How much should a small business spend on Google Ads?

“How much should I spend on Google Ads?” is one of the first questions business owners ask, and the honest answer is that it depends. A fixed number from a blog post would be a guess. What you can do is work out a sensible range from your own figures, then start modestly and let results guide the next step.

Start with what a customer is worth

Begin with the profit, not the revenue, from a typical new customer. If a job earns you £600 and £250 of that is profit after costs, that £250 is the most you could ever pay to win that customer without losing money. If customers come back, you may be willing to pay more for the first order, but be careful to use realistic repeat figures, not hopes.

Work backwards to a target cost per enquiry

Next, estimate how many enquiries turn into customers. If you win one in four, then you can afford to pay up to roughly a quarter of your profit per enquiry. In the example above, that is about £60 per enquiry (£250 divided by four). If clicks in your market cost £5 and one in ten visitors enquires, each enquiry costs about £50, which would be workable. If clicks cost £15, it probably would not be.

These are illustrations to show the method, not predictions. Your clicks, conversion rate and close rate will be different, and you will learn them from real data.

Check what clicks cost in your market

Google’s Keyword Planner shows estimated bid ranges for the searches you want to appear for. Costs vary widely between sectors and locations. Legal, finance and home-improvement searches tend to be expensive. Narrow local services are often cheaper. Use the estimates for a rough check on whether your numbers can work, not as a promise.

Budget for learning

The first weeks of a campaign are for testing which searches, ads and pages produce enquiries. Spending too little can leave you with too few clicks to learn anything. A common approach is to set a monthly budget you can comfortably afford to treat as an experiment for three months, then review honestly. If each pound is bringing profitable enquiries, increase it gradually. If not, find out why before adding more money.

Count the costs besides the ad spend

• Management: whether you do it yourself, which takes real time, or pay an agency a fee.
• Landing pages: a slow or unclear page wastes clicks. Improving it is often the best use of the first money you spend.
• Tracking: without conversion tracking, you cannot tell which ads work.
• Your response: an enquiry answered three days later is usually lost.

Signs your budget needs adjusting

If your ads rarely show because the budget runs out early in the day, the campaign is limited by budget and you are missing searches you chose. If you spend all of it but get few enquiries, the issue is likely targeting, the ads or the landing page, not the amount.

Keep control of your account

Whoever manages your ads, make sure the Google Ads account is in your name and you pay Google directly. That way you always see the spend and can take the account elsewhere.

If you would like help working out a realistic budget and setting up tracking, our PPC and Google Ads service starts with exactly these calculations, and a wider digital marketing strategy shows where ads fit alongside search and content.