“How much should we spend on Google Ads?” is usually the first question a small business asks, and “it depends” is the least useful answer. There’s no universal number. But there is a way to work out your own number from figures you already have, and a minimum below which a campaign simply can’t teach you anything. This guide walks through that calculation, explains how Google actually charges against your budget, and sets out a realistic plan for the first three months.
Why “whatever we can afford” is the wrong starting point
The first months of a Google Ads account are about learning, not profit: which search terms bring customers, which ads get clicked, which landing page converts, and what a customer really costs you. Learning needs data. A budget that buys 40 clicks a month might produce one or two enquiries, and you can’t tell a good campaign from a bad one on two enquiries.
So the right question isn’t “what can we spare?” but “what’s the smallest budget that gets us enough results to make decisions?” If that number is more than you can spend, it’s better to narrow the campaign than to spread a small budget thinly.
Step 1: Work out what a customer is worth to you
Before you look at Google at all, you need three numbers from your own business:
- Gross profit per customer. Revenue from an average first order or contract, minus the direct cost of delivering it. If customers usually come back, use a conservative estimate of what they spend in their first year.
- Close rate. Out of every ten enquiries, how many become paying customers?
- The share of profit you’re willing to spend on acquiring a customer. Only you can set this. Many businesses start somewhere between a quarter and a half of first-year gross profit.
From these you get your maximum cost per lead, the most you can pay for one enquiry and still come out ahead:
Maximum cost per lead = gross profit per customer × share you’ll spend × close rate
For example, suppose a customer is worth €1,200 in gross profit in the first year, you’re willing to spend 30% of that to win one, and you close 1 in 4 enquiries. Then €1,200 × 0.30 × 0.25 = €90 per lead. That’s the benchmark every campaign is measured against. (These figures are illustrative; use your own.)
Step 2: Find out what clicks actually cost in your market
Click prices vary enormously by industry, country and language, so generic averages from articles are nearly useless. Use Google’s own Keyword Planner (free inside any Google Ads account):
- Enter the terms your customers would actually search for, such as “accountant Tbilisi”, “office cleaning Berlin” or “Shopify developer”.
- Set the location and language to exactly where you’ll advertise. National averages hide big differences between cities.
- Look at the “Top of page bid (low range)” and “(high range)” columns. Plan with a figure between the two, closer to the high end for competitive, high-intent terms.
Also estimate your conversion rate, the share of clicks that become an enquiry. If you have no history, assume a cautious figure. It depends heavily on how good your landing page is and how closely it matches the search.
Step 3: Calculate your learning budget
Now decide how many conversions per month you need to learn anything. Google’s automated bidding strategies (Maximise Conversions, Target CPA) learn from conversion data, and they work far better with a steady flow of it. As a practical rule of thumb, many advertisers aim for at least 30 conversions per month per campaign before relying on automated bidding. Fewer is workable with manual control, but decisions will take longer.
Monthly learning budget = target conversions ÷ conversion rate × cost per click
An illustrative example:
| Target conversions per month | 30 |
| Expected conversion rate | 4% |
| Clicks needed (30 ÷ 0.04) | 750 |
| Expected cost per click (from Keyword Planner) | €1.20 |
| Monthly budget (750 × €1.20) | €900 |
| Daily budget to set (€900 ÷ 30.4) | about €30 |
| Resulting cost per lead (€900 ÷ 30) | €30, well under the €90 maximum from Step 1 |
The last line is the reality check. If the expected cost per lead is below your maximum, the campaign has room to work. If it’s above, fix the economics (a better landing page, more specific keywords, a higher-value offer) before you spend money finding out the hard way.
If the number is more than you can spend
Don’t keep the same plan on a smaller budget. Shrink the plan instead:
- One service, one location. Advertise your most profitable service in the area you serve best, and add the rest later.
- Fewer, more specific keywords. “Emergency plumber Vake” converts better than “plumber”, and there’s less competition for it.
- One campaign, not five. Five campaigns at €6 a day each learn nothing. One campaign at €30 a day learns something.
- Run ads when you can answer. If enquiries are mainly phone calls, schedule ads for the hours someone picks up. Still plan your spend as daily budget × 30.4 (see below).
- Accept a longer learning phase. With fewer conversions, judge the campaign over two or three months rather than one.
How Google charges against your budget
The budget you set in Google Ads is an average daily budget, not a hard daily cap. According to Google:
- On any single day, a campaign can spend up to twice its average daily budget to take advantage of busier days.
- Over a month, you won’t be charged more than 30.4 times the average daily budget (30.4 is the average number of days in a month).
So the safe way to plan is to treat daily budget × 30.4 as your monthly spend, whatever your ad schedule. Changing the daily budget mid-month resets that calculation for the rest of the month. Check the Billed cost report in Google Ads to see what you were actually charged.
A realistic three-month plan
Before you spend anything: tracking
- Set up conversion tracking for what actually matters: form submissions, calls from ads, calls from the website, bookings or purchases. Test every one.
- If you advertise in the EU or UK, set up Consent Mode v2 first. Without it, your conversion data will be incomplete from day one (see our Consent Mode v2 guide).
- Send traffic to a page about the specific service being searched for, not to your homepage.
Month 1: Collect clean data
- Start with a Search campaign and a tight set of keywords. In the campaign settings, turn off the Display Network option, which is often switched on by default.
- Check the Search terms report at least twice a week, and add irrelevant searches as negative keywords. This is where most early waste is found.
- Resist changing everything. Settings that change every few days make the data impossible to read.
Month 2: Optimise what you’ve learned
- Pause keywords that spend without converting, and raise the budget share of those that do.
- Test new ad headlines against your best performer. Change one thing at a time.
- Look at the landing page: if clicks are fine but enquiries are low, the page is usually the problem, not the ads.
- Once conversions are arriving steadily, consider moving to an automated bidding strategy. After switching, allow at least a few conversion cycles (the usual time between click and enquiry) before judging it.
Month 3: Decide: scale, fix or stop
| What you see | What to do |
|---|---|
| Cost per lead below your maximum, and Search lost impression share (budget) is significant | Scale: increase budget gradually, and add the next service or location |
| Cost per lead near your maximum | Hold the budget. Work on landing pages, ad copy and negative keywords |
| Cost per lead well above your maximum after three months of clean data | Stop or rethink. The offer, market or channel may not fit; spending more won’t fix it |
The most common first-quarter mistakes
- No conversion tracking, or tracking that counts page views as “conversions”.
- Broad keywords with no negatives, which pay for searches that have nothing to do with your business.
- Display Network left on in a Search campaign, spending on cheap, low-intent placements.
- All traffic sent to the homepage, instead of a page that answers the search.
- Judging results after two weeks, before there’s enough data to judge.
- Budget spread across too many campaigns, so none gets enough data to learn.
Quick checklist
- Maximum cost per lead calculated from your own profit, close rate and spend share.
- Real click prices checked in Keyword Planner, for your exact location and language.
- Monthly learning budget calculated, with the daily budget set at monthly ÷ 30.4.
- Conversion tracking (and Consent Mode, for EU/UK traffic) tested before launch.
- One focused Search campaign, with the Display Network turned off.
- Search terms reviewed and negatives added twice a week.
- A scale, fix or stop decision booked for the end of month three.
Sources and further reading
- Google Ads Help: About overdelivery and your average daily budget
- Google Ads Help: How our bidding algorithms learn
- Google Ads Help: Use Keyword Planner
All figures in the examples are illustrative. Click prices and conversion rates vary widely by industry, location and language, so always plan with numbers from your own market.