One of the biggest questions people have when starting with Google Ads is “how much should I spend?” It’s not always an easy answer. If you set your budget too low, you’ll struggle to gather enough data to see what’s working. Spend too much without a plan, and you risk burning through money with little to show for it.
That’s where budget planning comes in. Rather than pulling a number out of the air, you can work out a realistic range based on your costs, conversion rates and goals. In this guide, I’ll walk you through a process I use to calculate a sensible budget, whether you’re just getting started or planning a new campaign.
Step one: get your estimated CPCs
The first thing you need to know is how much a click is likely to cost. Google’s Keyword Planner is a free tool inside Google Ads that shows you estimated cost-per-click (CPC) ranges for your chosen keywords.
Search for the keywords you want to target and note down the CPC ranges. These are often shown as “low” and “high” values, but for planning purposes, I like to take an average figure across the group.
For example, let’s say your target keywords have estimated CPCs of £1.50, £2.10, £1.80 and £2.40. Add them all up and divide by four. Or, if you’re using a spreadsheet, just do an =AVERAGE in a cell below. That gives you an average CPC of £1.95. This becomes your working figure for the rest of the calculation.
Step two: know your conversion rate
Next, you need to decide what conversion rate you’ll use. If you’ve already been running ads or you have Google Analytics or other tracking on your site, the best option is to use your actual website conversion rate.
If you don’t have this data yet, you can use an industry benchmark as a starting point. A common ballpark figure for many industries is around 3%. That means, on average, three out of every 100 clicks convert into a lead or sale.
The important thing here is that the conversion rate sets the relationship between clicks and conversions. Once you know how many clicks you need to get one conversion, you can start to put real numbers against your budget.
Step three: work out clicks per conversion
This step is simple maths. Divide 100 by your conversion rate percentage to find out how many clicks you need for one conversion.
For example, with a 3% conversion rate:
100 ÷ 3 = around 34 clicks per conversion.
So if your website converts at 3%, you’ll need roughly 34 clicks to generate one conversion.
Step four: calculate different scenarios
Now that you know the average CPC and the clicks needed per conversion, you can start to map out different budget levels. I like to choose three different scenarios so I can see a range of possible outcomes.
Let’s continue the example:
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Average CPC: £1.95
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Clicks per conversion: 34
That means one conversion will cost about 34 x £1.95 = £66.30.
Now, let’s look at three different conversion goals:
| Number of conversions | Conversions x CPA | Estimated budget |
|---|---|---|
| 5 | 5 x £66.30 | £331.50 |
| 10 | 10 x £66.30 | £663.00 |
| 20 | 20 x £66.30 | £1,326.00 |
By doing this, you’re not just picking a budget randomly. You’re tying it directly to the number of conversions you’d like to achieve.
Here’s how this budget planning for Google ads might look in a spreadsheet:
Step five: decide your comfort zone
Once you’ve mapped out three scenarios, you can make a decision about where you feel most comfortable.
For example, if you’re testing a brand new campaign, you might start with the lower range (say, 5 conversions) just to validate the performance. If you’re more confident in your keywords and conversion rates, you might aim for 10 or 20 conversions straight away.
The point of this exercise is that you’re not left guessing. You’ll have a clear picture of what your budget could realistically deliver.
Why this process works
Budget planning with this method helps you avoid two common traps:
| Common trap | What it means | Why it’s a problem |
|---|---|---|
| Spending too little | Budgeting for only one or two conversions | You won’t collect enough data to judge campaign performance. Google Ads needs a minimum level of activity to optimise. |
| Spending blindly | Setting a budget without linking it to expected conversions | You risk creating unrealistic expectations or being disappointed by the results. |
By grounding your budget in CPC and conversion rate data, you give yourself a much better chance of setting realistic goals. It also makes conversations with stakeholders or clients easier, because you can show the logic behind the numbers.
Remember…
Remember that these are estimates, not guarantees. Your actual CPCs and conversion rates may shift once your campaigns are live, especially in competitive industries or during seasonal peaks.
That’s why budget planning should be treated as a starting point rather than a final answer. Use this framework to guide your decision, then monitor and adjust as real data comes in.
