The short answer
At a $1,500 cost per funded deal and a $60,000 average deal, ten points is $6,000 in commission: a 4x return on the first deal, before any renewal. That is the entire affordability calculation. A broker who knows their cost per funded deal, their average deal size and their points can decide how much to spend to acquire a customer without guessing, and a broker who does not know those three numbers cannot scale.
The cost per funded deal only means anything against what a funded deal pays. The calculation is three numbers long, and it is the one thing every broker running ads should be able to do from memory.
| Value | Where it comes from | |
|---|---|---|
| Cost per funded deal | $1,500 | High end of the $1,000 to $1,500 clients report at $60 a lead |
| Average deal size | $60,000 | Clients report $60,000 to $65,000 on these leads |
| Commission | 10 points, $6,000 | A typical rate; yours may be higher or lower |
| Return on the first deal | 4x | $6,000 back on $1,500 spent |
| Renewals | Not counted | Every one is commission on spend already returned |
Run it at your own numbers
- Use your real cost per funded deal over several months, not your best month. If you do not know it, that is the first problem, and the six numbers are how you get it.
- Use your real average funded deal, which is decided more by industry mix than by anything the floor does.
- Use the points you bank after any ISO or rep split, not the headline.
- Multiply, divide, and the result is how many times the spend came back on the first deal. Anything above 2x is a working channel. Anything below 1x is a channel to fix or stop.
Where the ceiling actually sits
The calculation is also how you decide the most you are willing to pay for a deal. Some brokers push cost per funded deal to $2,500 on larger files and it still works. Some clients are happy to break even on the first deal and make the whole margin on renewals, because what they are buying is a customer rather than a commission. Both are defensible; what decides between them is risk tolerance and how the business is run, and the calculation is what makes it a decision rather than a hope.