Solved: Facebook Ads Bid Caps Giving Expensive Leads

Hi there,

Thanks for reaching out!

That's a really common point of confusion with Facebook's bidding system, and tbh it’s one of the most expensive misunderstandings an advertiser can have. You're right to question it – seeing a $250 lead when you've set an $80 'cap' feels like the platform is just ignoring you. The short answer is that you’re not telling Facebook to cap your cost per lead, you're telling it something completely different, and that distinction is probably costing you a fortune.

Let's get this cleared up. I’ll walk you through what's actually happening in your campaign, why the Bid Cap isn't doing what you think it is, and what you should be doing instead to actually control your costs and get better results.

We need to look at the Bid Cap myth...

Right, let's get straight to the heart of the matter. The term 'Bid Cap' is massively misleading. You think it means "don't spend more than £X for a result," but what Facebook hears is "don't bid more than £X to enter any single auction for an impression."

Think of it like this: You're a salesperson. You decide you're willing to pay up to £80 for a meeting with a potential client. You go to 10 meetings, and you pay a different amount for each one, but never more than £80. Let's say you spend a total of £500 on those 10 meetings. Out of those 10 meetings, you only manage to sign two new clients.

What was your cost per client? It wasn't £80. It was £500 spent / 2 clients = £250 per client.

This is exactly what is happening inside your Facebook campaign. Facebook is entering millions of tiny auctions on your behalf to show your ad to people. Your $80 bid cap just tells it "don't bother entering an auction if the price of entry is more than $80." It then spends your $500 budget, winning lots of these auctions, showing your ad and getting clicks. But most of those people don't convert into a lead. The entire $500 ad spend is then averaged out across the two people who *did* convert. And so, you get a cost per lead of $250.

The platform followed your instructions perfectly. The problem is the instruction you gave it was based on a misunderstanding of how the auction works. Your high cost per lead has very little to do with your bid; its almost entirely down to your conversion rate. A low conversion rate means you have to 'pay for more meetings' to find those two clients, driving your final cost up.

I'd say you need to see how your conversion rate affects cost...

This is the bit that most advertisers miss. They spend all their time tweaking bids and budgets in Ads Manager, but the real money is made or lost on your website. Your Cost Per Click (CPC) is determined by the ad auction, but what happens *after* the click is what determines your final Cost Per Lead (CPL).

Let's put some numbers on it. Your CPA is basically your Cost Per Click divided by your Landing Page Conversion Rate. A tiny change in your conversion rate can have a massive impact on your final costs. I've built a little calculator for you below. Play around with the sliders and see for yourself. Notice how even with a high CPC, a strong conversion rate can give you a profitable CPA. And conversely, see how a really low CPC is worthless if your landing page doesn't convert.

Your $250 cost per lead, with a $500 spend, suggests you got very few clicks or your landing page conversion rate is extremely low. That's where you should be focusing your attention, not on the bid cap. Your campaign is inefficient. The question isn't "why didn't my bid cap work?", the real question is "why did it cost me $500 to get just two people interested?". This could be down to a few things:

• -> Your Offer: Is what you're offering in exchange for their contact details actually valuable? A generic 'Contact Us' form isn't an offer. A free guide, a webinar, a free audit, a compelling discount – these are offers. I see so many B2B campaigns fail because they have an arrogant "Request a Demo" button. It's high friction and low value for the prospect. You have to give value to get value.


• -> Your Targeting: Are you reaching the right people? Or are you targeting a broad demographic like "business owners" and hoping for the best? You need to target their pain point. We've worked on campaigns for SaaS companies where reducing a £100 CPA down to £7 was achieved almost entirely by refining the audience to people with a specific, urgent problem our client could solve.


• -> Your Ad Creative: Does your ad speak directly to their problem? Does it agitate that problem and present your offer as the clear solution? Or is it a generic ad listing your features? Your ad's only job is to get the right person to click. If it's not doing that, your CPC will be high, and you'll be paying a premium for low-quality traffic.


• -> Your Landing Page: This is the big one. Is your landing page fast, trustworthy, and clear? Does it instantly confirm the promise made in the ad and make it incredibly easy for the user to convert? We often see websites that are cluttered and slow, with no clear call-to-action. That will kill your conversion rate and send your cost per lead through the roof, no matter how good your ads are.

You probably should use a better bid strategy...

So if Bid Cap is the wrong tool for the job, what should you be using? Facebook gives you a few options, and for 99% of advertisers, the choice is pretty simple. You need to let the algorithm do its job. It's smarter than all of us, and its goal is the same as yours: to find conversions.

Here are the main strategies and when to use them:

1. Highest Volume (formerly Lowest Cost): This should be your default strategy, especially when starting out. You set a budget, and you tell Facebook, "Go and get me the most conversions you can find within this budget." The algorithm will automatically adjust its bids to find the cheapest available conversions first. It's designed for maximum efficiency. This is how you establish a baseline CPA. You let it run, and you find out what a lead *actually* costs for your business right now.

2. Cost Per Result Goal (sometimes called Cost Cap): This is what you *thought* Bid Cap was. With this strategy, you tell Facebook, "I want my leads to cost, on average, around £X." The algorithm will then try to maintain that average. Sometimes it will pay more for a lead it thinks is high-value, sometimes it will pay less. It's great for maintaining stable and predictable costs *after* you've used 'Highest Volume' to figure out what a realistic goal is. If you set this goal too low, your campaign simply won't spend its budget.

3. Bid Cap (What you are using): This is an advanced strategy for experts who want to manually control the maximum they're willing to bid in any given auction. The main reason to use it is to prevent overpaying in highly competitive auctions, but the huge downside is that it severely limits your campaign's ability to learn and deliver. By capping your bid, you are telling Facebook to walk away from thousands of auctions it could have won, including many that might have led to cheap conversions. It almost always leads to underspending and poor performance unless you know *exactly* what you're doing. It’s like trying to fly a plane by manually adjusting the flaps instead of using the autopilot.

To make it clearer, I've mapped out a simple decision-making process for you below. This is the logic we use for our clients, from small businesses to major SaaS platforms spending thousands a day.

You'll need a clear plan to fix this...

Okay, enough theory. You need an actual plan to turn this around. Forget about bid caps for now. Your job is to create a campaign so efficient that the final cost per lead is profitable, regardless of the bid strategy. We do this for our clients all the time, from eCommerce stores to high-ticket B2B services. The process is always the same: get the foundations right first.

I've detailed my main recommendations for you in the table below. This is the exact process you should follow to diagnose the real problem and start getting leads at a sensible cost.

Fixing an underperforming ad account isn't about finding one magic button to press. It's a methodical process of identifying the weakest link in your customer acquisition funnel and strengthening it. The issue you're facing is incredibly common, but focusing on the Bid Cap is looking in completely the wrong place. The problem lies in the journey you're sending users on after they see your ad.

Getting this right requires a deep understanding of the platform, your audience, and conversion psychology. It involves rigorous testing and analysis. While you can certainly follow the steps above yourself, the process can be slow and expensive if you're learning as you go. An expert can often diagnose the problem in minutes and implement a solution based on years of experience running campaigns for businesses just like yours.

If you'd like an experienced pair of eyes to look over your setup and give you a specific, actionable plan to fix your lead costs, we offer a completely free, no-obligation strategy session. We can audit your campaign and landing page together and show you exactly where the opportunities are.

Hope this helps!

Regards,

Team @ Lukas Holschuh