How much should you spend on PPC? It's one of the most common questions in digital advertising—and one without a simple answer.
Your ideal budget depends on your industry, goals, competition, and margins. But with the right framework, you can calculate a starting point that makes sense for your business.
This guide walks through PPC budget calculation methods, provides industry benchmarks, and helps you build a budget that supports your objectives.
Start with data, not arbitrary numbers. These formulas help you calculate realistic budgets based on your goals.
Start with your revenue or lead goal and work backward:
Step 1: Define your target
Step 2: Calculate required conversions If you need 50 new customers and your lead-to-customer rate is 20%, you need 250 leads.
Step 3: Estimate conversion rate Use historical data or industry averages (typically 2-5% for search ads).
Step 4: Calculate required clicks 250 leads ÷ 5% conversion rate = 5,000 clicks needed
Step 5: Apply average CPC 5,000 clicks × $3.00 average CPC = $15,000 monthly budget
Monthly Budget = (Target Conversions ÷ Conversion Rate) × Average CPC
Or expressed differently:
Monthly Budget = Target Clicks × Average CPC
| Variable | Value | Calculation |
|---|---|---|
| Monthly lead goal | 100 leads | Starting point |
| Expected conversion rate | 4% | Based on industry data |
| Required clicks | 2,500 | 100 ÷ 0.04 |
| Industry average CPC | $4.00 | Research-based estimate |
| Monthly budget | $10,000 | 2,500 × $4.00 |
Smart Bidding requires 15-30 conversions monthly to function effectively. If your average CPC is $5 and conversion rate is 5%, you need 300-600 clicks monthly to hit 30 conversions.
That translates to $1,500-$3,000 monthly minimum for automated bidding to work. Below this threshold, use manual bidding strategies until you build conversion history.
What do others in your industry spend? Use these 2026 benchmarks as reference points.
Median CPCs vary dramatically by industry:
| Industry | CPC Range | Median CPC |
|---|---|---|
| Logistics/Transportation | $10-$80+ | $20-$25 |
| Real Estate | $10-$100+ | $25-$40 |
| Healthcare/Medical | $5-$600+ | $25-$40 |
| Hospitality/Restaurants | $25-$175+ | $55-$70 |
| Home Services (HVAC, Plumbing) | $20-$250+ | $75-$100 |
| Heavy Equipment | $40-$350+ | $80-$100 |
| Manufacturing | $40-$220+ | $85-$100 |
| B2B Professional Services | $50-$200+ | $90-$110 |
| SaaS | $100-$850+ | $250-$300 |
| Higher Education | $150-$650+ | $300-$350 |
| Insurance | $500-$1,900 | $900-$1,100 |
Key performance metrics to compare against:
Different objectives require different budget approaches.
For B2B or service businesses focused on leads:
Key metrics:
Budget formula: Budget = Target Leads × Target CPL
Example: 50 leads × $75 CPL = $3,750 monthly budget
Considerations:
For online stores focused on sales:
Key metrics:
Budget formula: Budget = Revenue Target ÷ Target ROAS
Example: $50,000 revenue target ÷ 4:1 ROAS = $12,500 monthly budget
Considerations:
For visibility and reach objectives:
Key metrics:
Budget approach: Allocate percentage of overall marketing budget (typically 10-20%) for awareness campaigns. Focus on CPM (cost per thousand impressions) rather than CPC.
Considerations:
Use this step-by-step calculation to determine your budget:
| Input | Your Value | Notes |
|---|---|---|
| Monthly conversion goal | ___ | Leads, sales, or actions |
| Historical conversion rate | ___% | Use 3% if unknown |
| Industry average CPC | $___ | See benchmarks above |
| Target CPA (if known) | $___ | What can you afford per conversion? |
Required Clicks = Monthly Goal ÷ Conversion Rate
Example: 50 conversions ÷ 3% = 1,667 clicks
Monthly Budget = Required Clicks × Average CPC
Example: 1,667 clicks × $4.00 = $6,668
Check that budget supports at least 15-30 monthly conversions for automated bidding. Adjust goals or budget if needed.
Total investment should include:
Once you set a budget, optimize how it's spent.
Begin with a testing budget that generates meaningful data (minimum $1,500-$3,000/month). Identify what works, then scale successful campaigns while pausing underperformers.
On high-traffic days, Google can spend up to double your daily budget. Monthly caps prevent overspending, but monitor daily performance to ensure budget distributes effectively.
If campaigns frequently show "Limited by budget," you're missing opportunities. Either increase budget or narrow targeting to match available spend with highest-value opportunities.
Don't put all budget in one platform. Consider:
Test allocation and shift based on performance data.
Budget needs fluctuate throughout the year:
Before spending, know your minimum acceptable return:
Breakeven ROAS = 1 ÷ Profit Margin
Campaigns should exceed breakeven ROAS to be profitable.
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