Calculate what you can afford to spend

Choosing a marketing channel without clear cost limits is like driving a hire car without checking the fuel gauge. The tank looks full at launch, yet the engine will stall long before revenue catches up. I learnt this the hard way in my first agency role, when a promising LinkedIn campaign drained the budget in three weeks and delivered two sales calls of doubtful value.

This chapter prevents that mistake. We will work backwards from revenue to clicks, setting four spending ceilings: cost per acquisition, cost per meeting, cost per lead and cost per session or click. These numbers tell you whether a channel is affordable before buying media or building sequences.

The method applies to service firms, consultancies and the occasional SaaS play. Follow the maths, plug in your own conversion rates and the next channel decision will rest on evidence, not hype.

Start with the cost per acquisition ceiling, the single figure that decides if a deal remains profitable. Take your average contract value, subtract direct delivery cost and multiply by target gross margin. If a consultancy sells a £25 000 project that costs £10 000 to deliver and wants a fifty per cent margin, the maximum spend to win that customer is £2 500.

Next set a payback window. Many service firms prefer six months; SaaS ventures with strong retention might tolerate twelve. Divide the acquisition ceiling by the number of months to find the budget you can release each month until break-even. In the consultancy example, a six-month window means £417 per month can service that sale.

Compare your calculated CPA ceiling with market benchmarks. If LinkedIn ads in your industry average £4 000 per won deal, paid social is currently out of reach. If direct mail costs £1 800 per closed project, the numbers suggest a viable route. Ending here would leave guesswork inside the funnel, therefore we step down to cost per meeting.

A meeting turns intent into real pipeline, so you need to know the highest cost you may pay for that slot. Divide the CPA ceiling by your meeting-to-deal conversion rate. Suppose the consultancy converts one in three discovery calls; the £2 500 ceiling divided by 0.33 sets a cost-per-meeting limit of roughly £830.

An agency closing half of all proposals works on different maths. If its CPA ceiling is £1 200, the meeting ceiling becomes £600. A SaaS firm converting twenty per cent of demos into annual contracts would multiply £800 by 0.2, landing at a £160 meeting cap.

Check these ceilings against outreach tools. Cold calling may land meetings below £100, while conferences often exceed £1 000. Knowing the meeting limit lets you decide whether outbound, events or intent data lists make financial sense. The next layer is cost per lead, which we calculate now.

Leads sit higher in the funnel than meetings, so tolerance must tighten. Divide the meeting ceiling by the percentage of leads that advance to meetings. If forty per cent of downloaded white papers convert into discovery calls, the consultancy’s £830 meeting cap yields a target cost-per-lead of £332.

Service firms sometimes accept higher lead costs if qualification filters early. A niche legal practice may pay £500 for a lead knowing eighty per cent drop before consultation. The trade-off is intentional: higher CPL, lower sales time wasted.

Use the calculated CPL to evaluate gated content, webinar sponsorships or syndication lists. If the vendor’s forecasted CPL exceeds your ceiling, keep the cash. With lead economics clear, only one step up the funnel remains: the click or session cost.

Cost per session converts media spend into landing-page opportunities. Divide the CPL by your landing-page conversion rate from click to lead. For our consultancy, the £332 CPL divided by a ten per cent form-fill rate sets a cost-per-click ceiling of £33.

Map typical costs by channel. Google Search terms such as “digital transformation consultant” might average £15 a click, safely below the £33 ceiling. LinkedIn Sponsored Content in the same niche can reach £40, breaching the limit. Niche podcasts at £25 per listener and cold email at pennies per send both fit.

The cost ladder exposes when to unlock broader channels. High-intent, low-volume sources like referrals or organic search meet the maths first. Only after they saturate should you test display networks or untargeted social, where click costs are low but intent is weaker. Numbers, not excitement, drive the expansion call.

Working backwards from revenue gives four guard-rails: CPA, cost per meeting, cost per lead and cost per click. Each ceiling narrows the list of viable channels until only those the budget can afford remain.

The exercise turns strategy from a brainstorm into a calculated bet. A marketing agency may discover that outbound calls and podcast sponsorships fit while LinkedIn ads must wait. An IT consultancy could find that conferences stay, paid search goes. A SaaS firm might learn that content syndication tops the list once trial conversion rises.

Update the numbers every quarter as conversion rates improve. The ceilings will rise, new channels will qualify and each euro of spend will land where intent and volume meet instead of being sprayed in hope.