Key facts
- Google bills against a monthly spending limit equal to the average daily budget times 30.4, so a monthly figure has to be entered as a daily one: divide your monthly number by 30.4.
- The Search lost impression share (budget) column in Google Ads shows the share of eligible searches your ads missed because the budget ran out. It is the clearest sign that a bigger budget would buy more of the same demand.
- Keyword Planner's top-of-page bid ranges are Google's own estimate of what a click costs in your area, and they are the right starting number for a budget calculation.
- A budget is only useful if the business can answer the phone. Leads that go to voicemail or wait a day for a reply cost the same as leads that close.
- Automated bidding needs a steady stream of conversions each month to learn from. A budget that produces only a few leads a month leaves it guessing, and results swing from week to week.
Start with a customer, not a budget
The wrong way to set a monthly budget is to pick a round number that feels safe. The right way is to work back from a customer.
Write down four numbers from your own business: what a new customer is worth to you (first sale, or first year if they come back), how many new customers you want each month, how many leads it takes to win one, and roughly what share of visitors to your best page become a lead.
Now multiply. Say you want five customers, you close one lead in four, and one visitor in twenty fills the form. That is 20 leads and 400 clicks. If Keyword Planner shows clicks in your area at around $5, that is about $2,000 a month. Change any input and the budget changes with it. That is the point: the number comes from your business, not from a guess.
Check it against the market
Keyword Planner's top-of-page bid ranges tell you what a click costs for each search in your area. If the math above produces $500 a month but clicks in your industry cost $40, the budget buys about a dozen clicks, which is not a test of anything. Either narrow the campaign until the budget covers enough clicks for one focused service, or accept a higher budget to reach the goal.
Also look at your own capacity. Twenty leads a month is pointless if two people can only return calls on Fridays. Leads that wait a day go cold. Set the goal to what you can answer within the hour, then set the budget to reach that goal.
The ceiling: cash, fees, and time
Commit for three months. The first month calibrates: real click costs, real conversion rate, real cost per lead. Months two and three are where changes based on those numbers start paying. A budget you cannot sustain for that long is a budget you will cut before it works.
Management costs extra. SearchPod's fee is 10% of the budget, never less than $600 a month, with nothing added on top of the spend. Under $6,000 a month in ad spend, the fee is a flat $600; above it, the fee grows with the budget. Whatever agency you use, put the fee and the ad spend on separate lines and judge cost per lead on the total.
Google bills against a monthly spending limit equal to your average daily budget times 30.4. Enter your monthly figure divided by 30.4 as the daily budget, and the month will land where you planned.
Adjust it month by month
At the end of each month, look at three numbers: cost per lead, the share of leads that became customers, and Search lost impression share (budget). If cost per lead is acceptable and lost impression share is high, the budget is the cap and raising it buys more of the same. If cost per lead is too high, fix the campaign first: search terms, landing page, location, hours. If lost impression share is low, more budget will not buy more clicks; growth has to come from new keywords, new areas, or a second channel.
Raise or lower in steps and give each change a few weeks. If you would like the calculation done with your own numbers, SearchPod sends a free proposal within one business day.
Related questions
Google sets no minimum; you can run a campaign on a few dollars a day. The practical minimum is the amount that buys enough clicks to produce leads regularly in your market, and that depends on what clicks cost. In cheap markets a few hundred dollars a month can work for one focused service. In expensive markets, such as legal or home services in big cities, the same money buys only a handful of clicks.
A percentage is a rough starting point when you have no data, but it ignores what clicks cost and what a customer is worth. Two businesses with the same revenue can need very different budgets. Use the customer math instead: customers wanted, leads needed, clicks needed, cost per click. Revisit the percentage after three months as a sanity check, not a rule.
Only while there is demand left to buy. Search lost impression share (budget) shows how much of the available searches you miss because the budget runs out. When that number is high and cost per lead is good, more budget buys more leads. When it is low, the demand is already covered and extra money goes to weaker searches at a higher cost per lead. Growth then comes from new keywords or areas.
Give the most to the campaign with the best cost per lead and clear intent, usually your core service search campaign. Give brand searches a small budget of their own so they are never crowded out. Fund broader campaigns, such as Performance Max, only after the core campaign is limited by budget. Keep the total in line with the customer math, and review the split monthly.
No. The ad budget goes to Google for clicks; the management fee pays the people running the account. SearchPod bills 10% of the budget, with a floor of $600 a month and nothing added to the spend, so a $3,000 budget costs $3,000 to Google and $600 to us. When comparing agencies, ask for both figures separately and compare on cost per lead including the fee.
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