Should I charge local advertisers per lead or take a cut of their sales?

"Every time the answer is just charge per lead. It's just that simple. Just charge per lead. And then who cares? Don't worry about it."

I've had this argument about local advertising and about insurance, and I land in the same place every time.

Why not take a percentage of the sales I drive?

Because you can't see their sales. Revenue share means trusting the advertiser's CRM, and access depends on which CRM they use. Even with access, it doesn't solve anything:

"If somebody wants to be shady they can just take it out of the CRM."

Price the event on your side of the wall instead. A lead from your form or your survey is something you can count without asking anyone.

How do I make lead billing trustworthy for both sides?

Build the lead form yourself: name, email, phone. Have it submit to you and the advertiser at the same time. Then apply one test to any performance metric you want to bill on: the only way they know about it, you know about it too. Attribution stops being a trust exercise. That's how I'd set it up.

Should I get paid only when a customer redeems the offer?

I'm wary of it. If you only get paid when somebody uses a coupon inside the business, you can't track redemptions, and you're back to trusting their count.

My suggestion to a partner who wanted to bill per redemption: charge for the slot regardless, around a couple hundred a month, and take a prepaid balance you draw down per lead.

"Give me $1,000 right now, and I will delete $10 from your balance, and you don't have to give me any more money until your balance is gone."

I'm not certain that's the right answer. The prepaid structure is something I've heard from people doing usage-based pricing, not something I've run. The partner agreed prepaid would be clearly better on his end.

What if the leads are bad?

Then they stop paying, and that's fine. You adjust the offer or find another plan. Nobody argues over an invoice for leads they both watched arrive.

Help the advertiser do their own math out loud. On leads we've handed to one advertiser, they close about 25%. Multiply close rate by lead cost, compare it to what a customer is worth over time, and the per-lead price gets judged on their numbers instead of yours.

When does pay-per-lead make the most sense?

• Short buying windows. Christmas light installation is one of the few cases where per-lead works really well. It only matters in November, and good providers are hard to find. I've literally gone looking for one myself.
• High-value services where one customer pays for many leads: realtors, insurance, med spas.
• Partnering instead of starting a business. Instead of launching a service company, partner with one and take a referral fee per lead. There's no cost to them if you fail.

For brand-awareness buyers, I still sell the slot. Per-lead works best as its own product. See how much to charge per lead.