Key Takeaways
- The targeting radius is a pricing decision disguised as a settings field, and it is rarely revisited after launch.
- Drive cost is real and quantifiable: the IRS standard business mileage rate is 76 cents from 1 July 2026, and BLS puts private-industry compensation at $46.60 per hour worked.
- Capacity loss usually costs more than fuel — every hour a crew spends driving is an hour it is not billing.
- Tiered zones with different pricing and different minimum tickets usually beat a single radius.
- A second location beats a wider radius once the outer zone consistently sustains its own lead volume.
It's common to set a service radius once, at launch, based on how far you were willing to drive that year, and then never look at it again while your ticket, crew cost and fuel price all move underneath it. It is one of the most consequential numbers in the ad account and one of the least reviewed.
Why is the targeting radius a pricing decision?
Because it silently sets the cost of serving every job you win. Widening the radius adds vehicle cost, adds paid hours in transit, and removes jobs from the day — none of which appears in the ad platform. You are not choosing where to advertise; you are choosing what your jobs cost to deliver.
What does drive time actually cost?
Two things, both measurable. The IRS standard business mileage rate — 76 cents per mile from 1 July 2026 — covers fuel, maintenance, insurance and depreciation. The Bureau of Labor Statistics puts private-industry total compensation at $46.60 per hour worked, which is what everyone in the vehicle is being paid to sit there.
Scroll sideways to see the full table →
| Cost component | Rate | Source |
|---|---|---|
| Vehicle, per mile | $0.76 (from 1 July 2026) | IRS standard business mileage rate |
| Vehicle, per mile | $0.725 (1 Jan – 30 Jun 2026) | IRS standard business mileage rate |
| Labour, per person per hour | $46.60 total compensation | BLS Employer Costs for Employee Compensation, March 2026 |
| Of which wages | $32.60 (69.9%) | BLS Employer Costs for Employee Compensation, March 2026 |
| Of which benefits | $14.01 (30.1%) | BLS Employer Costs for Employee Compensation, March 2026 |
The IRS rate already includes maintenance, insurance and depreciation, so adding those separately double-counts. It is one of the most common errors in contractor job costing.
Which costs more — the fuel or the lost capacity?
The lost capacity, usually by a wide margin. A crew losing ninety minutes a day to a wider radius loses roughly half a job, and half a job at a typical home-services ticket dwarfs the fuel bill for the same trip. The fuel is visible on a statement; the capacity loss is invisible, which is why it goes unmanaged.
How should service zones be structured?
As tiers rather than one radius. A core zone gets standard pricing and full advertising support; a secondary zone gets a minimum ticket or a modest travel charge; an outer zone is served only when the job is large enough to justify the trip. One radius forces the same economics onto jobs with completely different profitability.
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| Zone | Typical range | Pricing | Advertising |
|---|---|---|---|
| Core | 0-15 miles | Standard | Full budget, all campaigns |
| Secondary | 15-30 miles | Standard plus travel charge, or a minimum ticket | Reduced budget, higher-ticket services only |
| Outer | 30-45 miles | Minimum ticket enforced | High-ticket campaigns only, or inbound only |
| Beyond | 45+ miles | Quoted individually | Not advertised |
Should different services have different radii?
Yes, and this is one of the most valuable refinements available. Drive cost is fixed per mile while margin scales with the ticket, so a $12,000 install absorbs a fifty-mile trip that would destroy a $400 service call. Trades running both should target them as separate campaigns with genuinely different radii. If your ads run under Meta's Housing special ad category, the minimum radius is 15 miles, so a tighter inner zone has to be managed with pricing and minimum tickets rather than targeting.
How does the radius affect cost per lead?
It does not, and that is exactly the problem. A lead from the far edge and a lead from three streets away cost the same to buy — around $42.95 on Meta for home improvement — and completely different amounts to serve. Cost per lead is blind to geography, so a channel can look stable while your margin drifts downward.
This is why widening the radius so often looks like a win. Lead volume rises, cost per lead holds, and the damage lands in job costing where nobody connects it back to the campaign.
Do location pages need to match the service area?
They should match where you genuinely work, and no further. Publishing pages for towns you will not profitably serve generates enquiries you have to decline, which wastes your time and produces a poor experience for someone who reasonably believed you covered them. Match the map to the truth.
When should you open a second location instead?
When the outer zone consistently produces enough demand to keep a crew busy locally. At that point a second base removes the drive cost entirely rather than managing it, and turns the outer zone into somebody's core zone. Stretching the radius further is the more expensive way to serve the same demand.
How often should the radius be reviewed?
Whenever your ticket, crew cost or fuel price moves materially, which in practice means annually at minimum. The IRS mileage rate changed twice in 2026 alone, rising from 72.5 to 76 cents on 1 July. A radius calibrated three years ago is calibrated to costs that no longer exist.
Run the numbers
- Service Radius Planner
Prices the drive time and finds the mileage where a job stops paying.
- Contractor Margin Calculator
The margin the drive time is coming out of.
- Lead Capacity Planner
What the schedule can absorb once travel is counted honestly.
- Budget optimization service
Geo targeting structured around margin rather than reach.
What should you do first?
Price your current radius honestly, then compare it against what you are actually targeting in the ad account. Many contractors find they are advertising well beyond the point where the average job still pays for itself — and pulling that back is a margin improvement that costs nothing and takes an afternoon.
Sources
The public studies behind the figures on this page, with what each one was used for.
- 1Internal Revenue Service — Standard Mileage Rates (IR-2026-29)
Effective 1 July 2026 · Annual rate set from an IRS-commissioned study of the fixed and variable costs of operating an automobile; 72.5 cents per mile applied 1 January – 30 June 2026, raised to 76 cents from 1 July 2026. Source for both mileage figures in the cost table and for the point that the rate already includes maintenance, insurance and depreciation.
- 2US Bureau of Labor Statistics — Employer Costs for Employee Compensation — March 2026 (USDL-26-0827)
March 2026 reference period; released 12 June 2026 · National Compensation Survey of employer-reported costs per hour worked; private industry workers averaged $46.60 total compensation, $32.60 wages and salaries, $14.01 benefits. Source for the $46.60 loaded hourly labour cost and the 69.9%/30.1% wage-to-benefit split quoted in the cost table.
- 3WordStream / LocaliQ — Facebook Ads Benchmarks 2026
2026. Source for the $42.95 Home & Home Improvement cost per lead used as the planning frame. Used to make the point that cost per lead is identical regardless of how far away the lead is, which is why a widening radius does not show up in the ad account.
- 4SearchLight Digital — Home Services LSA Benchmark — Google Local Service Ads Cost Per Lead by Trade
February 2026 · 888 contractors, $6.72M tracked Local Services Ads spend, 126,650 leads, $52.7M closed revenue. Source for the $1,826 average home-services ticket used in the worked examples of where a job stops paying for its own drive.