How Much Should You Spend on Google Ads? A Simple Way to Work It Out

“What budget should we start with?”

It’s one of the first questions we hear from almost every business owner thinking about Google Ads. The honest answer is that there’s no magic number. A budget that’s plenty for a neighbourhood salon would barely get a B2B software company started.

What there is, though, is a reliable way to work it out. You start with what a customer is worth to you and work backwards. Once you’ve done it, you’ll know whether Google Ads makes sense for your business and roughly what you should spend each month.

Step 1: Know what a customer is worth

Before you think about clicks, think about money in the bank. For a typical customer, answer three questions:

• How much do they spend on the first purchase?
• What’s your margin on that? Not revenue. What’s left after costs.
• Do they come back? A dental patient who returns twice a year is worth far more than a single visit suggests.

From this you can decide how much you’re comfortable paying to win one new customer. Some businesses are happy to spend most of the first sale’s margin because the repeat business is where they profit. Others need every campaign to pay for itself immediately. Both are fine, as long as you decide upfront.

Step 2: Work backwards to a cost per click

Here’s a worked example. The numbers are made up to show the method, so swap in your own.

Say you run an interior design studio. You decide you’re comfortable spending ₹15,000 to win one signed project.

1. From experience, roughly 1 in 5 serious enquiries turns into a project. So you can afford to pay ₹3,000 per enquiry (₹15,000 ÷ 5).
2. A decent landing page might turn around 5 in 100 visitors into enquiries. So you can afford to pay up to ₹150 per click (₹3,000 × 5%).
3. Now check what clicks actually cost. Google’s Keyword Planner gives you estimated cost-per-click ranges for searches like “interior designer in Kolkata”. If those estimates sit comfortably below ₹150, the maths works. If they’re well above it, you either need a better-converting page, a higher-value offer, or a different channel.

This one exercise tells you more than any rule of thumb.

Want to skip the arithmetic? Our free Google Ads budget calculator runs these numbers for you.

Step 3: Turn it into a monthly budget

Now decide how many enquiries you want. Continuing the example:

• You want 10 enquiries a month.
• At 5 enquiries per 100 clicks, you need about 200 clicks.
• If clicks cost around ₹80, that’s roughly ₹16,000 a month, about ₹530 a day.

Add some breathing room for the first month or two. New campaigns need time to learn which searches convert, and your early costs will usually be higher than your eventual average.

The minimum budget that’s actually useful

Small budgets can work, but only if they’re focused. The mistake we see most often isn’t spending too little. It’s spreading too little across too much.

If you split ₹10,000 across five services, three cities and broad keywords, each part gets so few clicks that you can’t tell what’s working. Nothing gets enough data to improve.

With a small budget, start narrow:

• One service, ideally your most profitable or most in-demand.
• One location, the area you actually serve well.
• A tight list of keywords that show buying intent, such as “AC repair near me” rather than “how does an AC work”.

Once that one campaign is profitable, expand from there.

Where small budgets quietly leak

These are the usual suspects when an account spends money without much to show for it:

• Showing ads to the whole country when you only serve Kolkata. Check your location settings, including whether you’re targeting people in your area or just people interested in it.
• Broad keywords without negative keywords. If you sell premium furniture, you probably don’t want clicks from searches containing “second hand” or “free”.
• The Display Network switched on inside a Search campaign. It can eat budget with low-intent clicks. Keep Search and Display separate.
• No conversion tracking. If you can’t see which keywords produce enquiries, you’re guessing. Set up tracking for form submissions, calls and WhatsApp clicks before spending seriously.
• Sending everyone to your homepage. A page built for one service, with one clear action, almost always converts better.
• Ads running when nobody answers the phone. If your team leaves at 7 pm, a call ad at 11 pm is money spent on a missed call. Use an ad schedule.

When to increase your budget

Increase spend when two things are true:

1. Your tracked cost per enquiry is at or below the target you worked out in Step 2.
2. Google shows you’re losing impressions because of budget, meaning there are more relevant searches you could be appearing for.

When both are true, raise the budget in steps rather than doubling it overnight. Sudden large jumps can throw the campaign’s learning off, and steady increases let you check that costs stay in line.

Search or Performance Max?

For most small businesses starting out, we prefer standard Search campaigns. You choose the keywords, you can see what people searched for, and you’re reaching people who are actively looking for what you sell.

Performance Max campaigns can work well, but they rely heavily on good conversion data and give you less control. They usually make more sense once you have solid tracking and a steady flow of conversions.

Frequently asked questions

Is ₹10,000 a month enough to start?

It can be, if you keep it focused on one service and one area, and if clicks in your industry aren’t very expensive. Run the numbers in Steps 1 to 3 first. They’ll tell you how many enquiries ₹10,000 can realistically buy.

How soon will I see results?

Ads can bring clicks on the first day. Getting the cost per enquiry down to a healthy level usually takes a few weeks of adjusting keywords, ads and the landing page.

Do I pay if nobody clicks?

For standard Search campaigns, you pay when someone clicks your ad, not when it’s shown. Other campaign types and bidding options can work differently, so check the settings.

Should I run ads if my SEO is already working?

Often, yes. Ads can cover searches you don’t rank for yet, test which keywords convert before you invest in SEO content, and add visibility for your most valuable services.

Want a second opinion on your budget?

If you’d like help running these numbers for your business, or you suspect your current account is leaking money, our Google Ads team can review it with you. Book a free consultation and bring your questions.