The honest answer to "how much to spend on Google Ads" is: it depends on how many customers you want, how many clicks it takes to win one, and what each click costs in your market. Anyone who gives you a single magic number without knowing those things is guessing.
The good news is that you can work it out yourself with simple arithmetic. In this guide I will show you a method that starts with the customers you want and works backwards to a monthly budget, with a fully worked example you can copy. We will also cover how much to set aside for testing, how management fees differ from ad spend, and when to increase or cut your budget.
Google Ads is a form of PPC, which stands for pay-per-click. You pay Google a small amount each time someone clicks your advert, so your budget decides how many people can visit your website. Your results depend on what happens after the click, and they vary from business to business.
Why a "typical budget" is the wrong starting point
It is tempting to look for what other businesses spend and copy it. The trouble is that a cleaner in Tunbridge Wells, a solicitor in London and an online shop selling candles all have different clicks costs, different customer values and different sales processes. A budget that is sensible for one could be wasteful or far too small for another.
A better starting point is your own numbers. If you are also deciding how Google Ads fits into your wider plans, my guide on how much a small business should spend on marketing covers the bigger picture. Here we will focus only on Google Ads.
The method: work backwards from the customers you want
You need four numbers. Do not worry if some are rough estimates at first. You can sharpen them as real data comes in.
- Your target number of new customers per month. Be realistic about what you can serve.
- Your enquiry-to-customer rate. Out of every 10 people who get in touch, how many become paying customers?
- Your website conversion rate. Out of every 100 people who click your advert and visit your site, how many get in touch (call, fill in a form, book or buy)? If you are unsure how to find this, see how to calculate your website conversion rate.
- Your cost per click (CPC). This is what you pay Google each time someone clicks your advert. It varies by industry, location, competition and keyword, so I will not quote an "average" here. Google's Keyword Planner gives estimates for your own search terms, and your real figure will appear once your campaign is live.
The formulas are:
- Enquiries needed = target customers divided by enquiry-to-customer rate
- Clicks needed = enquiries needed divided by website conversion rate
- Monthly ad spend = clicks needed multiplied by cost per click
A fully worked example (hypothetical)
Imagine a local home-improvement business in Kent. These figures are made up purely to show the method, so please do not treat them as benchmarks.
- Target: 10 new customers a month
- Enquiry-to-customer rate: 25% (1 in 4 enquiries becomes a job)
- Website conversion rate: 8% (8 in every 100 visitors get in touch)
- Cost per click: £2.00
Now the sums:
- Enquiries needed = 10 / 0.25 = 40 enquiries
- Clicks needed = 40 / 0.08 = 500 clicks
- Monthly ad spend = 500 x £2.00 = £1,000
From that you can also work out two useful figures. Cost per enquiry is £1,000 / 40 = £25. Cost per customer is £1,000 / 10 = £100. (If you would like to go deeper on the first of these, see how to calculate cost per lead.)
Next, compare that with what a customer is worth. Say the average first job is worth £400. Ten jobs bring in £4,000 of revenue from £1,000 of ad spend, which is a return on ad spend (ROAS) of 4 to 1. ROAS simply means revenue for every £1 spent on ads, and I explain it fully in how to calculate ROAS. Whether 4 to 1 is good depends on your profit margins. If your margin on those jobs is 40%, you keep £1,600 of gross profit, which covers the ad spend with £600 left to pay for management, your time and overheads.
What happens if your assumptions are wrong?
This is the real value of the method. Change one number and see what happens:
- If your cost per click is £3.00 instead of £2.00, the same 500 clicks cost £1,500.
- If your website converts at 4% instead of 8%, you need 1,000 clicks, so the budget doubles to £2,000.
- If you close 1 in 3 enquiries instead of 1 in 4, you need only about 30 enquiries, and the budget drops.
Notice that two of the three levers sit with you, not Google. Improving your website and your follow-up can lower the budget you need more reliably than hoping clicks get cheaper.
What if the number is bigger than you can afford?
Quite often the sums point to a budget that feels too high. That is useful information rather than bad news. You have three sensible options:
- Aim for fewer customers to start with. Halve your target and halve your budget. The cost per customer should stay broadly similar, you simply grow more slowly.
- Narrow your targeting. Focus on the services, products or areas that make you the most money, rather than spreading a small budget thinly across everything.
- Fix the website first. If very few visitors get in touch, more clicks just means more money wasted. Our post on why your website may not be generating enquiries is a good place to start.
Setting a testing budget
Your first few months are partly about learning. Google needs time to find out which searches and adverts work for you, and you need time to see what your real conversion rate and cost per click look like. Your worked-out budget is a target, but your testing budget is what you commit to before you know the real figures.
A few practical guidelines:
- Commit to a test period of about three months if you can. Judging a campaign after a week or two, on a handful of clicks, usually tells you very little.
- Spend enough to collect meaningful data. A budget so small that you only get a few clicks a week makes it hard to tell what is working. If your budget cannot produce a reasonable number of clicks, narrow the campaign to one service and one area rather than spreading it thin.
- Decide in advance what "working" means. For example: "I will be happy if each enquiry costs under £30 and at least one in five becomes a customer." Setting this before you start stops you changing your mind based on a single bad week.
- Make sure tracking is set up first. If you cannot see which clicks led to calls, forms or sales, you are flying blind. Without it, you cannot calculate any of the numbers above.
Treat the testing budget as the cost of learning what works. Results vary, and I would never promise a particular outcome, but a structured test will tell you far more than an open-ended spend ever could.
Management fees vs ad spend: two separate costs
This catches a lot of small business owners out, so it is worth being clear. There are two different costs with Google Ads:
- Ad spend is the money that goes to Google for your clicks. You pay this directly to the platform, and it is the budget we have been calculating above.
- Management is the fee for someone to set up, monitor and improve your campaigns. At Digital AdDoctor, Google Ads management starts from £450 a month, and your ad spend is paid separately to Google. You can see all of our fees on the pricing page.
In our worked example, the total monthly cost would be £1,000 in ad spend plus management from £450, so about £1,450 a month. When you judge whether Google Ads is worth it, count both.
This also affects how you set your budget. If your sums suggest an ad spend of only £200 a month, a management fee of £450 would be more than double the spend, and that may not make sense yet. In that situation, you might begin with a one-off Google Ads audit (from £250) to check your setup, or build up your website and tracking first and start campaigns when the numbers support it. I would always rather tell you that honestly than sell you something that does not fit.
When to increase your Google Ads budget
Do not raise your budget just because things feel busy. Increase it when the evidence supports it:
- Your cost per customer is comfortably below what you can afford to pay. If a customer is worth £400 to you and costs £100 to win, there is room to grow.
- You are losing out on clicks because of budget. Google Ads will tell you when a campaign is limited by budget, meaning your adverts stopped showing partway through the day.
- You can handle more work. More enquiries are only a win if you can answer them quickly and deliver well.
- The results have been steady for several weeks, not just a few good days.
Raise the budget in steps, for example by around 20% at a time, then wait a couple of weeks to see whether your cost per customer holds up. Big jumps make it harder to tell what caused any change.
When to cut or pause your budget
Cutting spend is not a failure. It is part of managing money sensibly. Consider reducing or pausing when:
- Your cost per customer is consistently above what the customer is worth to you, and you have already given the campaign a fair test.
- Tracking is broken or unreliable. Pause or reduce until you can see what is actually happening.
- Your website or phone line cannot cope, or enquiries are going unanswered.
- Your business has a quiet season or is at capacity. There is no point paying for enquiries you cannot take on.
Before you cut, check whether the problem is the budget at all. Poor results are often caused by the wrong search terms, weak adverts or a website that does not convince visitors, and a bigger or smaller budget will not fix any of those. My post on why Google Ads may not be generating enquiries walks through the common causes.
A simple monthly check
Once your campaign is live, spend 15 minutes each month answering these questions:
- How much did I spend with Google?
- How many enquiries did that produce, and what did each cost?
- How many became customers, and what did each customer cost?
- Is that cost lower than what a customer is worth to me?
If the answer to the last question is yes, you have a good reason to keep going or grow. If it is no, change something specific before changing the budget. If you are based locally and want to see how this works in practice, take a look at my page on Google Ads in Tunbridge Wells.
Frequently asked questions
What is the minimum I can spend on Google Ads?
Google lets you set a very small daily budget, so technically it can be a few pounds a day. The practical minimum is the amount that gets you enough clicks to learn something, which depends on your cost per click and how well your website converts. Use the formulas above to see what your own numbers suggest.
How much should I spend on Google Ads per day?
Work out your monthly budget first, then divide it by about 30 to get a daily figure. In our example, £1,000 a month is roughly £33 a day. Google may spend a little more on some days and less on others, but it should balance out over the month.
Is the management fee included in my ad budget?
No. Ad spend goes directly to Google, and the management fee pays for the time and expertise of the person running your campaigns. With Digital AdDoctor, Google Ads management starts from £450 a month, with ad spend paid separately.
How long before I know whether Google Ads is working?
Some early signals, such as clicks and enquiries, can appear within the first few weeks. A fair judgement usually needs around three months of data, so you can see patterns rather than reacting to a single week. Results vary between businesses and cannot be guaranteed.
Should I spend more if my competitors are spending more?
Not automatically. Competitors can afford different costs, and you cannot see their profit or results. Base your budget on what a customer is worth to you and what you can afford to pay to win one, not on guesses about what others are doing.
Want help working out your Google Ads budget?
If you would like a second pair of eyes on your numbers, I am happy to help. You work directly with me, and we can look at what a realistic budget could be for your business before you spend anything. If we grow you, we grow together.
The easiest first step is to request a free digital audit, or you can get in touch to talk it through.
Want help putting this into practice?
