How much should you spend on Google Ads? This depends on your goals, industry, and competition. Here's how to calculate your budget.
The Budget Formula
Monthly Budget = (Target Leads × CPA) or (Target Revenue ÷ ROAS)
Example 1: Lead Generation
- Goal: 50 leads/month
- Average CPA in your industry: $75
- Budget needed: 50 × $75 = $3,750/month
Example 2: E-commerce
- Goal: $50,000 in revenue
- Target ROAS: 400% (4x return)
- Budget needed: $50,000 ÷ 4 = $12,500/month
Industry Benchmarks
| Industry | Avg CPC | Avg Conversion Rate | Avg CPA |
|----------|---------|-------------------|---------|
| Legal | $6-9 | 3-5% | $150-200 |
| Healthcare | $3-5 | 3-4% | $80-150 |
| Finance | $4-7 | 4-6% | $80-120 |
| Home Services | $2-5 | 5-8% | $40-80 |
| E-commerce | $1-3 | 2-4% | $30-60 |
| B2B | $3-6 | 3-5% | $75-150 |
Minimum Viable Budget
Testing Phase (Month 1-2)
- Minimum: $1,500-3,000/month
- Goal: Gather data, test keywords
- Expect: Higher CPA, learning
Optimization Phase (Month 3-4)
- Increase to: $3,000-5,000/month
- Goal: Identify winners, cut losers
- Expect: Improving CPA, more data
Scaling Phase (Month 5+)
- Scale profitable campaigns
- Goal: Maximize ROI
- Expect: Stable CPA, predictable results
Budget Allocation
By Campaign Type
| Type | % of Budget | Purpose |
|------|-------------|---------|
| Brand | 10-15% | Protect brand, high conversion |
| Non-Brand Search | 50-60% | Main lead generation |
| Remarketing | 15-20% | Convert warm traffic |
| Display/YouTube | 10-15% | Awareness, assist conversions |
By Funnel Stage
- Bottom (high intent): 60-70%
- Middle (consideration): 20-30%
- Top (awareness): 10-15%
When to Increase Budget
Increase if:
- Hitting impression share limits
- CPA below target consistently
- Conversion rate improving
- Quality scores above 7
Don't increase if:
- CPA above target
- Low Quality Scores
- Poor conversion rate
- Not tracking properly
Budget by Business Size
Small Business ($1,500-5,000/month)
- Focus on high-intent keywords
- Limit geographic targeting
- Single campaign focus
- Weekly optimization
Mid-Size ($5,000-20,000/month)
- Multiple campaign types
- Broader targeting
- A/B testing
- Bi-weekly reporting
Enterprise ($20,000+/month)
- Full funnel coverage
- Advanced automation
- Competitive conquest
- Daily monitoring
ROI Calculation
Example ROI Calculation:
- Monthly spend: $5,000
- Leads generated: 75
- Close rate: 20%
- New customers: 15
- Average customer value: $2,000
- Revenue: $30,000
- ROI: 500% ($30,000 ÷ $5,000)
Common Budget Mistakes
- Too little too spread - Focus beats breadth
- No testing budget - Can't improve without tests
- Rigid budget - Miss opportunities
- Ignoring seasonality - Budget should flex
- Not tracking ROI - Flying blind
See our Google Ads guide for strategy details.
Get a custom budget recommendation.
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Related: Google Ads Guide | Google Ads Costs