How Many Leads Does a Contractor Need? Start With the Jobs You Need to Sell

The whole method is three divisions.

The first number is the jobs. Divide your revenue goal by your average sold-project price.

A lead target without a job target is a guess. Real project sizes vary, so use the average sold price you expect across the year, not the price of one job you remember. If your project mix swings widely, build the plan from your expected mix of project sizes instead of assuming every job sells for the same amount. This is the same business as What a Solo Contractor Has to Charge to Make $100,000, so the numbers carry across both pages.

Each project contributes what is left after its own job cost, $188,230.77 ÷ 8 projects.

Overhead divided by contribution gives 7.03 projects, or $281,144.19 of revenue. That is the mathematical break-even point. This business sells whole projects, so seven still leave a $471.15 loss, and the eighth is the first project count that turns a profit.

Break-even here still pays the owner's management salary, because that sits inside overhead. It is where the business stops losing money after the owner's management salary has already been included in overhead. For the full method, see What a Contractor Has to Sell Before the Business Earns a Profit.

In this model, the eighth project is what takes the business from roughly break-even to its $16,000 annual profit.

At seven projects the business is $471.15 short. Project eight adds $16,471.15 of contribution, covering that shortfall and leaving the planned profit.

There is a second cost, separate from net profit. The owner's production labor is part of job cost, so a project not built is also $6,403.85 of planned production pay the owner does not earn.

A ninth project would add another $16,471.15, if the hours exist to build it. Step 7 covers that.

Here, a qualified lead means one that has passed your initial screening call and is strong enough to book a visit for: a four or a five on the five criteria in How to Qualify a Contractor Lead in Seven Minutes.

Use enough of your own recent lead history to smooth out one or two unusual wins or losses, and recalculate when your project size, qualification standards or sales process change.

If your close rate differs a lot between lead types, run the math separately for each group rather than averaging unlike inquiries together.

Not every call is a four or a five. The share that qualifies is the second ratio, and it is also yours. At one in three signed:

A low qualification share can signal a targeting problem, not simply a shortage of volume. More calls of the wrong kind take time without adding jobs.

The model budgets $12,000 a year for marketing and advertising. Spread across eight sold projects, that is $1,500 of marketing budget per sold project. If the business closes one in three qualified leads, the same budget works out to $500 per qualified lead. If one in three inquiries qualifies, the same annual marketing budget works out to $166.67 per inquiry.

The budget is an overhead line, funded through price like every other line. The 21 Overhead Categories Contractors Should Track carries it as Marketing & Advertising and names the common mistake: under-budgeting lead generation while waiting for referrals to carry the year.

At about 120 hours a project, 960 production hours build eight projects. In this model, a solo operator cannot build a ninth without more hours.

Once production capacity is full, inquiry volume is no longer the main constraint. The next decisions are which leads deserve an appointment, whether estimating time should be paid, and whether pricing needs to change as available production capacity tightens. When to Charge for the Estimate, and How Much covers the second.