How much should your Google Ads budget be?

You want to advertise on Google but do not know how much you should spend a day. Here is how to set the budget with a simple calculation rather than a guess.

There is no single answer to "How much should I budget for Google ads?" that fits everyone. The cost of a click for a locksmith and for a cosmetic clinic differs many times over. But there is a simple logic you can use to set your budget, and it works in every sector.

How is money spent in Google Ads?

With search ads you pay for clicks, not for impressions. The price of a click is not fixed; it is set afresh for every search, according to the number of competitors advertising on the same keyword and the quality of your ad. Clicks are expensive in sectors where competition is heavy and cheap where it is light. You set your daily budget and Google does not go above it.

Work the budget out backwards

Instead of "How much should I spend?", ask "What does one customer earn me?"

1. What do you earn on average from one customer? Not turnover, but the amount you are left with.
2. What is the most you are willing to pay to win one customer? This should be a portion of what you earn.
3. How many clicks does it take to get one call or form? You learn this by measuring in the first weeks.
4. How many of the people who call become customers? You know this better than anyone.

With these four numbers in hand, you can work out the most you can pay for a click and how much budget you need for how many customers a month. You decide with your own figures rather than guessing.

Can you see click prices in advance?

Yes. Keyword Planner inside Google Ads shows how many times a keyword is searched each month and the estimated range of click prices. Looking up the keywords in your sector here before you advertise is the easiest way to tell whether your budget is realistic.

Can you start with a small budget?

You can, provided you do not spread it thin. If you advertise ten different services on a small budget, none of them gathers enough data. Instead:

• Pick your single most profitable service.
• Target only the districts you serve.
• Show the ad only during the hours you can answer the phone.
• Choose keywords that carry buying intent, such as "price", "installation" or "near me".

Five mistakes that waste the budget

• No conversion tracking: You cannot manage a budget without knowing which keyword brings in calls.
• No negative keyword list: You pay for searches like "free", "how to" and "job vacancies".
• Broad match left wide open: Your ad appears for irrelevant searches.
• The ad goes to the home page: The visitor leaves without finding the service they searched for. Every ad should go to its own service page or to a landing page.
• The account is set up and left alone: The search terms report should be checked every week.

The ad budget and the management fee are separate things

If you work with an agency there are two separate items: the ad budget you pay to Google and the management fee you pay to the agency. The ad budget should be charged directly to your card, from an account opened in your name. You should be the owner of the account; even if the agency changes, your historical data stays with you.

What should you expect in the first month?

The first weeks are a data-gathering period. Which keywords work and which burn money becomes clear in this time. The account delivers its real performance once it has been adjusted in line with that data. Looking at the first week's results and switching the ads off is one of the most common mistakes.

If you are wondering whether to put your budget into Google or Instagram, this post of ours will help. If you would like to leave the setup and management of your account to us, take a look at our Google Ads management page.