Google Ads

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

NUVIX · 15 February 2026 · 10 min read

TLDR: There's no universal answer, but you can work backwards from the numbers. Figure out what a customer is worth to you, what conversion rate your landing page gets, and what the average cost per click is in your industry. That gives you a minimum viable budget. For most small businesses in the UK, £1,000-3,000 per month is a reasonable starting point. Anything below £500 usually doesn't generate enough data for the algorithm to optimise. Don't set a budget based on what you can afford — set it based on what the maths says will be profitable.

The Wrong Way to Set a Budget

Most businesses pick a Google Ads budget by asking 'what can we afford to spend?' That's backwards. The question should be 'what budget will generate a positive return?'

If £1,000 in ad spend generates £5,000 in revenue, you can afford a lot more than you think. If £3,000 generates £2,000, you can't afford anything until you fix the underlying performance.

Budget isn't a cost. It's an investment with a measurable return. Treat it like one.

Working Backwards From Your Numbers

You need four figures to calculate a sensible budget:

1. Customer lifetime value (LTV) or average order value (AOV)

What is a customer actually worth to you? For e-commerce, this might be the average order value, or better yet, the average value over their lifetime if they buy repeatedly. For services, it's the typical contract value.

A solicitor whose average client is worth £3,000 can afford to spend a lot more per lead than a café selling £4 coffees.

2. Your conversion rate

What percentage of people who land on your site actually become customers? If you don't know this, you need to find out before spending anything on ads. Check GA4 — look at your key event rate for whatever counts as a conversion (form submission, purchase, phone call).

A typical landing page converts at 2-5%. Some do much better, some do worse. Use your actual number, not an optimistic guess.

3. Cost per click in your industry

Google Keyword Planner gives you estimated CPCs for your target keywords. These vary wildly by sector:

Legal services: £5-30 per click
Insurance: £10-50 per click
Home services (plumbing, electrical): £3-15 per click
E-commerce (general): £0.50-3 per click
B2B SaaS: £5-20 per click
Recruitment: £2-10 per click

These are rough ranges. Your actual CPC depends on your Quality Score, competition, and targeting.

4. Your target cost per acquisition

What's the maximum you're willing to pay for a customer? A good rule of thumb: your CPA should be no more than a third of the customer's value. If a customer is worth £3,000, a CPA of £1,000 leaves enough margin to be worthwhile. If a customer is worth £50, your CPA needs to be under £15-20.

The Calculation

Here's how the numbers work together.

Say you're a B2B company. Your average client is worth £5,000. You're targeting keywords with an average CPC of £8. Your landing page converts at 3%.

Cost per lead: £8 ÷ 0.03 = £267 per lead

If 1 in 4 leads becomes a client: £267 × 4 = £1,067 per client. Client value is £5,000, so the return is roughly 5:1.

That's profitable. Now work out the budget: if you want 10 new clients per month, you need 40 leads, which requires about 1,333 clicks, which costs roughly £10,667 per month.

If that budget is too high, you've got two levers: improve conversion rate (which reduces cost per lead) or increase close rate (which reduces cost per client).

Minimum Viable Budgets

Google Ads needs data to optimise. Smart bidding strategies require conversion volume to learn effectively. Google recommends at least 30 conversions per month for target CPA bidding, though it can work with less — just more slowly.

At very low budgets, you don't get enough clicks to generate meaningful conversions, which means the algorithm never learns, which means performance stays mediocre, which confirms the belief that 'Google Ads doesn't work'. It's a self-fulfilling prophecy.

As a rough guide:

Under £500/month: Barely viable for most industries. Only works if your CPCs are very low (under £1) or you're in a very niche market with minimal competition.
£1,000-2,000/month: Workable starting point for most small businesses. Enough to test 2-3 campaigns and generate some data. Won't set the world on fire but you'll learn whether the channel works.
£3,000-5,000/month: Comfortable budget for serious testing across multiple campaigns. Enough data for smart bidding to work properly. This is where most SMEs find their footing.
£5,000-10,000/month: Room to scale what works and test new opportunities. You can run search, shopping, and remarketing simultaneously.
£10,000+/month: Full-scale operation. Multiple campaign types, ongoing testing, regular optimisation. This is where agencies like ours typically get involved.

Don't Spread It Too Thin

A common mistake is splitting a small budget across too many campaigns. If you've got £1,500 per month, running six campaigns with £250 each means none of them get enough data to optimise.

Start with one or two campaigns focused on your highest-intent keywords. Get those working profitably. Then expand.

It's better to dominate a narrow set of keywords than to sprinkle budget across everything and dominate nothing.

The Ramp-Up Period

New accounts need time. The first month is essentially paying for data — you're learning what works, what doesn't, which keywords convert, and which waste money.

Budget expectations by month:

Month 1: Data collection. You'll probably lose money or break even. That's normal. Focus on learning, not returns.
Month 2: Optimisation kicks in. Cut the waste you found in month one. Performance improves.
Month 3: The algorithm has enough data to optimise properly. This is when you should see whether the channel is viable for your business.
Month 4+: Scale what works. Increase budget on profitable campaigns, test new keywords and campaign types.

If you're not willing to commit to at least three months of learning, Google Ads probably isn't the right channel for you right now. One month of spend tells you almost nothing useful.

When to Increase Budget

Scale when the numbers work, not before. If your campaigns are generating leads at a profitable CPA and you've got capacity to handle more, increase budget gradually — 20-30% at a time.

Watch for diminishing returns. Doubling your budget doesn't double your conversions. At some point you've captured the available demand and additional spend starts hitting less qualified clicks. If CPA creeps up as you increase budget, you've probably hit the ceiling for those keywords and need to expand into new keyword sets.

When to Reduce Budget

Reduce if you're consistently unprofitable and you've already optimised the fundamentals (negative keywords, landing pages, ad copy, targeting). Not every business works on Google Ads. If the CPCs in your industry are high and your margins are thin, the maths might not add up.

That's not failure — it's useful information. It means you should look at other channels (Meta Ads, SEO, content marketing) where the economics might work better.