Biological samples are routinely analyzed for microbe concentration. The samples are diluted, loaded onto established host cell cultures, and incubated. If infectious agents are present in the samples, they form circular spots that do not contain the host cells. Each spot is assumed to be originated from a single microbial unit such as a bacterial colony forming unit or viral plaque forming unit. The undiluted sample concentration is estimated by counting the spots and back-calculating. Counting the number of spots by trained technicians is currently the gold standard but it is laborious, subjective, and hard to scale. This paper presents a new automated algorithm for spot counting, Localized and Sequential Thresholding (LoST). Validation studies showed that LoST performance was comparable with manual counting and outperformed several existing tools on images with overlapping spots. The LoST algorithm employs sequential thresholding through a two-stage segmentation and borrows information across all images from the same dilution series to fine-tune the count and identify right censoring. The algorithm increases the efficiency of the spot counting and the quality of the downstream analysis, especially when coupled with an appropriate statistical serial dilution model to enhance the undiluted sample concentration estimation procedure.