“How much do Google Ads cost per month?” doesn’t have a simple answer—budgets can range from $100 to $10,000+, and competitive industries can pay over $50 per click. But the good news is that most small and medium businesses typically spend between $1,000 and $10,000 monthly, with an average CPC of $4.51.
What truly matters is ROI. With Google Ads delivering an average return of 800% ($8 earned for every $1 spent), your budget should be based on goals, industry benchmarks, and real performance data. In this guide, you’ll learn the exact steps to calculate your ideal Google Ads budget for 2025, understand key metrics, and build a strategy that maximizes returns.
Understand the Core Metrics Behind Google Ads Budgeting
You need to understand the basic metrics that determine your costs and returns to create a working Google Ads budget. These core metrics help you calculate spending amounts and guide your optimization efforts.
What is cost per click (CPC)?
Cost per click shows what you pay when someone clicks your ad. The difference between maximum CPC (the highest amount you’ll pay) and actual CPC (what Google charges you) matters. Most advertisers pay less than their maximum bid.
You can find your average CPC by dividing the total advertising cost by clicks received. Google Ads users in 2025 pay an average of $5.26 per click. This amount varies a lot between industries – Arts & Entertainment costs $1.60 while Attorneys & Legal Services run at $8.58.
How conversion rate affects your budget
Your monthly Google Ads spend should align with your conversion rate. The average conversion rate stands at 7.52% in 2025, making this metric vital for budget planning.
To name just one example, see how a $1.00 CPC might work with a 2-3% website conversion rate, but you could lose money with just 1% unless you have high traffic volumes. On top of that, your cost per acquisition (CPA) shapes your budget – selling a $100 product might mean setting a target CPA of $20.
The role of customer lifetime value
Customer lifetime value (CLV) now plays a bigger role in Google Ads budgeting. CLV looks beyond quick sales to see what customers might spend over time.
Data shows app users buy 33% more often and deliver 3-5X higher lifetime value than other customers. Research proves that boosting customer retention by just 2% can match the financial benefits of cutting costs by 10%.
These core metrics give you the tools to set your Google Ads budget and use it wisely for better returns.
Use the Marlin Multiple to Estimate Your Starting Budget
The Marlin Multiple provides a practical approach to help first-time advertisers decide their monthly Google Ads spend. This method serves as a solid starting point that allows budget scaling based on performance.
How to calculate your average cost per conversion
The average cost per conversion (CPA) shows the total amount needed to get one conversion action, such as a sale or lead form submission. You can find this metric by dividing your total advertising costs by successful conversions.
The CPA shows how many ad clicks you need before someone converts. A 2% conversion rate means 2 out of 100 visitors convert into customers. You’ll need about 50 clicks to generate one conversion. Each click at $1 would result in a $50 average CPA.
Industry averages for CPA usually fall between $30-$90. Some industries might see costs as low as $,5 while others cost a lot more.
Applying the Marlin Multiple formula
The Marlin Multiple suggests a simple rule for new advertisers. Start with a monthly Google Ads budget that equals ten times your industry’s average cost per conversion. Here’s the formula:
Monthly Budget = Average Cost Per Conversion × 10
You could also use this alternative: Monthly Budget = (Average CPC ÷ Conversion Rate) × 10
This method lets you test Google Ads with enough data before making bigger investments. Then you can figure out potential returns without spending too much.
Example calculation for a small business
Let’s look at a fitness center owner’s case to see how much they should spend on Google Ads monthly. The health and fitness industry has an average CPC of $4.71 with a 7.40% conversion rate.
The starting budget calculation works like this:
- Find the average CPA: $4.71 ÷ 0.074 = $63.65
- Apply the Marlin Multiple: $63.65 × 10 = $636.50
A reasonable monthly starting budget would be around $636.50.
Here’s another way to think it over: targeting 100 sales with a 2% conversion rate and $1.00 average CPC needs a $5,000 budget ($1.00 ÷ 0.02 × 100). The Marlin Multiple suggests starting with one-tenth of that amount during testing.
Project Your Monthly Spend and ROI
Your next priority after setting your original budget is to project monthly spending and measure returns. Here’s what you need to know about your Google Ads investment in 2025.
How much should I spend on Google Ads per month?
The money you spend on Google Ads each month can differ greatly based on your industry and company size. Small local companies usually invest between $150-$800 monthly. For mid-sized firms, they typically set aside around $7,000 to $30,000 for this activity. Organizations at the enterprise level put in $20,000-$50,000.
The amount you can spend each month is the same as your average daily budget times 30 (this being the usual number of days in a month). If $100 is what you have for spending each day, then on a monthly scale, it shows that you may spend no more than $3,000.
Estimating return on ad spend (ROAS)
ROAS shows the revenue you get back for each dollar spent on advertising. The formula is simple:
ROAS = (Revenue / Ad Spend) × 100
A business that spends $5,000 on ads and makes $25,000 in revenue has a 500% ROAS or a 5:1 ratio. The average ROAS across industries sits at 200%. You should want to achieve at least 300-400% to maintain healthy campaign performance.
When to increase or decrease your budget
Small budget increases work best—10-20% every 7-14 days. This helps avoid triggering Google’s learning phase. These key metrics need monitoring after each change:
- Rising CPA (over 15-20%)
- Stable or increasing conversion volume
- Consistent ROAS
- Impression share limitations
- Click-through rate changes
The algorithm needs clear signals, so make one change at a time. This helps you see exactly what affects your performance.
Refine Your Budget with Smart Targeting and Optimization
Your Google Ads budget optimization becomes a significant priority after setting initial spending limits. You can extract more value from your current spend by optimizing targeting instead of increasing your budget.
Use geo-targeting to reduce waste.
Clever location targeting can provide a more profitable return by displaying ads only to relevant customers. Businesses may waste as much as 70% of their budget on clicks from areas they don’t cover. The platform allows changing bids for specific locations, with a range from -90% to +900%. This flexibility helps you focus on areas where conversions are high and reduce spending in places that do not perform well.
Adjust bids by device and time of day.
Results can vary dramatically across different devices. To name just one example, desktop users might convert at $85 per lead while mobile costs $310. The platform supports device bid adjustments (-100% to +900%) and schedule adjustments (-90% to +900%). These features help focus your budget during peak performance periods:
- Increase bids during high-conversion hours
- Decrease spending during off-peak times
- Prioritize devices with better conversion rates
Improve landing pages to boost conversions
Poor landing pages can derail even the best-targeted campaigns. Research indicates that slow-loading pages can reduce conversions by up to 7%. Your dedicated landing pages should include:
- Single, clear call-to-action
- Headlines matching ad copy
- Trust signals like testimonials
- Mobile optimization
Track multiple conversion types
Understanding your true return on ad spend requires tracking different valuable actions. Google Ads offers options between counting “every conversion” or just “one conversion” after each ad click. This feature helps measure both sales and leads with greater accuracy.
Conclusion
To figure out your Google Ads budget, it’s not about choosing a number at random. You need to comprehend factors like CPC (cost per click), conversion rate, and the value of customer lifetime. These measurements determine how amount you should spend and also predict how much you can get back. The Marlin Multiple is useful for new advertisers as an intelligent starting point based on data, without spending too much – this involves 10 times your average CPA (cost per acquisition).
No matter if you are a small business putting in $300 each month or a brand on the rise investing lots of money, your aim should be identical: to reach an effective ROAS between 300-400% and make your campaigns better with superior targeting, enhanced landing pages, and constant optimization.
Do you wish to establish the ideal Google Ads budget and enhance ROI for 2025? Reach out to Codevelop today. Allow us to create a profitable, data-based ad strategy customized for your business.
