How to Set a Google Ads Budget from a Lead Target (Not a Guess)

'What should I spend on Google Ads?' is usually answered with a number that sounds tolerable rather than a number that produces the outcome. $1,000 a month feels safe. Whether it can generate the twelve jobs the business needs is a separate question nobody asked.

The calculation isn't complicated. It takes about fifteen minutes and four numbers you already have.

Step 1: state the revenue target

Not 'more leads'. A figure. 'We need an additional $40,000 in revenue per month from paid search.'

If you don't have a revenue target, use a capacity target instead: how many additional jobs can the business actually deliver each month without breaking? Advertising past your delivery capacity produces angry customers and refunds, which is worse than not advertising.

Step 2: convert revenue into jobs

Divide the revenue target by your average job or transaction value. If you need $40,000 and your average job is $2,500, that's 16 jobs a month.

Use your real average, calculated from the last 12 months of invoices, not your headline price. Most businesses overestimate this figure by quoting their best jobs.

Step 3: convert jobs into leads

Divide jobs by your close rate: the proportion of enquiries that become paying customers.

If you close 25% of enquiries, 16 jobs needs 64 leads a month. If you close 40%, it needs 40 leads. This single number has more leverage on your budget than anything you'll do inside the ad account, which is why improving close rate and response time is usually cheaper than buying more traffic.

If you don't know your close rate, that's the first thing to fix. Count enquiries and count jobs for one month.

Step 4: estimate cost per lead

If you've run ads before, use your actual figure from the last 90 days.

If you haven't, estimate it: cost per lead equals cost per click divided by landing page conversion rate.

For Australian service businesses, cost per click on commercial search terms commonly falls between $3 and $12, with legal, cosmetic, and some medical categories running higher. Landing page conversion rates for well-built, message-matched pages typically land between 5% and 15%; homepages receiving ad traffic often sit under 3%.

So a $7 click at a 10% conversion rate implies roughly $70 per lead. At 3%, the same click implies $233 per lead, which is the arithmetic reason sending paid traffic to a homepage is expensive.

Step 5: multiply out

64 leads at $70 each is $4,480 per month in ad spend. That's the media budget. Management fees, landing page build, and creative sit on top of it.

Now compare that number to what the business can fund. If it fits, you have a plan. If it doesn't, you have a decision to make, and the decision is not 'spend less on the same thing'.

When the number is bigger than the budget

Thinning a $4,500 plan into $1,200 spread across the same keywords produces a campaign that appears occasionally, never accumulates enough conversion data to optimise, and burns six months proving nothing.

Narrow instead. Four ways, in order of usefulness.

1. Cut the keyword set to the highest-intent terms only. 'Emergency plumber Newstead' rather than 'plumbing services'. Fewer searches, far better conversion rate, much lower cost per lead.
2. Restrict geography to the suburbs where your economics are best, usually the ones closest to you where travel time is lowest and brand recognition is highest.
3. Restrict ad scheduling to the hours you can answer the phone. Paying for clicks at 9pm when nobody calls back until 10am wastes the click and the lead.
4. Advertise one service rather than all of them. Pick the one with the best margin and the highest close rate, prove the economics, then expand.

A narrow campaign at $1,200 a month can work. A thin campaign at $1,200 a month cannot.

Budget for the learning period

Google's Smart Bidding strategies need roughly 30 to 50 conversions in a rolling 30-day window to bid accurately. Below that, performance is noticeably worse than the account's eventual steady state.

Plan for 6 to 8 weeks at a cost per lead 30% to 50% above your target, and budget for it explicitly rather than panicking in week 3. The most expensive thing an owner can do in month one is switch strategies, which resets the learning and restarts the clock.

This is also the practical floor argument for budget: an account generating 8 conversions a month will never accumulate enough signal to optimise, regardless of how long it runs.

Daily budget versus monthly budget

Google works in daily budgets and multiplies by 30.4 to get the monthly figure. A $4,480 monthly budget is roughly $147 per day.

Google may spend up to twice the daily budget on any given day, balancing across the month, so don't be alarmed by a $290 day. Do watch the monthly total.

Splitting budget across campaigns

With a $4,480 budget and four campaigns, don't divide evenly. Weight by economics.

A reasonable starting split for a service business: 50% to the highest-intent commercial terms, 25% to secondary services, 15% to local and suburb-level terms, 10% to brand protection and remarketing. Then reallocate monthly based on cost per booked job, not cost per lead.

When to increase budget

When cost per lead is at or below target and the campaign is limited by budget (Google shows this status directly), increasing spend is usually the highest-confidence growth move available.

Increase in steps of 20% to 30%, not by doubling. Large jumps disturb bidding and push you into more expensive auctions faster than the account can adapt. Wait two weeks between increases and watch cost per lead, which typically rises slightly as you expand into less qualified traffic.

Reviewing the number quarterly

Costs per click drift, competitors enter and leave, your close rate changes as your sales process improves. Re-run this five-step calculation every quarter with fresh numbers. The budget that was right in March is rarely right in September.