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Ad Budget Calculator: How Much Should You Spend on Ads?

Start from the revenue you want and get the monthly ad budget it takes, or start from a budget and see the leads, customers and revenue it should produce. Add an optional channel split. Free, instant and no email required.

Your goal

The numbers filled in are example values, replace with yours. They are not industry averages.

Use your own account data if you have it.

Results per month

Recommended monthly ad budget

$7,500

Range $6,000 to $9,000 if cost per lead is 20% lower or higher.

Customers needed

20

Leads needed

100

Expected ROAS

6.67x

revenue goal ÷ budget

Cost per customer

$375

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How to set an advertising budget

The most reliable way to set an ad budget is to work back from the revenue you need, using your own numbers:

Customers needed = Revenue goal ÷ Average sale value (rounded up)
Leads needed = Customers needed ÷ Close rate (rounded up)
Ad budget = Leads needed × Cost per lead
ROAS = Revenue ÷ Ad budget
Cost per customer = Ad budget ÷ Customers

Example: a $50,000 monthly goal with a $2,500 average sale needs 20 customers. At a 20% close rate that is 100 leads, and at $75 per lead the budget is $7,500, a ROAS of about 6.7x. These are example numbers; use your own.

Cost per lead is the number you are least sure of, so the calculator also shows the budget if it comes in 20% lower or higher. Plan for the higher figure until you have a few months of data.

How to estimate your cost per lead

  • Use your own account data. If you have run ads before, divide spend by leads for the last 60 to 90 days, for the campaigns that sell the service you are planning for.
  • Run a short test. If you have no data, run a small test campaign for a few weeks on one channel and one offer, then divide spend by leads.
  • Count real leads only. Leave out spam, duplicates and people outside your service area, or your cost per lead will look better than it is.
  • Do not rely on generic averages. Costs vary widely by industry, location, offer, season and how well the account is run.

Signs your budget is too low or too high

Too low

  • Campaigns run out of budget early in the day, so you miss people searching later.
  • Too few conversions for the platform's automated bidding to learn from.
  • Results swing wildly from week to week because the numbers are so small.
  • The calculator's budget for your goal is well above what you are spending.

Too high

  • Cost per customer keeps rising as you add spend, while customers barely increase.
  • Your team cannot follow up with every lead quickly, so close rate drops.
  • Ads are showing for loosely related searches or audiences to spend the money.
  • ROAS is below your break-even point and not improving.

Related

Frequently asked questions

How much should a small business spend on ads?

Work backwards from what you need to sell. Divide your monthly revenue goal by your average sale to get customers needed, divide that by your close rate to get leads needed, then multiply by your cost per lead. That is the budget your goal requires. If it is more than you can afford, lower the goal for now or work on close rate and average sale first.

Where do I get my cost per lead if I have never run ads?

Run a short, small test campaign on the channel you plan to use, aimed at the service and area you actually sell, and divide spend by the leads it produces. Cost per lead varies widely by industry, location, offer and season, so a generic average is a poor guide. Update the calculator once you have your own numbers.

What is a good ROAS?

It depends on your margins. ROAS is revenue divided by ad spend, so a business with high gross margins can be profitable at a lower ROAS than one with thin margins. Work out your break-even ROAS as 1 divided by your gross margin (for example, a 50% margin breaks even at 2x) and aim above it.

Should I split my budget between Google Ads and Meta Ads?

Many businesses use both, but the right split depends on how your customers buy. Search ads reach people already looking for what you sell; social ads reach people before they search. Start where your buyers are, measure cost per customer for each channel, and move budget to whichever produces customers more cheaply for you.

Does this calculator store my numbers?

No. The calculations run in your browser. Your inputs appear only in the page address so you can share or bookmark the results. Nothing is sent to us unless you choose to email yourself the results.

Embed this tool

Free to use on your own site or blog. Copy the code below; please keep the credit line under the frame. Preview the embed.

<iframe src="https://www.omnivancemedia.com/embed/tools/ad-budget-calculator" title="Ad Budget Calculator by Omnivance Media" width="100%" height="1050" style="border:0;max-width:760px" loading="lazy"></iframe>
<p>Calculator by <a href="https://www.omnivancemedia.com/tools/ad-budget-calculator">Omnivance Media</a></p>