How to work out an ad budget from a goal
Many budget questions start with the money: "We have $1,000, what will it bring?" Planning often works better the other way round. Start with what the ads should bring each month, a number of sales or leads, and walk the funnel backwards to the money it takes. Three numbers carry the whole calculation: your goal, your conversion rate (the share of clicks that become a sale or lead) and the average price of a click.
The calculator rounds clicks and impressions up to whole numbers, so the plan never falls a fraction short of the goal. Divide the result by the conversions and you get the cost per sale or lead, the CPA, which is the number to hold against what a sale is worth.
A worked example
An online shop wants 50 sales a month from search ads. In past campaigns, 2.5% of ad clicks ended in a sale, clicks cost $1.20 on average and 4% of impressions were clicked.
- Clicks: 50 ÷ 0.025 = 2,000 clicks.
- Budget: 2,000 × $1.20 = $2,400.00 a month, or $78.95 a day.
- Impressions: 2,000 ÷ 0.04 = 50,000.
- Cost per sale: $2,400.00 ÷ 50 = $48.00.
With an average order of $80, the 50 sales bring $4,000.00 in revenue, a ROAS of 1.67 (revenue ÷ ad spend). Whether that pays off depends on your margin: if a $80 order leaves less than $48.00 of gross profit, each sale loses money on the first purchase. The CPA calculator works out the break-even cost per sale from order value and margin.
Planning from a revenue goal
If the goal is money rather than a count, the average order value turns it into sales: $10,000 ÷ $80 = 125, rounded up to 125 sales. From there the funnel is the same. At the example's 2.5% and $1.20, that takes 5,000 clicks and $6,000.00 a month. Use revenue without tax and after typical returns, or the plan will look better than the month that follows.
Buying impressions: CPM and CTR
Some campaigns are bought by the thousand impressions instead of by the click. Then the click price is not fixed; it follows from the CPM and the click-through rate. Choose "CPM and CTR" in the tool and it adds one step to the funnel:
For the same 50 sales at 2.5%, a $8.00 CPM and a 1% CTR need 200,000 impressions and $1,600.00 a month. Each click then costs $0.80: CPM ÷ (CTR × 10). A better ad that doubles the CTR halves the price of a click, which is why ad creative matters as much as the bid. The CPM calculator and the CTR calculator work out these numbers from a campaign that ran.
From a budget to results
Switch "Start from" to "A budget" to run the funnel forwards. $1,000 at $1.20 a click buys 833 clicks, rounded down, and at 2.5% those bring about 20.83 sales or leads, a cost of $48.02 each. The sales stay an average with decimals on purpose: a month will bring a whole number, but which one varies.
Why the conversion rate matters most
Clicks needed is the goal divided by the conversion rate, so the budget moves in inverse proportion to it. Here is the example goal of 50 sales at $1.20 per click, at a few example rates (not benchmarks):
| Conversion rate | Clicks needed | Monthly budget | Cost per sale |
|---|---|---|---|
| 1% | 5,000 | $6,000.00 | $120.00 |
| 2% | 2,500 | $3,000.00 | $60.00 |
| 2.5% | 2,000 | $2,400.00 | $48.00 |
| 4% | 1,250 | $1,500.00 | $30.00 |
| 5% | 1,000 | $1,200.00 | $24.00 |
Going from 1% to 2% halves the budget. So a better landing page can save as much as a lower bid, and a rate from the wrong traffic throws the whole plan off. Use a rate from the same kind of traffic you plan to buy. The conversion rate calculator works out the rate from visits and sales.
Monthly and daily budgets
Ad platforms usually ask for a daily budget. In Google Ads, the average daily budget is the amount you set per campaign per day, and Google Ads Help says you will not be charged more than 30.4 times it in a month for most campaigns, the average number of days in a month. On a single day, spending can reach up to twice the daily budget (Google Ads Help: About average daily budgets). So divide a monthly plan by 30.4 for the daily setting, which the tool shows below the result. Other platforms have their own rules, so check theirs.
Common mistakes
- Borrowed benchmarks. An "average CPC" or "average conversion rate" from someone else's market says little about yours. Plan with your own numbers, or run a test month first.
- Mixed conversions. A rate that counts newsletter sign-ups cannot plan sales. Use the conversion your goal is about.
- Forgetting the margin. A budget that reaches the goal can still lose money. Compare the cost per sale with the gross profit of a sale.
- Planning once. Prices and rates move. Rerun the plan each month with last month's numbers.
How to use the ad budget calculator
- 1Choose whether to start from a goal or from a budget. For a goal, pick sales or leads, or revenue, and enter the monthly number.
- 2Enter your conversion rate and how you buy traffic: an average cost per click, or a CPM with a click-through rate.
- 3Add an average order value to see revenue and ROAS. Read the monthly and daily budget, the clicks and impressions, and the cost per sale or lead.
- 4Copy the result, or a link that keeps your numbers, and rerun the plan when your rates change.
Frequently asked questions
How do I work out an ad budget from a sales goal?
Work backwards through the funnel. Divide the sales or leads you want by your conversion rate to get the clicks, then multiply the clicks by your average cost per click. 50 sales at a 2.5% conversion rate need 2,000 clicks, and at $1.20 a click that is a budget of $2,400.00 a month.
How much should I spend on ads per month?
There is no right amount for everyone. A budget follows from what you want the ads to bring and what that costs in your market: your goal, your conversion rate and your cost per click. This calculator turns those three numbers into a monthly budget. Then check that the cost per sale it shows is less than what a sale earns you.
What conversion rate and CPC should I use?
Your own, from an ad account or analytics for the same kind of traffic. We do not list industry averages, because they vary with the market, the offer, the page and the time, and a wrong benchmark gives a wrong budget. Without data, run a small test campaign first, then plan with the real numbers.
How do I turn a monthly budget into a daily budget?
Divide it by 30.4. Google Ads Help explains that you will not be charged more than 30.4 times your average daily budget in a month for most campaigns, the average number of days in a month. A $2,400 month is $78.95 a day.
Can I plan with CPM instead of CPC?
Yes. Choose "CPM and CTR" and enter your cost per 1,000 impressions and your click-through rate. The calculator works out the impressions the clicks need and what they cost. A $8.00 CPM at a 1% CTR works out to $0.80 per click, because CPC = CPM ÷ (CTR × 10) with CTR in percent.
Why does the calculator round up the clicks?
Because you cannot buy part of a click, and a plan that falls short by a fraction would miss the goal. When you start from a goal, the clicks and impressions are rounded up to whole numbers. When you start from a budget, the clicks are rounded down, and the sales or leads stay an average, like 20.8.
Is the result a guarantee?
No. It is a plan built on averages. Prices change from auction to auction and conversion rates from week to week, so real months land above or below it. Check your actual cost per sale after a few weeks and adjust the budget with the new numbers.