How much should you spend on Google Ads? Set your budget from your ticket and margin

"How much should I spend on Google Ads?" is the question I hear most, and the honest answer is: it depends on two numbers you already have and one you can measure in minutes. Here's how to get them.

Step 1: what each sale leaves you

Multiply your average ticket by your margin. If you sell a $1,000 service and keep $400 after costs, each sale leaves you $400. That's the most you could pay to win a customer without losing money. In practice you want to pay a lot less, so the investment turns a profit.

If customers buy from you repeatedly, use what they leave you in the first year, not on the first purchase. It changes the whole calculation.

Step 2: how many leads it takes to close a sale

Think about the last few months: out of every ten people who contacted you or asked for a quote, how many bought? If you close 2 out of 10, you need 5 leads per sale. That turns "cost per customer" into a maximum "cost per lead": in the example, $400 divided by 5 is a ceiling of $80 per lead.

Step 3: how much demand there is in your market

This is the number almost nobody checks. Google can only bring you people who are already searching for what you sell. With Keyword Planner you measure how many monthly searches there are for your services in your area. If there are 500 searches a month and some share clicks on ads, that's the real size of the channel: past a certain spend, each extra dollar doesn't buy more clicks, because there's nothing more to buy.

That's why sometimes the best advice is to spend less on Google and put the difference into Meta or LinkedIn, where reach doesn't depend on how many people type into a search box.

A full example

An example with round numbers, not a forecast:

• Ticket: $1,000. Margin: 40%. Each sale leaves $400.
• You close 2 out of 10 leads: you need 5 leads per sale.
• If a click costs $2 and 1 in 20 visitors contacts you, each lead costs about $40 and each sale about $200.
• With $600 a month you'd get about 15 leads and about 3 sales, which leave $1,200. The investment pays for itself.

If the market only has 150 clicks a month, there's no point spending more than those clicks cost: the rest goes to another channel.

What if my budget is small?

Under $100 a month, ads collect little data and learn slowly. You can start, but focus: one channel, a few keywords with measured demand and all traffic going to one action, like a call or a message. And track from day one, because a small budget that isn't tracked is money lost twice.

What no budget can tell you

This math tells you how many sales it takes for the investment to pay off, not how many there will be. That depends on your website, your offer and how fast you respond. That's why the budget gets adjusted every month with real data, not set once and forgotten.

If you want this math done for your business, the NARVEX Diagnostic calculates it with your ticket and margin, measures demand in your market with Google data and tells you how much to invest and on which channel. It's free.