How Much Should You Spend on Google Ads? A Way to Work It Out
There is no single right budget for Google Ads, but there is a sensible way to work one out. This guide walks through the numbers, with a worked example.
- By SEO Fleet Team
- 12 Feb 2026
What is one click really worth to you?
“How much should we spend on Google Ads?” is one of the most common questions business owners ask, and one of the hardest to answer with a single number. The right budget depends on what a customer is worth to you, how competitive your market is and how well your website turns visitors into enquiries.
The good news is that you can work out a sensible starting budget from a few numbers you probably already know. This guide shows how.
Start with what a customer is worth
Before thinking about clicks, work out how much profit a new customer brings in. For a one-off sale, that is the average order value multiplied by your profit margin. For a business with repeat customers, consider the value over a reasonable period, such as the first year, as long as you are honest about how many customers actually come back.
From that, decide the most you are willing to pay to win one customer. This is your target cost per acquisition. Some businesses accept breaking even on the first sale because repeat business brings the profit. Others need every sale to be profitable on its own. That is a commercial decision, not a marketing one.
Work backwards to a cost per click
Once you know what you can afford per customer, you can work out what you can afford per click. You need two conversion rates:
- Website conversion rate: the share of visitors who enquire or buy.
- Lead-to-customer rate: for lead generation, the share of enquiries that become paying customers.
The formula is:
Maximum affordable cost per click = target cost per acquisition × website conversion rate × lead-to-customer rate
If you sell online, leave out the lead-to-customer rate, because a conversion is already a sale.
A worked example
The figures below are hypothetical, chosen only to show how the calculation works. Your own numbers will be different.
Imagine a home improvement company where the average job is worth £2,000 with a 30% profit margin. Each job therefore brings £600 of profit. The owner decides they are willing to spend up to £200 in advertising to win one job.
- Target cost per acquisition: £200.
- Website conversion rate: 5% of visitors submit an enquiry.
- Lead-to-customer rate: 20% of enquiries become jobs.
Maximum affordable cost per click = £200 × 0.05 × 0.20 = £2.
So if clicks in this market typically cost less than £2, the numbers can work. If they typically cost £6, the business either needs a better conversion rate, a higher-value offer or a different approach.
Estimate the budget you need
Next, decide how many new customers you want per month and work the numbers forwards. Continuing the hypothetical example, if the company wants 10 new jobs a month:
- 10 jobs ÷ 20% lead-to-customer rate = 50 enquiries needed.
- 50 enquiries ÷ 5% conversion rate = 1,000 clicks needed.
- 1,000 clicks × an expected average cost per click of, say, £1.80 = £1,800 per month.
That is a starting budget based on a clear goal, rather than a figure picked because it felt comfortable.
Where to find realistic cost per click figures
Keyword Planner in Google Ads shows estimated bid ranges for the keywords you enter. Treat these as rough guides rather than firm prices, because actual costs depend on your ad quality, your competitors and the exact searches you appear for. If you have run campaigns before, your own historical data is more reliable than any estimate.
Check the budget is big enough to learn
A budget that is too small can be worse than no budget at all. If a campaign only gets a handful of clicks a day, it can take months to gather enough data to tell whether it is working. Automated bidding strategies also tend to need a reasonable number of conversions before they perform well.
If your calculated budget is more than you can afford, narrow the focus rather than spreading a small budget thinly. Concentrate on your most profitable service, your strongest location or your highest-intent keywords, and expand once you have results.
Understand how daily budgets work
Google Ads budgets are set as an average daily amount. On any single day, Google may spend up to twice your average daily budget when traffic is higher, but over a month it aims not to charge more than your daily budget multiplied by the average number of days in a month (about 30.4). Knowing this avoids surprises when one day’s spend looks high.
Review and adjust
Your first budget is an estimate. After a few weeks of reliable data, replace the assumptions with real figures:
- What is the actual cost per click?
- What is the actual conversion rate?
- How many enquiries became customers?
If the real cost per customer is below your target, you have room to spend more. If it is above, look at landing pages, ad relevance and keyword choice before simply cutting the budget. None of this works without accurate conversion tracking, so make sure that is in place from the start.
Key takeaways
- Start from the profit a customer brings, not from a round number.
- Use your conversion rates to work out the most you can pay per click.
- Work forwards from your customer goal to estimate a monthly budget.
- If the budget is too small to learn, narrow the focus instead of spreading it thin.
- Replace assumptions with real data as soon as you have it.
If you would like help working through these numbers for your own business, SEO Fleet’s Google Ads team can build a budget model with you, set up the tracking to test it and manage the campaigns against clear targets.