Most business owners pick their Google Ads budget the same way. They make it up.
A thousand dollars a month. Five dollars a day. Maybe they saw a Facebook post about generating leads for five bucks a day. The number feels reasonable, so they go with it. No research. No maths. Just a gut feeling and a credit card.
I've been managing Google Ads accounts since 2008. I run an agency. I also run my own businesses. I've seen what happens when the budget is right, and I've seen what happens when it's not. The answer to "how much should I spend?" isn't a number. It's a process.
Start With the Maths, Not a Number
Before you decide on a budget, you need to know three things:
1. How many people are searching for what you sell, in the area you serve
2. How much Google charges per click for those keywords
3. How many of those clicks are likely to turn into enquiries
Let's walk through a scenario using real keyword data.
Say you're a plumber in Brisbane. We pulled the numbers from Google's Keyword Planner for terms like "plumber brisbane," "emergency plumber brisbane," "blocked drain brisbane," and a handful of suburb-level variations. Across all of those, you're looking at roughly 4,400 relevant searches per month and an average cost per click of about $10.
Now do the maths. If you set a budget of $10 a day, that's $300 a month. At $10 per click, you're getting 30 clicks. One a day. That's not enough to learn anything useful or generate consistent leads.
To get 200 clicks a month, you'd need $2,000. That starts to look like a real campaign. You're getting enough data to see which keywords are converting, which ones are wasting money, and where to focus next month.
To get 400 clicks and capture a solid share of that traffic, you're looking at $4,000 a month. Most plumbers aren't spending that. You don't have to. You target the keywords that matter most, set a budget that gets you enough clicks to generate consistent leads, and work up from there. The point is to know what the real numbers are before you pick a budget out of thin air.
Now compare that to a less competitive industry. A niche service provider in a smaller market might have clicks at $3 to $5. Same process, very different budget. A $1,500 monthly budget at $4 per click gets you 375 clicks. That's plenty to work with. That's why there's no universal answer.
The Minimum Viable Budget
There are three tiers I talk clients through:
Under $900/month: You can run ads at this level, but having an agency manage them is overkill. If an agency charges you a few hundred dollars a month to "manage" a budget this small, there's not much management actually happening. At this level, pay someone to set it up properly - the tracking, the keyword research, the ad structure, the landing page. We do this - a proper Google Ads and landing page setup so you're starting with a solid foundation. Then run it yourself. Keep an eye on it. If it works, great. If something looks off, come back to us and pay an hourly rate for a review.
$900 to $2,000/month: This is workable. You'll miss some traffic, but you'll have enough data to see what's working and make adjustments. Agency management starts to make sense here because there's enough activity to actually optimise. There's also a practical reason: if you get it wrong at this level, it hurts. Wasting $900 to $2,000 a month for three months is $3,000 to $6,000 gone. You're better off spending a little less on ads and a little more on agency management to make sure that money is working properly.
$2,000+/month: This is where Google Ads starts to make the most sense. You're capturing a meaningful share of the traffic, you're generating enough leads to measure performance properly, and you're giving the campaigns enough data to improve over time. Most of our clients sit in this range or above.
These numbers shift depending on your industry and location. A lawyer in Melbourne might need $5,000 a month because clicks cost $50 or more. A local trades business on the Sunshine Coast might do well with $1,500. The cost per click is the variable that changes everything.
When I started in this industry back in 2008, we were paying cents on the dollar for clicks. Those days are gone. Some competitive keywords now cost $70 per click. If you're in one of those industries and your budget is $10 a day, the maths just doesn't work.
The Most Expensive Mistake I See
It's not spending too little. It's trying to save money by doing it yourself and trusting Google to set things up.
I had a client who set up a Google Smart Campaign on their own. Smart Campaigns are Google's simplified option. You basically give Google your website and your credit card and let it figure out the rest. You don't pick your keywords. You don't write specific ads. You don't control much of anything. Google loves recommending them because they're easy to set up and they spend your money fast.
This client ran the Smart Campaign for months. No proper conversion tracking. No keyword control. Their cost per lead was $700.
We took over the account, built proper campaigns with the right keyword targeting, wrote ads that matched what people were actually searching for, and set up conversion tracking so we could actually see what was working.
Cost per lead dropped to about $50.
Same business. Same location. Same services. The difference was the setup. That client spent thousands of dollars generating leads at $700 each, trying to save $1,500 on having someone set it up properly. That's the maths that matters.
Google is not on your side here. Their recommendations are designed to make Google money, not to make your campaigns efficient. Broad match keywords, Smart Campaigns, automated suggestions to increase your budget - all of those benefit Google first and you second. Don't trust Google to manage your money. They'll take it.
When You Shouldn't Run Ads at All
If you're running out of options and your business is struggling, Google Ads is a bad move.
That might sound counterintuitive. "I need leads, so I should advertise." In theory, yes. In practice, desperation leads to bad decisions. You'll launch campaigns without proper tracking. You'll accept whatever Google recommends. You'll panic when the first week doesn't generate leads and either kill the campaign too early or throw more money at it without knowing what's working.
The best time to start running ads is when you don't need them. When business is steady and you want to grow. When you can afford to spend $2,000 a month for three months while the campaigns find their rhythm. When you're not checking your phone every hour hoping for a lead.
That's when you can build something properly, test different approaches, and scale it up once you know the numbers work.
The Other Side: Too Many Leads
I've worked with clients who wanted to double their leads. Then double them again. More leads, more leads, more leads.
Leads are useless if you can't convert them. And even if you convert them, can you actually deliver?
I know of businesses that scaled their ads too fast, got more work than they could handle, brought on subcontractors to cope, and the quality dropped so badly it nearly killed the business. Too much work you can't fulfil does more damage than not enough work. Unhappy customers talk. Refunds eat your margins. Your reputation takes years to rebuild.
Before you increase your budget, ask yourself two things. First, can you handle more enquiries right now? Is someone answering the phone? Following up the same day? Second, if those enquiries convert, can you actually do the work? Do you have the team, the capacity, the systems to deliver without dropping quality?
My recommendation: build it out properly. One step at a time. Start with a budget you can sustain, make sure you can handle the volume, then scale up when you're ready. Slow and steady beats fast and broken.
So How Much Should You Actually Spend?
The honest answer: talk to us and we'll walk you through it. We can pull the keyword data for your industry, show you what the clicks actually cost in your area, and give you a realistic budget range in a 15-minute conversation.
If you want to figure it out yourself first, here's the process:
1. Look up your keyword volume and average cost per click. Google's Keyword Planner will give you these numbers for free.
2. Do the maths. How many searches are happening for your keywords each month? What's the average cost per click? Multiply the clicks you want by the cost per click and you've got your minimum budget.
3. Be realistic about your minimum. Under $900 a month, get a professional setup and manage it yourself. Between $900 and $2,000, agency management starts to pay for itself. Above $2,000, you're giving the campaigns enough room to perform.
4. Factor in your location and competition. A Sunshine Coast business and a Melbourne business in the same industry will have very different cost-per-click numbers and very different budgets.
5. Make sure you can handle the leads. There's no point generating enquiries you can't follow up or work you can't deliver.
6. Don't start from desperation. Start from a position where you can afford to learn what works before you need it to work.
Whether you need a full Google Ads setup, a landing page that actually converts, or ongoing campaign management, we can help you figure out the right starting point.
Johannes