How Much Should You Spend on Google Ads? A Realistic Guide

“How much should I spend on Google Ads?”

It is one of the most common questions I get from business owners, and there is no universal answer. The right budget depends on your industry, competition, goals, and what you can afford to pay to acquire a customer.

This guide helps you work through the calculation for your specific Google Ads situation.

Start with Customer Value

Before thinking about ad budgets, you need to know what a customer is worth to your business.

Calculate your average customer value:

For a one-time purchase business: Average customer value = Average transaction value

For a repeat business: Average customer value = Average transaction value x Expected number of transactions x Customer lifespan

Example: A plumber might have:

Average job value: $400
Customers return an average of 3 times over 5 years
Average customer value: $1,200

Example: A dental practice might have:

Average appointment value: $180
Patients visit twice yearly for 10 years
Average customer value: $3,600

Knowing this number is essential because it determines how much you can afford to spend acquiring each customer.

Calculate Your Target Cost Per Acquisition

If a customer is worth $1,200 to your business, you probably cannot afford to spend $1,200 to acquire them—you would break even at best.

A general guideline is to keep customer acquisition cost at 10-30% of customer lifetime value, depending on your margins and business model.

Customer worth $1,200 → Target acquisition cost: $120-360 Customer worth $3,600 → Target acquisition cost: $360-1,080

This gives you your target cost per acquisition (CPA).

Work Backwards to Budget

Now you can estimate a realistic budget.

The formula: Monthly budget = Target CPA × Desired number of new customers

If your target CPA is $200 and you want 10 new customers per month: Monthly budget = $200 × 10 = $2,000

This is a minimum budget to achieve those goals. Actual performance varies, especially when starting out.

Industry Benchmarks for South East Queensland

Costs vary significantly by industry. Here are rough benchmarks for South East Queensland (these fluctuate with competition and season):

Trades (plumbers, electricians, builders):

Cost per click: $8-20
Cost per lead: $80-200
Emergency services higher, maintenance lower

Professional services (lawyers, accountants):

Cost per click: $15-40
Cost per lead: $150-400
Highly competitive keywords much higher

Healthcare (dentists, physios, GPs):

Cost per click: $8-25
Cost per lead: $60-150
New patient acquisition competitive

Real estate:

Cost per click: $5-20
Cost per lead: $50-200
Varies significantly by property type and location

Hospitality:

Cost per click: $2-8
Cost per booking: $10-40
Lower costs but lower margins

E-commerce:

Cost per click: $0.50-5
Target ROAS (return on ad spend): 3-5x
Highly variable by product category

These are starting points. Your actual costs depend on your specific keywords, location targeting, competition, and ad quality.

Minimum Viable Budgets

There is a floor below which Google Ads does not make sense:

Too low to function (under $300/month): At this level, you cannot get enough data to optimise. Your campaigns will run but you will not learn what works.

Learning phase ($500-1,500/month): Enough to gather data and start optimising. Expect the first 1-2 months to be investment in learning.

Sustainable growth ($1,500-5,000/month): Enough to run meaningful campaigns, test variations, and scale what works.

Significant market presence ($5,000+/month): Competitive presence for most local markets. Ability to dominate specific niches.

For most South East Queensland small businesses, starting at $1,000-2,000 per month allows for meaningful testing and optimisation.

What to Expect at Different Levels

$500/month

Tight geographic and keyword targeting required
Focus on highest-intent keywords only
Expect 30-60 clicks per month (depending on costs)
Might generate 3-10 leads if landing pages convert well
Limited ability to test and optimise

$1,500/month

Can target primary service area effectively
Room to test different ad variations
Expect 80-200 clicks per month
Might generate 8-25 leads
Enough data to start optimising

$3,000/month

Cover most local competitive keywords
Test multiple campaigns
Expect 150-400 clicks per month
Might generate 15-50 leads
Good data for optimisation decisions

$5,000+/month

Comprehensive keyword coverage
Multiple campaign types (Search, Display, Remarketing)
Significant market presence
Enough volume for advanced optimisation

When to Increase Budget

Increase spending when you have evidence it works:

Good signs:

Positive ROI (revenue from ads exceeds ad spend plus management costs)
Cost per acquisition is within target
You can handle more leads (capacity, staff, time)
You are limited by budget, not demand

Increase gradually: Do not double your budget overnight. Increase by 20-30% at a time and let performance stabilise before increasing again.

Red flags for increasing:

Leads are not converting to customers (sales process issue)
Cannot follow up with leads quickly enough
Cost per acquisition is already at the high end of acceptable
Quality of leads is poor

When to Decrease Budget

Reduce spending or pause when:

Economics do not work: If your cost per acquisition exceeds what you can afford, the campaign needs fixing before spending more.

Lead quality is poor: Lots of clicks and leads but none converting could indicate targeting problems or landing page issues.

Capacity constraints: If you cannot handle more work, do not pay for leads you cannot serve.

Better alternatives exist: If SEO, referrals, or other channels deliver better ROI, shift resources there.

Budget Allocation Tips

If you have $3,000/month to spend, consider:

60-70% on proven campaigns: Your best-performing keywords and ad groups should get the majority of budget.

20-30% on testing: Try new keywords, ad copy, landing pages. Not all tests win, but winners become your new proven campaigns.

10% on remarketing: Show ads to people who visited but did not convert. Usually efficient spend.

The Hidden Costs

Your Google Ads budget is not your total cost. Also factor in:

Management time or fees: Either you spend time managing campaigns, or you pay someone. Professional management typically costs $500-2,000/month for small business accounts.

Landing page creation: You may need dedicated landing pages for best results.

Conversion tracking setup: Proper tracking requires initial setup work.

Creative and copy: Someone needs to write ad copy and potentially create display ads.

When budgeting, consider total investment, not just ad spend.

Starting Out: A Practical Approach

If you are new to Google Ads:

Month 1-2: Test and learn Start with $1,000-1,500/month. Focus on highest-intent keywords. Accept that you are paying to learn what works.

Month 3-4: Optimise Use data to cut poor performers and increase investment in winners. Cost per acquisition should improve.

Month 5+: Scale If performance is positive, gradually increase budget. If not, diagnose problems before spending more.

Give yourself at least 90 days before judging whether Google Ads works for your business. Early results are rarely representative.

Questions to Ask

Before setting a budget:

What is a new customer worth to my business?
What can I afford to spend to acquire a customer?
How many new customers do I want per month?
Can I handle that many new customers?
Do I have time to manage campaigns, or do I need help?
What is my total marketing budget (not just ads)?

The answers determine whether Google Ads makes sense and at what level.

The Bottom Line

There is no magic number. The right Google Ads budget is one that:

You can sustain for long enough to learn (at least 90 days)
Acquires customers at an acceptable cost
Generates positive return on investment

Start conservatively, measure carefully, and scale based on results—not hopes or competitor comparisons.

Want help planning your Google Ads budget? Platform21 provides transparent Google Ads management for South East Queensland businesses. Book a free strategy call or explore our Google Ads management to discuss your goals and realistic budgets.

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