Google Ads
How much should you spend on Google Ads?
There is a right answer to this and it is not a number someone else picks. It comes out of your own margins in about ten minutes.
3 min read · Updated October 2026
The short version
Work backwards from what a customer is worth. In Sydney, service clicks run roughly $5 to $7.50, and about one in twenty clicks becomes an enquiry on a decent site — so a lead costs around $100 to $150. Most small businesses need $1,000 to $2,000 a month for the campaign to produce enough data to improve.
Most people pick an ads budget by deciding what they can stomach losing. That works until it does not, because the number has no relationship to whether the campaign can succeed.
Here is the arithmetic instead. You need three figures, and you already have all of them.
Work it out in ten minutes
- 01What is a customer worth? Average job value multiplied by your gross margin. A $900 job at 40 per cent is $360 of margin. If they come back, use lifetime value instead — it is usually much higher and most people forget it.
- 02What share of quotes do you win? If you quote ten and win four, that is 40 per cent. Be honest rather than optimistic.
- 03So what can you pay for a lead? $360 of margin at a 40 per cent close rate means each lead is worth $144. Pay a third of that and you have a healthy business: around $48. Pay all of it and you are working for Google.
That gives you a target cost per lead. Multiply by the number of jobs you want each month, and you have a budget with a reason attached.
Worked example
You want 10 extra jobs a month. You win 40 per cent of quotes, so you need 25 leads. At $120 a lead that is $3,000 a month in ad spend. If that is more than you can commit, the honest conclusion is that you want fewer extra jobs, not that the maths is wrong.
What clicks actually cost
Sydney is the most expensive capital in Australia for service searches — roughly $4.80 to $7.50 a click for trades and professional services, with the usual suspects higher. Legal, dental implants and emergency trades can run far above that.
A site that converts around 1 in 20 clicks therefore produces leads at roughly $100 to $150. A site converting 1 in 50 produces them at $250 to $375 for identical spend. Which is the entire argument for fixing the website before turning ads on.
The minimum that makes sense
Below about $1,000 a month, two things go wrong. You buy too few clicks for Google’s bidding to learn anything, and you get too few leads to tell signal from luck. Three leads one month and one the next tells you nothing at all.
There is a real floor here, and it is uncomfortable: if your market’s clicks cost $7 and you need 30 clicks a week to learn anything, you need about $900 a month before you have bought a single useful insight.
If the budget is not there
Do not run a starved campaign. Put the money into Google Business Profile, reviews and fixing the site — all of which produce leads without a monthly spend. Come back to ads when you can commit properly. A badly funded campaign is worse than none, because it costs money and teaches you nothing.
Management fees are separate
Whoever runs the campaign charges on top of the spend. In Australia that is typically $800 to $2,000 a month for a small business, or 10 to 20 per cent of spend above a threshold.
So a “$2,000 a month on Google Ads” commitment is usually $2,000 to Google plus $800 to $1,500 to whoever manages it. Budget for both, and make sure the spend goes to Google on your card rather than through an agency invoice.
What to expect in the first ninety days
| Period | What is actually happening |
|---|---|
| Weeks 1–2 | Learning. Cost per lead will look bad. Changing things now resets the learning and makes it worse. |
| Weeks 3–6 | Negative keywords get added as real search terms come in. Cost per lead starts dropping. |
| Weeks 7–12 | Enough data to cut what is not working and push what is. This is where the campaign becomes worth what you pay for it. |
Anyone promising profitability in week one is hoping rather than forecasting.
The two things that waste most budgets
No negative keywords. Without them you pay $7 a click for people searching “free”, “jobs”, “DIY” and “how to”. On a $2,000 budget this routinely wastes several hundred dollars a month.
No conversion tracking. If calls and forms are not tracked, Google optimises towards clicks because clicks are all it can see. You get more traffic and fewer customers, and the reporting looks fine.