Costs and pricing
Part of Budgeting for a lead network with cash, VAT and labour kept separate
Lead generation networks: turning a quote into a budget, with HMRC VAT, PECR consent hours and a worked month
Turn a lead network quote into a budget: fixed and variable lines, a worked 500-lead month, VAT at 20 per cent under HMRC rules and the cost of consent.
What to take away
- Turn the quote into two totalsthe cash requirement and the economic cost, as the costs and budget guide explains.
- Sort every line twice, first fixed or variable, then one-off or recurring, before any total.
- Budget the work behind the invoicevalidation, routing, complaint handling, buyer hours and exit.
- Keep gross VAT in the cash line until a named tax reviewer confirms liability and recovery.
- Check what you may do with a bought lead, because consent rules can limit how you contact it.
Name the record the network sells
Lead networks connect buyers with enquiries, so compare the definition of a delivered record on each network's own terms page. Write down what counts as submitted, validated, routed, buyer-accepted and credited before you compare prices.
No network price list is quoted here. Ask each network for its current schedule in writing and enter it in the model. A seller's label is not an acceptance definition. Set your own geography, service type, age limit, duplicate window and evidence bundle. A quote with no named unit has no price. The lead marketplace fees article shows how to read one.
Compare structures only after the unit is fixed. The pricing models guide separates subscriptions, per-lead fees and performance fees on a common basis.
Sort every ledger line twice
Tag each line fixed or variable, then one-off or recurring. Acquisition media moves with volume. A subscription may be fixed inside a usage band.
| Cost line | Fixed or variable | One-off or recurring |
|---|---|---|
| Acquisition media | Variable | Recurring |
| Platform subscription | Fixed in a usage band | Recurring |
| Buyer record review | Variable | Recurring |
| Exit data extraction | Fixed charge | One-off |
| Post-exit record cleansing | Variable | One-off |
Buyer hours are easy to forget. Log time for procurement, legal review, privacy mapping, security answers and reconciliation, and apply an approved loaded hourly rate for each role. The hidden costs article lists lines that sit outside the headline fee.
The consent cost of a bought lead
A lead is only useful if you may contact it. You must not send marketing emails or texts to individuals without specific consent. The soft opt-in lets you email or text your own customers, but it does not apply to prospective customers or new contacts, such as bought-in lists.
PECR regulation 22 bars unsolicited direct marketing by email unless the recipient has previously notified the sender that they consent.
A network lead that came with no consent for your business is therefore a lead you may need to call, post to or re-permission, and each route costs time.
The ICO is the regulator of data protection and other information rights legislation. Organisations, including sole traders, that use personal information need to pay its data protection fee unless they are exempt.
Sole traders and other types of partnerships are treated the same as individuals, so a lead from a tradesperson is not exempt.
You must also determine your lawful basis before using the personal information, and document it. Budget hours for that record, and ask the network how consent was captured. Re-permissioning a lead costs time per contact, so estimate the hours from a small sample of your own leads before you set the line.
Illustrative arithmetic: re-permissioning 100 bought leads at 6 minutes each takes 10 hours. At the £25 loaded rate used in the example below, that adds £250.
Example: 500 accepted leads in one month
The figures below are invented to show the arithmetic. They are not a market benchmark.
- 500buyer-accepted leads at £18 net each: £9,000.
- £300Platform fee
- £200Validation tooling
- £9,500Net external cost
- 60hoursBuyer hours
| Total | Calculation | Illustrative value |
|---|---|---|
| VAT at 20 per cent on net external cost | £9,500 × 0.20 | £1,900 |
| Gross supplier payments | £9,500 + £1,900 | £11,400 |
| Cash requirement | £11,400 + £1,500 payroll cash | £12,900 |
| Economic cost if VAT is recoverable | £9,500 + £1,500 | £11,000 |
The £1,900 difference between the two totals is the VAT that a registered buyer expects to recover. Until a reviewer confirms recovery, hold the gross figure in the cash line.
VAT rates, thresholds and cash timing
The standard VAT rate is 20 per cent. A reduced rate of 5 per cent applies to certain goods and services, and the rate depends on the supply. A business must register once its total taxable turnover for the last 12 months goes over £90,000.
The 20 per cent rate has applied since 4 January 2011. HMRC, the UK's tax, payments and customs authority, administers VAT. The rules are UK-wide, so an England buyer uses the same figures.
The VAT charging guidance requires invoices to show the VAT number and display the VAT separately. Check that every network invoice does, and keep net, VAT and gross as separate fields in the model.
Cash timing matters as much as the total. If a network bills in advance and credits rejected leads later, the credit arrives after the cash left. Delay the service credit by a month in the stress case below.
Test the quote with three scenarios
- Low volume. Run one accepted lead a day and check that the minimum monthly fee leaves a margin.
- Operating case. Use your expected volume, validation rejection rate and staff hours.
- Stress case. Double the rejection rate, add a complaint load and delay the service credit by one month.
Pause commitment when a price lacks a unit, a source is out of date, tax is unresolved, or supplier evidence cannot support provenance. The vendor due diligence checklist covers the evidence to request.
Set the acceptance tests by reading the service standards that measure transitions rather than vague quality.
Budget approval checklist
- Record stages defined as submitted, validated, routed, buyer-accepted and credited.
- Every line tagged fixed or variable and one-off or recurring.
- Buyer hours logged at an approved loaded rate per role.
- Net amount, VAT position and gross cash held as separate fields.
- Consent route for each lead source recorded.
- Three scenarios run and signed off before commitment.
Common questions
What should a lead network quote contain beyond the headline price?
Units and definitions, minimum volumes, overage rules, rejected-record treatment and exit charges. Ask for each item as a dated schedule with a named owner.
How do I scope internal buyer work without inflating it?
Log actual hours per role for procurement, legal, privacy, security and reconciliation. Apply a loaded hourly rate and keep the evidence attached to the model.
Can I email every lead the network sends me?
Not automatically. Marketing emails to individuals need specific consent, and the soft opt-in does not cover new contacts from bought-in lists. Check the consent wording before you budget for email follow-up.
