Every business owner asks me some version of this question, and every generic answer online is useless because it ignores the one number that matters: what a customer is worth to you.
I’m not going to give you a “spend 5-10% of revenue” rule. That number floats free of your business and tells you nothing about whether the spend will work. Here’s the framework I use.
Start with what a customer is worth
Before you set a budget, you need two numbers: your average customer value, and your close rate on leads. If a signed job is worth $8,000 and you close one out of every four qualified leads, each lead is worth roughly $2,000 to you. That’s the number that tells you what you can afford to pay for a click, and what a reasonable monthly budget looks like.
If you don’t know these numbers, that’s the actual first project — not the ad account.
Work backward from cost-per-click reality
Different industries have wildly different costs per click. Local home services and B2B construction-related keywords often run $8–$40 per click depending on the market and competition. If your average cost-per-click is $15 and your site converts about 5% of visitors into leads, you need roughly 20 clicks to generate one lead — about $300 per lead before you’ve even accounted for a lead that doesn’t close.
Compare that $300 lead cost against the $2,000 a closed job is worth, and you can see the math working. If your numbers come out upside down before you spend a dollar, that’s a sign the offer, the landing page, or the targeting needs work before you scale spend — not that Google Ads doesn’t work for your business.
A realistic starting budget
For most small and mid-sized businesses running local or regional campaigns, I tell people to plan on at least $1,500–$3,000 a month to get a real read on performance. Below that, you’re often working with too little data to know if something’s broken or if it just needs more volume. That’s not a hard floor — some tightly targeted local campaigns work with less — but it’s a realistic range to plan around rather than being surprised by.
Budget isn’t something you set once and leave alone, either. The first month or two is really a diagnostic period: which keywords convert, which don’t, where the cost per lead lands. I’d rather a client start a little conservative and scale up once we know what’s working than overcommit to a number pulled from a percentage-of-revenue rule of thumb.
What moves the needle beyond budget
Budget gets all the attention, but I’ve seen plenty of accounts where doubling the spend just doubled the wasted money, because the landing page didn’t match the ad, or the targeting was too broad. Before increasing budget, I look at:
- Whether the landing page speaks directly to the ad’s promise, or dumps visitors on a generic homepage
- Whether negative keywords are filtering out the searches that were never going to convert
- Whether call tracking and conversion tracking are set up correctly, so we’re optimizing toward real leads instead of guesses
This is also where the site itself matters — a slow or generic landing page will waste ad spend no matter how well the campaign is targeted, which is part of why I handle Paid Media and Websites work together for a lot of clients instead of treating them as separate projects.
FAQ
What’s a good cost per lead for Google Ads? It depends entirely on what a lead is worth to you. A $150 lead cost is a disaster for a $500 job and a bargain for a $15,000 one. Compare it to your numbers, not an industry benchmark.
Should I start with a small budget and scale up? Generally yes, but not so small that you can’t gather enough data to make real decisions. A budget that’s too thin to generate meaningful click volume just wastes the first month.
Is Google Ads worth it if I already rank well organically? Often yes — paid and organic show up in different spots and reach different intent levels. They’re not competing for the same budget line in most cases; they’re complementary.
How long before I know if a campaign is working? Give it a full month minimum, ideally two, before making major changes. Early data is noisy, especially with lower search volume keywords.
If you want a straight read on what a realistic budget looks like for your business and your numbers, that’s a conversation I’m glad to have before you commit to anything.