can afford.