Methodology
Lead Value Calculator methodology
Educational only: Business decision support, not accounting, tax or legal advice.
Privacy: Calculations run locally; Margin101 does not receive your commercial inputs.
Update policy: Reviewed when formulas or official dependencies change.
Scope: Market-neutral small-business planning using your own assumptions.
1. Formulas and units
grossLeadValue = close rate × bounded contribution per customerWhere
- closeRate
- Lead close rate (decimal rate)Source: Business record
- boundedContributionPerCustomer
- Bounded contribution per customer (currency units on one consistent basis)Source: Business record
- grossLeadValue
- Gross Lead Value (money)Source: Calculated output
netLeadValueBeforeAcquisition = gross lead value − handling cost per leadWhere
- handlingCostPerLead
- Handling cost per lead (currency units on one consistent basis)Source: Business record
- grossLeadValue
- Gross Lead Value (money)Source: Calculated output
- netLeadValueBeforeAcquisition
- Net Lead Value Before Acquisition (money)Source: Calculated output
currentLeadProfit = net lead value − current cost per leadWhere
- currentCostPerLead
- Current cost per lead (currency units on one consistent basis)Source: Business record
- currentLeadProfit
- Current Lead Profit (money)Source: Calculated output
maximumCostPerLead = net lead value − target contribution per lead when non-negativeWhere
- targetContributionPerLead
- Target contribution per lead (currency units on one consistent basis)Source: Business record
- maximumCostPerLead
- Maximum Cost Per Lead (money)Source: Calculated output
maximumCostPerLeadState = reachable unless the target is missed before acquisition spendWhere
- maximumCostPerLead
- Maximum Cost Per Lead (money)Source: Calculated output
- maximumCostPerLeadState
- Maximum Cost Per Lead State (state)Source: Calculated output
targetContributionShortfallBeforeAcquisition = max(0, target contribution − net lead value before acquisition)Where
- targetContributionPerLead
- Target contribution per lead (currency units on one consistent basis)Source: Business record
- netLeadValueBeforeAcquisition
- Net Lead Value Before Acquisition (money)Source: Calculated output
- targetContributionShortfallBeforeAcquisition
- Target Contribution Shortfall Before Acquisition (money)Source: Calculated output
costPerLeadHeadroom = maximum cost per lead − current cost per leadWhere
- currentCostPerLead
- Current cost per lead (currency units on one consistent basis)Source: Business record
- maximumCostPerLead
- Maximum Cost Per Lead (money)Source: Calculated output
- costPerLeadHeadroom
- Cost Per Lead Headroom (money)Source: Calculated output
Money inputs and outputs use the currency selected in the scenario without changing the canonical methodology. Rates, margins, utilisation and buffers are entered as percentages and converted to decimal values for calculation.
2. Worked example
Input assumptions
Worked values below come from the same registered engine and visible default assumptions.
Calculation and outputs
Example
Worked values below come from the same registered engine and visible default assumptions.
- Gross Lead Value
- 100.00 currency units
- Net Lead Value Before Acquisition
- 90.00 currency units
- Current Lead Profit
- 30.00 currency units
- Maximum Cost Per Lead
- 70.00 currency units
- Maximum Cost Per Lead State
- Unreachable
- Target Contribution Shortfall Before Acquisition
- 0.00 currency units
- Cost Per Lead Headroom
- 10.00 currency units
The exact engine-derived outputs are shown in the labelled rows below.
Interpretation
Maximum cost per lead protects the target contribution after close probability and lead-handling cost.
3. Validation and boundary checks
- All inputs must be finite and non-negative unless the formula explicitly permits a negative calculated profit or gap.
- Rates must remain between 0% and 100%; horizons and declared counts use the exact whole-number boundaries shown by the inputs.
- Zero denominators return an explicit unreachable state rather than Infinity, NaN or a numeric sentinel.
- Compared records must use one consistent attribution, contribution, period and currency basis.
4. Assumptions and source classification
- Retention, conversion, attribution and incrementality are user assumptions rather than causal claims.
- Customer value is contribution-based and bounded to the selected finite horizon.
- No provider rate, market benchmark, country rule or policy constant is embedded.
This calculator has no current policy-data dependency. Its commercial assumptions are user supplied. Registered family-level regression suites exercise the shared business-logic engine and worked-result reconciliation.
5. Limitations
- The workflow does not forecast demand, retention, conversion or campaign performance.
- It does not replace financial, accounting, tax or legal advice.
This is educational decision support, not tax, accounting, legal or financial advice. Check the treatment of your actual transactions under the rules that apply to your business and seek qualified advice where appropriate.
6. Update and evidence policy
Registered family-level suites test formula invariants and example reconciliation; the release ledger records that coverage without claiming a separate oracle for every line of public copy. There is no official threshold or benchmark to refresh for this calculator. Commercial inputs remain user-supplied because they vary by business and contract.
Change history
- : Initial public release of the planner and methodology after pre-launch calculation, content, source and interaction review.
Related reading
Guides to interpret the decision and its assumptions.
- Lead Qualification: The Capacity Cost of Low-Quality Leads
Measure lead-handling capacity cost before changing a qualification gate without assuming conversion uplift.
Read guide