The budget formula
- Customers neededHow many new customers do you want each month?
- Leads neededDivide by the share of leads that become customers.
- Clicks neededDivide by the share of clicks that become leads.
- BudgetMultiply clicks by the average cost per click.
For example, 10 customers a month at a 25% close rate means 40 leads. At a 10% conversion rate that is 400 clicks. At $6 a click, the budget is $2,400.
Check it against profit
The budget only makes sense if customers are worth more than they cost. Using the same example, $2,400 for 10 customers is $240 per customer. If an average customer brings $1,500 in profit over time, that is a strong return. If they bring $200, it is a loss.
What changes the budget
| Factor | Raises the budget | Lowers the budget |
|---|---|---|
| Competition | Many bidders in your area | Few local competitors |
| Landing page | Weak page, low conversion rate | Strong page with clear proof |
| Sales follow-up | Slow callbacks, few leads close | Fast follow-up, high close rate |
Adjust with real data
Your first budget rests on estimates. After a month or two, replace them with your real click prices, conversion rate and close rate. Budgets should then follow results, growing where cost per customer is good and shrinking where it is not.
Good example. A med spa recalculates its budget quarterly from real numbers and moves money toward the treatments with the lowest cost per booking.
Bad example. A med spa keeps the same budget for two years without ever checking which treatments its ads actually sell.
Read how much PPC costs for a small business. Our PPC management builds budgets from your numbers, not guesses.