"How much should we spend on Google Ads?" is usually the first question a small business owner asks us, and it's a fair one. Nobody wants to throw money at a platform and hope for the best. The honest answer is that there's no magic number, but there is a simple, sensible way to work out a Google Ads budget that suits your business, your goals and your cash flow.
Here's the approach we use with small businesses across Australia, plus the hidden costs and common mistakes worth knowing about before you set your first daily budget.
How Google Ads budgets actually work
Before picking a number, it helps to understand how Google spends your money. On Search campaigns you pay when someone clicks your ad, not when it's shown. You set an average daily budget for each campaign, and Google uses that to pace your spend across the month.
A couple of details catch people out:
Daily spend can go over on busy days. Google says your spend on any single day can be up to two times your average daily budget. It balances out on quieter days.
Your monthly spend is capped. Google won't charge you more than your average daily budget multiplied by 30.4 (the average number of days in a month) for that campaign. So a $50 daily budget means a maximum of $1,520 a month.
GST is added on top. Australian advertisers are billed by Google Australia, which charges 10% GST on advertising, so factor that into your numbers.
There's no official minimum spend, which is great for flexibility but also makes it easy to set a budget that's too small to tell you anything useful.
Work out your Google Ads budget backwards from your goals
Rather than starting with "what can we afford?", start with "what is a new customer worth to us?". Working backwards gives you a budget grounded in your own numbers instead of a guess.
Step 1: Know what a customer is worth
Look at your average sale, your profit margin and how often customers come back. A one-off $150 job is very different from a client who books every month for two years. This tells you how much you can comfortably spend to win a customer and still make money.
Step 2: Estimate your cost per click
Google's free Keyword Planner shows a "top of page bid" range for keywords in your chosen location, based on what advertisers have bid over the last 30 days. It's an estimate rather than a price list, but it gives you a realistic starting point. Costs vary a lot between industries and suburbs, so check the keywords your customers would actually type, like "dentist Robina" rather than just "dentist".
Step 3: Estimate how many clicks turn into leads
If you already have website data, use it. If not, be conservative with your assumptions and plan to replace them with real numbers within the first month or two.
Step 4: Do the maths
Here's a simple example with made-up numbers. Say clicks for your main keywords cost around $5, and about 1 in 20 visitors makes an enquiry. That's roughly $100 per lead. If you close half of your leads, each new customer costs around $200 in ad spend. If a customer is worth $1,000 to you, that's a healthy return. If they're worth $180, you'll need to improve your conversion rate or rethink the offer before scaling up.
From there, decide how many leads you want each month and multiply. Ten leads at $100 each is a $1,000 monthly ad budget, or roughly $33 a day.
Budget enough to get real data
One of the most common mistakes we see is a budget so small that the campaign never gathers enough information to improve. If your daily budget only buys a handful of clicks, it can take months to learn which keywords and ads actually bring in customers.
Google's automated bidding strategies also go through a learning period. Google says this can take up to around 50 conversion events or three conversion cycles, depending on how much conversion data the campaign has. A tiny budget stretches that learning out, which means slower and patchier results.
Our rule of thumb: it's better to run one focused campaign properly than several underfunded ones. Pick your most profitable service and your core service area, and put your budget there first.
Costs to plan for beyond ad spend
Your ad budget is what you pay Google, but it isn't the whole picture. When planning, think about:
Management. Whether you run it yourself or work with an agency, someone needs time to research keywords, write ads, add negative keywords and review results each week.
Your landing page. Clicks are wasted if the page is slow, confusing or hard to use on a phone. Sometimes the best investment is fixing the page before adding more budget.
Conversion tracking. Without tracking calls, forms and bookings, you can't tell which keywords are paying off. Setting it up properly is non-negotiable.
When to increase (or pause) your budget
Give a new campaign enough time to settle before making big calls. We cover realistic timeframes in our post on how long it takes to see results from digital advertising.
Once you have a few weeks of reliable data, it's time to review. Consider increasing your budget when your cost per lead is within your target and Google reports you're losing impressions because of budget. Hold off or pull back when leads are coming in above your target cost, when most of your spend is going on irrelevant search terms, or when your team can't keep up with the enquiries you already have.
Increase in steady steps rather than doubling overnight, and watch your cost per lead as you go. If you're weighing up whether search is the right channel at all, our guide to Meta Ads vs Google Ads can help.
FAQ
What is the minimum budget for Google Ads in Australia?
Google doesn't set a minimum. You choose your own average daily budget and can change or pause it at any time. The real question is whether your budget buys enough clicks each month to generate leads and useful data.
Is Google Ads worth it for a small business?
It can be, especially for businesses that people actively search for, like trades, clinics and local services. It works best when your tracking, landing page and offer are in good shape and your cost per customer is comfortably below what a customer is worth.
Should I set a daily or monthly budget?
Google Ads campaigns use an average daily budget, but it's helpful to think monthly. Decide what you're comfortable spending in a month, divide it by 30.4 and use that as your daily budget, remembering GST is added on top.
Let's find the right budget for your business
Setting a Google Ads budget gets much easier once you know your numbers, and you don't have to work them out alone. We're a boutique paid ads agency on the Gold Coast, and we love helping small businesses spend smarter, not just more. Take a look at our packages, or book a free discovery call and we'll chat through your goals and a budget that makes sense for you.
