“How much should we spend on Google Ads?” is usually the first question in any PPC conversation, and “it depends” is the most common – and least useful – answer. A PPC budget should come from your own numbers: what a customer is worth, what a lead costs, and how many you need.
Set the budget too low and campaigns never collect enough data to improve. Set it too high without a plan and you pay for an expensive experiment.
This guide gives you a simple formula for setting a PPC budget, worked examples using dated 2026 benchmarks, the rules Google uses to spend your daily budget, and a step-by-step method for testing and scaling.
Key Takeaways
- Work backwards: target conversions × target cost per acquisition = monthly budget.
- Check that the daily budget can buy enough clicks for the campaign to learn.
- Google may spend up to 2× your average daily budget on a single day, but no more than 30.4× it in a month.
- Use benchmarks only as a starting point; your own data replaces them within weeks.
- Scale budgets gradually, and only on campaigns that hit target CPA or ROAS.
Step 1: Know what a customer is worth
Before setting any budget, calculate how much you can afford to pay for a conversion. You need three numbers:
- Average order or job value (or first-year customer value for subscriptions)
- Gross margin after cost of goods or delivery
- Lead-to-customer rate for lead generation businesses
Example: a roofing firm’s average job is £6,000 with a 35% margin, so each job brings £2,100 gross profit. If one in five leads becomes a job, a lead is worth up to £420 in gross profit. To stay profitable, you might set a target cost per acquisition of £100–£150 per lead.
Step 2: The PPC budget formula
The core formula is simple:
Monthly budget = target conversions × target CPA
Target CPA = average CPC ÷ conversion rate
Daily budget = monthly budget ÷ 30.4If you have no history, you can estimate CPC and conversion rate from keyword research tools and published benchmarks, then replace them with your own data after a few weeks. The Google Keyword Planner gives bid ranges for your exact keywords.
Worked examples using 2026 benchmarks
WordStream’s Google Ads Benchmarks 2026 report (13,474 US search campaigns, April 2025–March 2026; “averages” are medians) gives starting figures by industry. Here is how they translate into budgets for 30 leads a month:
| Industry (WordStream 2026) | Median CPC | Median conv. rate | Median cost per lead | Budget for 30 leads/month | Daily budget |
|---|---|---|---|---|---|
| All industries | $5.42 | 8.18% | $66.69 | ≈ $2,000 | ≈ $66 |
| Attorneys & legal services | $9.87 | 5.55% | $131.63 | ≈ $3,950 | ≈ $130 |
| Home & home improvement | $8.33 | 8.05% | $90.92 | ≈ $2,730 | ≈ $90 |
| Dentists & dental services | $8.00 | 10.67% | $72.97 | ≈ $2,190 | ≈ $72 |
| Real estate | $3.22 | 3.70% | $102.51 | ≈ $3,075 | ≈ $101 |
Budgets are calculated as 30 × the median cost per lead, rounded. Note that the report’s median cost per lead is not exactly CPC ÷ conversion rate, because each column is a separate median. Your local market, competition and landing page will move these numbers a lot – treat them as a sense check, not a forecast.
Step 3: Check the click volume
A budget can be “right” on paper but too small to learn. If your CPC is $8 and your daily budget is $20, you get two or three clicks a day – far too few to judge keywords or ads. As a rule of thumb, aim for a budget that buys enough clicks each day to collect meaningful data within a few weeks, and narrow the campaign (fewer keywords, tighter location, fewer hours) if it does not.
Automated bidding has its own needs. For Demand Gen campaigns using Target CPA, Google recommends a daily budget of at least 10 times your target CPA. For more on strategies, see Google Ads bidding strategies.
How Google spends your daily budget
Google Ads uses an average daily budget, not a hard daily cap.
“On a given day, your campaign might spend up to twice your average daily budget to take advantage of fluctuations of traffic.”
— Google Ads Help, About average daily budgets
Over a month, Google says you will not be charged more than 30.4 times your average daily budget (30.4 is the average number of days in a month). So if your monthly budget is £3,000, set the daily budget to about £99.
How to allocate a PPC budget across campaigns
| Campaign type | Typical role | Budget priority |
|---|---|---|
| Brand search | Protect your own name from competitors | Small, always on |
| High-intent non-brand search | “Service + location”, “buy + product” | Largest share at the start |
| Shopping / Performance Max | Product sales for ecommerce | Large for online stores |
| Remarketing | Bring back visitors | Small, efficient |
| Demand Gen / video / display prospecting | Create new demand | Add once search is profitable |
| Testing | New keywords, audiences, channels | Around 10–20% (an internal rule of thumb) |
Start where intent is highest. A small business with a limited budget should usually begin with tightly themed search campaigns – see our plan for Google Ads for small businesses – and add other channels later. For the wider picture, our marketing budget guide covers how PPC fits alongside SEO and other channels.
Step-by-step: set, test and scale your PPC budget
- Calculate your maximum affordable CPA from margin and close rate.
- Estimate CPC and conversion rate from Keyword Planner and dated benchmarks.
- Calculate the monthly budget for your target number of conversions.
- Divide by 30.4 to set the average daily budget.
- Narrow the scope if needed so the budget buys enough clicks per day.
- Set up conversion tracking before launch – budgets without measurement are guesses.
- Run for 30 days, cutting obvious waste weekly using the search terms report.
- Reallocate from campaigns above target CPA to campaigns below it.
- Scale gradually – raise budgets in steps on campaigns that are limited by budget and on target.
Common mistakes
- Picking a round number. “£500 a month” without maths often means too few clicks in a high-CPC niche.
- Spreading too thin. Ten campaigns on a small budget means none of them learn.
- Ignoring wasted spend. Irrelevant searches can eat a large share of small budgets; build negative keyword lists.
- Doubling budgets overnight. Sudden jumps can push automated bidding into more expensive auctions.
- Treating benchmarks as targets. Your margins, not an industry median, define a good CPA.
- Forgetting management and creative costs when calculating return on ad spend.
Related Guides
- PPC KPIs: Metrics Every Advertiser Should Track
- Cost Per Acquisition (CPA): Calculate and Reduce It
- Click-Through Rate: What’s Good and How to Improve It
Frequently Asked Questions
How much should a small business spend on PPC?
Work back from your goals: target leads per month × expected cost per lead. Then check that the daily budget can buy enough clicks – ideally at least 10–20 a day per campaign – to learn quickly.
Can Google Ads spend more than my daily budget?
Yes. Google says a campaign may spend up to twice its average daily budget on a given day, but over a month you will not be charged more than 30.4 times the average daily budget.
Should I set a monthly or daily budget?
Google Ads campaigns use an average daily budget. Divide your monthly budget by 30.4 to get the daily figure.
How long before I know if my budget works?
Give a new campaign several weeks and enough conversions to judge. Many advertisers review after 30 days, then reallocate towards campaigns with the best cost per acquisition.
When should I increase my PPC budget?
When campaigns hit your target CPA or ROAS and show lost impression share due to budget. Increase gradually and watch whether the cost per conversion holds.
Conclusion
A good PPC budget is calculated, not guessed: start from what a customer is worth, estimate your cost per lead, make sure the daily budget buys enough data, and then let real results decide where money goes next. If you would like an expert to build a budget plan and forecast for your market, see our PPC management services or get a free quote.
