Cost per deal by channel: what one deal costs to buy
By Josh MillerUpdated 4 min readCost per deal is what you spent on a channel divided by the deals it closed, and it's the only number that compares mail, calls, ads and bought leads fairly. Work it out from your own tracking for each list and channel, since the list you point a channel at moves the number more than the channel does.
Every channel looks cheap measured the way its seller measures it: per piece, per click, per lead. The number that pays your bills is per deal.
The formula
Cost per deal = everything you spent on a channel, divided by the deals it produced. "Everything" includes the tools, data and skip tracing that channel needs, not just the stamps or clicks.
What goes into each channel
| Channel | Costs to count |
|---|---|
| Direct mail | Pieces (about 55 cents to $1.33 each), list data, tracking numbers |
| Cold calling | Skip tracing (about 12 to 15 cents a record), dialer, callers' pay |
| Search ads | Clicks ($13 to $35 for top seller phrases), landing page, management |
| Bought leads | Lead price (about $39 to $300+), and time spent on dead ones |
| All channels | Your CRM and any staff time on the leads |
Why it beats cost per lead
A $250 exclusive lead that closes 5 of every 100 costs $5,000 a deal. A $60 shared lead that closes about 1.25 of every 100 costs $4,800. A 70-cent letter that reaches owners who aren't selling can cost more per deal than either. You only see it per deal.
What moves it most
- The list. Owners with a recent filing sold off-market at 12 to 13 of every 100 within a year in the county records; free and clear owners at about 1.5. Same channel, very different cost per deal.
- Timing. Reaching a list in the months it sells.
- Speed and follow-up. The same leads close more often when you call fast and keep calling.
Work out yours
Put your own spend and deals in, per channel. Your cost per deal, in thirty seconds.
Questions investors ask
What is cost per deal in real estate investing?
Total marketing spend on a channel, including tools and data, divided by the deals that channel produced.
What is a good cost per deal?
One well below your profit per deal, with room for your time and risk. A wholesaler making $15,000 a deal can afford far more per deal than one making $5,000.
Why is cost per lead misleading?
Leads differ in how often they close. A $250 lead that closes 5 of every 100 costs $5,000 a deal; a $60 lead that closes about 1.25 of every 100 costs $4,800. The cheap lead isn't cheaper.
How do I track cost per deal?
Separate tracking numbers or lead sources for every list and channel, and a record of which deals came from which. Then divide spend by deals, each quarter.