The allowable cost per install is the most a boiler company should spend in marketing to win one sold installation. You find it by starting with the contribution the install leaves, choosing a share of that to invest in winning it, and working backwards through your close and booking rates. Every figure below is illustrative; none is a market price. Replace each with your own.
Step 1: Separate your install types
Before any arithmetic, list the install types you sell, because each has its own economics. A typical boiler company might sell three:
- Combi replacement: a combined heating and hot-water unit replacing an older boiler or a boiler plus tank.
- System boiler with indirect tank: a heat-only boiler paired with a separate indirect hot-water tank, common in larger homes.
- Hydronic retrofit or conversion: new distribution work, often replacing a different heating system altogether, with far more labour.
If your records cannot split jobs this way, start splitting them now. Even a rough tag on each invoice is enough to begin.
Step 2: Work out contribution per install
Contribution is the sold price minus the costs that come with that specific job. For this purpose, keep it to:
- equipment and controls
- venting, piping, fittings and other materials
- permit and inspection fees
- installation labour at your loaded hourly cost
- disposal of the old equipment
- any warranty reserve you set aside per job
An illustrative set of figures:
| Install type | Sold price | Direct costs | Contribution | Contribution % |
|---|---|---|---|---|
| Combi replacement | $11,000 | $6,600 | $4,400 | 40% |
| System boiler with indirect tank | $14,500 | $9,100 | $5,400 | 37% |
| Hydronic retrofit | $24,000 | $16,300 | $7,700 | 32% |
Notice that the largest job does not carry the highest percentage. Bigger jobs bring more labour risk, and that shows up in the margin.
Step 3: Choose the share you will invest
Next, decide what share of contribution you are willing to spend to win each install. This is a business decision, not a formula. Some owners pick a low share because referrals already fill much of their schedule. Others pick a higher share for a period while they build market presence.
For this example, use 15% across all three types:
| Install type | Contribution | Allowable cost per sold install (15%) |
|---|---|---|
| Combi replacement | $4,400 | $660 |
| System boiler with indirect tank | $5,400 | $810 |
| Hydronic retrofit | $7,700 | $1,155 |
Whatever share you choose, write it down. The ceiling only protects you if it is fixed before campaigns run, not adjusted afterwards to excuse a result.
Step 4: Divide back through your close rate
You do not sell every quote. If you close 35% of in-home combi quotes, each quote visit may cost no more than 35% of the sold-install ceiling.
- Combi: $660 × 0.35 = $231 per quote visit
- System boiler, at a 30% close rate: $810 × 0.30 = $243 per quote visit
- Hydronic retrofit, at a 25% close rate: $1,155 × 0.25 = about $289 per quote visit
This is the step most owners skip, and it explains why a campaign that "costs too much per lead" can still be profitable, and vice versa.
Step 5: Divide back through your booking rate
Not every enquiry becomes a quote visit. Some callers are out of area, some only want a price, and some never answer the callback. If 60% of combi enquiries book a visit, the cost-per-lead ceiling is:
- Combi: $231 × 0.60 = about $139 per lead
- System boiler, at 55%: $243 × 0.55 = about $134 per lead
- Hydronic retrofit, at 45%: $289 × 0.45 = about $130 per lead
These three ceilings are the figures to hold your campaigns against. They are also the figures that tell you where improvement is cheapest.
Which lever moves the ceiling most
Once you have the chain, you can see which lever moves the ceiling most. Using the combi numbers:
| Change | New cost-per-lead ceiling |
|---|---|
| Baseline | about $139 |
| Close rate rises from 35% to 42% | about $166 |
| Booking rate rises from 60% to 70% | about $162 |
| Contribution rises by $400 through option structure | about $151 |
| Share invested rises from 15% to 18% | about $166 |
Improving close rate and booking rate costs very little in media spend. Better price presentation, faster callbacks and clearer options often do more for your marketing budget than any new channel. The install pricing service works on exactly those levers.
A quick self-check
Before moving on, answer these four questions for your own company. If any answer is "I don't know", that is where to start.
- What did your last ten combi replacements sell for, on average?
- What were their direct costs, by the definition in Step 2?
- How many quote visits did it take to sell those ten?
- How many enquiries did it take to book those visits?
Common mistakes
- Using revenue instead of contribution. An $11,000 install does not give you $11,000 to spend. Basing ceilings on revenue overstates them several times over.
- One ceiling for every boiler type. It overfunds the work with the thinnest margin and underfunds the rest.
- Ignoring the agreement. If most combi buyers also sign a service plan, the agreement's lifetime contribution can justify a slightly higher install ceiling. Count it separately, then add it consciously. The service agreement break-even guide shows how.
- Judging a ceiling on a few jobs. Five installs are not enough to judge close rate. Wait for a meaningful number of quote visits before changing course.
- Forgetting the seasons. Ceilings stay fixed; the cost of reaching them changes. Heating-season clicks cost more, so the same ceiling buys fewer leads in January than in September.
Putting it to work
Once the ceilings are set, every channel can be judged the same way: cost per lead, cost per quote visit and cost per sold install, each against its limit. That requires tracking from the first call to the invoice, which is what our unit-economics tracking service builds.
If you would like to run your own numbers through this method, call, text or email through the contact page. Bring rough figures; we will work through them with you. All the figures here are illustrative, and none of this replaces advice from your accountant.
Frequently asked questions
What share of contribution should go to marketing?
There is no universal figure. It depends on your overheads, how much work comes from referrals and how hard you want to grow. Pick a share you can defend with your accountant, then test it.
Should we include overheads in direct costs?
Keep this calculation to costs that rise and fall with each install: equipment, materials, permits and installation labour. Overheads such as rent and office salaries are paid from contribution and belong in a separate check.
Why calculate per boiler type?
Because a combi swap, a system boiler with indirect tank and a full hydronic retrofit can differ greatly in price, labour and close rate. One blended ceiling will overfund some and starve others.
Is this accounting advice?
No. It is a marketing planning method using illustrative numbers. Your real costs and how to treat them should come from your books and your accountant.