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How to Set a Realistic Google Ads Budget for Your Business

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Lachlan Nye
Author Lachlan Nye

Director of Growth at Salt Agency, a Brisbane-based performance and creative growth marketing agency. He leads…

How to Set a Realistic Google Ads Budget for Your Business

How to Set a Realistic Google Ads Budget for Your Business

You’re spending money on Google Ads and hoping for the best. That’s not a strategy, it’s a gamble.

Setting the wrong budget means you either waste cash or miss out on real opportunities. And most businesses in Brisbane and across Australia get it backwards.

In this post I’ll show you exactly how to work out what you should be spending. No guesswork. Just data, real numbers, and a process you can use today.

Why most businesses get their Google Ads budget wrong

Most people start with a number they feel comfortable with. “I can spare $500 a month.”

That feels safe. But it has nothing to do with what the channel actually needs to perform.

Google Ads is a pay-per-click platform. You only pay when someone clicks. But if your budget is too low, Google won’t show your ads enough to gather useful data. You’ll never know what works.

A study from WordStream found that the average small business spends between $9,000 and $10,000 per month on Google Ads. That’s around $300 a day. But that number varies wildly by industry.

In Brisbane, local competition for keywords like “plumber” or “accountant” drives CPCs up. If you’re setting a budget without checking average cost-per-click in your area, you’re flying blind.

The real cost of running Google Ads in Australia

Let’s break it down.

Google Ads costs come from two places: the actual ad spend (what you pay per click) and the management fees if you hire someone to run it.

Average CPC in Australia across all industries is around $2.69 for search and $0.49 for display. But in competitive niches – legal, insurance, real estate – expect to pay $10 or more per click.

Here’s what that means for your budget. If your average CPC is $5 and you want 50 clicks a day, that’s $250 daily. That’s $7,500 a month just in ad spend.

Plus you need budget for testing. New campaigns take 2–4 weeks to exit the learning phase. You can’t optimise what you haven’t spent on.

If you’re thinking about running ads yourself, check out our article on what is PPC and how does pay-per-click work (that’s a full sitemap link, but we’ll use the internal links later – actually let’s use the ones provided: our blog has more on this). I’ll link those properly below.

How to calculate a realistic Google Ads budget in 3 steps

Forget “what can I afford.” Start with “what do I need to achieve?”

Step 1: Know your numbers

You need three things: your target cost-per-acquisition (CPA), your average order value (AOV), and your expected conversion rate.

Most businesses don’t know these numbers. That’s the first problem.

Let’s say you sell a product worth $100. Your target CPA is $30 (30% of revenue). Your estimated conversion rate from landing page to sale is 2%. That means you need 50 clicks to get one sale. At $5 CPC, that’s $250 to acquire one customer. Your $30 CPA is impossible.

You see the problem. You need to either lower your CPC, improve your conversion rate, or accept a higher CPA.

Step 2: Work backwards from revenue goals

Want $50,000 in monthly revenue? With a $100 AOV, that’s 500 sales. At a 2% conversion rate, you need 25,000 clicks. At $5 CPC, that’s $125,000 in ad spend.

That might be more than you expected. Now you adjust: improve conversion rate to 4% and you halve the clicks needed. Or target less revenue to start.

The formula is simple: (Revenue goal ÷ AOV) ÷ conversion rate = clicks needed. Then clicks × CPC = budget.

Step 3: Factor in testing and optimising

You won’t hit those numbers on day one. Plan to spend 20–30% of your budget on testing ad copy, audiences, and landing pages.

Budget for at least 30 days of consistent spend before making big decisions. If you can’t afford that, you’re better off waiting until you can.


What if your budget is too small?

Some businesses can only commit to $500 a month. That’s about $16 a day.

In a competitive niche, $16 might get you 3 clicks. Three clicks a day won’t give you enough data to optimise anything. You’ll likely waste that money.

A minimum viable budget for Google Ads is around $20–30 per day for search campaigns. That gives you ~10 clicks per day minimum. Over a month you’ll have a sample size worth analysing.

If your budget is smaller than that, consider other channels first. Maybe SEO, which takes longer but costs less upfront. We’ve written about what is SEO and how does it work if you want to compare options.

Also check out why video marketing works for Australian businesses – video ads can sometimes deliver cheaper clicks on YouTube.

Should you manage Google Ads yourself or hire an agency?

Running Google Ads well is a full-time job. You’re managing keywords, bids, negative keywords, ad copy, landing pages, conversion tracking, and more.

If you manage it yourself, your time isn’t free. And mistakes cost real money.

Agencies like ours (based right here in Brisbane) bring experience and data. We know what works in the Australian market. We can reduce your CPA and stretch your budget further.

The question is: does the extra performance cover the management fee? For most businesses, yes. A well-managed campaign can deliver 2–3x better ROI than a DIY one.

Read more tips on our blog – we cover paid ads, SEO, branding, and everything in between.

FAQ

What’s the minimum Google Ads budget I should start with?

At least $600–$900 per month ($20–$30/day) for search campaigns in competitive Australian markets. Lower budgets can work for niche, low-competition keywords.

How much should a small business spend on Google Ads?

A common starting point is 10–15% of your monthly revenue. For a business doing $50k/month, that’s $5k–$7.5k. Then adjust based on results.

How often should I review my budget?

Weekly for the first month, then monthly once campaigns stabilise. Watch your cost-per-acquisition and adjust bid strategies accordingly.

Should I set a daily budget or a monthly budget?

Daily. Google can overspend on a single day and underspend later. Set a daily cap and let the system pace your monthly total.

Can I change my budget mid-month?

Yes, but avoid frequent changes. Each change resets the learning phase. Stick to a plan for at least two weeks.

References

  • WordStream, “Google Ads Benchmarks for 2024”
  • Google Ads Help Center, “About budgets”
  • Optmyzr, “Average CPC by Industry in Australia”

Ready to build a Google Ads budget that actually works? Get in touch with Salt Agency – we’ll help you spend smarter.

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