This question of calculating customer acquisition costs has always been an interest of mine.
This time, however, I wanted to ask the question differently. If you had an easy button (or a service out there) that would add a guaranteed client to your client base, how much are you ready to pay for each sign-up?
Obviously, prices will vary depending on class of service we are talking about, so please define the parameter when you are responding.
For example, $40 for a shared hosting client, $100 for a dedicated server client.
I am asking this question because the whole psychology of spending changes when you know you receive a paying client versus when you are designing your affiliate system and choose not to go over a certain amount (comes down to difference in risk). The objective is to understand whether the value of each such sign-up is exponentially higher than when you have to earn a client yourself.
This really depends on anticipated churn. If you're buying a firm that has a history of poor customer support, or poor bookkeeping, that ratio goes down. More often than not, those companies are depressed and facing foreclosure anyway. Even at best, we'd probably not consider higher than one to one.
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Yea I'd pay up to 50% for one. Hopefully they will be recurring annually and bring customers in. And its always a possibility they could write good reviews on you that you can get even more customers. I think its a worth investment to build up a client base.
We usually pay anyone with a referral 50% of the first months invoice price.
Is that what you will pay to someone who would tell you tomorrow he will refer 1,000 guaranteed clients to boost your business? 50% of the first monthly fee? As I am specifying in my original post, we are NOT talking about what your usual affiliate commission is.