The $91 Lead: Why Home Services Platform Costs Keep Rising

The average home services lead now costs $91 across paid channels.

That's up 10.5% from last year. And costs rose for 69% of home services businesses in 2025, according to LocaliQ's search advertising benchmarks. That rate is roughly double the 5.13% increase seen across all other industries.

The cause isn't complicated. More contractors are entering the market, all bidding on the same keywords and the same platforms. The platforms pass the cost along.

Here's what the cost breakdown actually looks like across platforms:

The range is wide, but the trend is consistent: every major channel is getting more expensive. And the cheapest leads, the ones from your own website, take the longest to build.

217,000 New Competitors Entered Last Year

The home services industry set an all-time record for new business openings in 2024. According to Yelp's State of Services report, 217,000 new home services businesses launched, making it the only category to grow over the prior year's record numbers.

That followed a 32% year-over-year increase in 2023.

Every new business that opens bids on the same Google keywords, joins the same platforms, and competes for the same leads. Platforms operate like auctions. More bidders means higher prices. The cost increase isn't random. It's structural.

Google Ads cost-per-conversion rose 19% overall for home services in 2024, with HVAC seeing a 16% jump and electrical leads climbing 23%, according to data from 99 Calls. Google Local Services Ads specifically went from an average of $50.46 per lead in 2023 to $60.50 in 2024, a 20% increase.

The Platform Tax

The platforms themselves have become more competitive too. Google Local Services Ads went from 28% contractor adoption in 2021 to approximately 70% in 2026. What once gave early adopters a competitive edge is now table stakes.

Meanwhile, platforms like Angi and Thumbtack sell the same lead to 3-5 contractors simultaneously. Each contractor pays for the lead. Four out of five will never close it.

The economics of shared leads:

• Angi: $25-$120 per lead, shared with multiple contractors. Contractor reviews on Trustpilot report that 70% of leads don't answer or aren't qualified. Angi has faced class-action lawsuits over lead quality and FTC charges for deceptive marketing.
• Thumbtack: $10-$75 per lead, sent to 3-5 pros. With conversion rates of 10-30%, actual customer acquisition cost reaches $100-$250+. Thumbtack adjusts prices weekly based on supply and demand.
• Google LSAs: $40-$85 per lead. Higher intent and disputable, but costs rising 20% annually as adoption saturates.

For a contractor running 5-10 leads per day at $91 average, that's $450-$900 daily in lead acquisition costs. Over a month, that's $13,500-$27,000 before a single wrench turns.

The 8.6x Gap Nobody Talks About

Here's where the data gets interesting.

SEO-generated leads close at 14.6%, according to Ruler Analytics. Outbound and shared platform leads close at 1.7%. That's an 8.6x difference in close rate.

The reason isn't mysterious. Someone who finds your website through Google organic search, reads your reviews, and fills out your contact form has already decided they want you. They're not price-shopping five contractors. They're not a lead that got sold to your three closest competitors.

Organic leads are exclusive by nature. Platform leads are shared by design.

The cost math follows the same pattern. SEO costs $25-$45 per lead at maturity (12+ months), while platform leads average $91 and climbing. But SEO takes time to compound. Most home services businesses see organic search start outperforming paid advertising at around the 9-12 month mark, according to industry benchmark data.

That creates a trap. Contractors who need leads today can't wait 12 months for SEO to mature. So they stay on platforms, paying more each year, while the cost of switching keeps rising.

The Buyer Journey Is Getting Longer Too

Homeowners are doing more research before they call. Customer touchpoints increased from 4.9 to 5.5 before converting, according to LocaliQ. They're reading reviews, comparing prices, checking multiple sites.

That extra research time means:

• Leads take longer to close, increasing the cost per acquisition
• Homeowners contact more contractors, diluting conversion rates
• The first contractor to respond still wins most of the time, but "first" now means within minutes, not hours

For contractors on shared platforms, this is a double hit. They're paying more per lead, and each lead is less likely to convert because the homeowner is shopping around more aggressively.

What Contractors Can Actually Do

The data points to three practical shifts:

1. Track real cost per acquisition, not cost per lead.

A $50 Thumbtack lead that converts at 15% costs $333 per customer. A $75 Google LSA lead that converts at 50% costs $150 per customer. Most contractors only look at the first number. The second number is what matters.

2. Start building owned channels now.

SEO, Google Business Profile, your own website, email follow-ups. These take months to build but produce leads at a fraction of platform costs. The contractors who started 12 months ago are already seeing the payoff. The best time to start was last year. The second best time is now.

3. Speed wins regardless of channel.

Across every platform and every channel, the contractor who responds first closes the most leads. MIT research found that responding within 5 minutes makes you 100x more likely to connect than waiting 30 minutes. Whether the lead costs $10 or $100, responding in 2 minutes instead of 2 hours changes the conversion rate more than switching platforms.

The Bottom Line

The cost of buying leads on platforms is rising faster than any other marketing expense in home services. More contractors, same leads, higher prices. This trend won't reverse.

The contractors in the strongest position are the ones building their own lead flow: their own website, their own SEO, their own reputation. Platforms should be a supplement, not the foundation.

But that transition takes time. And in the meantime, maximizing conversion on every lead, regardless of source, is the fastest lever contractors can pull. A 10% improvement in response time pays off immediately. A 10% improvement in SEO pays off for years.