How Much Should I Spend on Google Ads?

Everyone searching this question wants a number. There isn't one. But there is a calculation, and it starts with your own business, not someone else's.

The right budget is anchored to one figure: the maximum you can afford to pay to acquire a single customer. That's your cost per acquisition, or CPA. Start with your average profit per customer. A common starting point is that acquisition should cost no more than 20 to 30 percent of that profit, leaving the rest as margin. So if a customer is worth £500 in profit, your maximum CPA is somewhere between £100 and £150. This isn't a number you look up. It's a number only your business can produce. And it's the only anchor that makes your budget meaningful. Without it, you're just guessing at spend and hoping the maths works out.

Once you have your maximum CPA, the rest follows from two more inputs: your estimated conversion rate and the cost per click in your market. Here's the calculation. Divide your maximum CPA by your estimated conversion rate. If your maximum CPA is £100 and you expect one in fifty clicks to convert, that's a two percent conversion rate. £100 divided by 0.02 gives you a target cost per click of £2. If clicks in your market cost more than that, the maths doesn't work yet. Then decide how many clicks you need to generate useful data. Fewer than a hundred clicks gives you almost nothing to act on. So multiply your target CPC by the number of clicks you need per month. That's your minimum viable monthly budget.

Note: costs per click vary significantly by industry, keyword competition, and location. London CPCs can run noticeably higher than regional markets for the same keywords. Use Google's Keyword Planner to sense-check your market before committing.

Here's where most businesses go wrong. They run ads for three or four weeks, see no profit, and conclude Google Ads doesn't work. The first 30 days are a cost of information. Google's algorithm needs data to learn which clicks convert. Pull the budget before it has that data and you've paid for nothing useful. Treat month one as research spend, not revenue generation. If you can't sustain your minimum viable budget for at least 30 days, the channel isn't viable for you yet.

Google Ads isn't the right channel for every business, and it's worth being honest about that before you spend. If your margins are thin, the CPA maths may simply not work at any realistic budget. If your sales cycle is long and there's no clear conversion event to track, the algorithm has nothing to optimise against. And if you can't identify a specific action you want the visitor to take, you'll burn budget on clicks that go nowhere.

The decision rule is straightforward: if your unit economics support a viable CPA, and you can sustain the budget for at least 30 days, test it. If they don't, fix the economics first.

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