Google Ads Budgets, Explained in Juice-Box Math

By Anthony Cicirello

Saturday morning, sideline, cooler full of juice boxes

I coach my kid’s Saturday soccer. Last week one of the other parents asked me how much they should spend on Google Ads. I grabbed a juice box and did the math right there on the cooler lid.

Here’s the version of that conversation that doesn’t require a juice box.

Start with what a customer is worth

If your average job is $500 and a customer usually comes back twice a year, that customer is worth $1,000 annually. That’s your ceiling for what it makes sense to spend acquiring one.

Now work backwards

If your close rate on leads is 25%, you need four leads to get one customer. If each click costs $8 and one in ten clicks becomes a lead, you need 40 clicks per lead. That’s $320 in ad spend to get one $1,000 customer. That’s money doing push-ups.

But if your close rate drops to 10% because you’re slow to follow up, suddenly you need ten leads per customer, and that same $1,000 customer costs you $3,200 to acquire. That’s money doing push-ups in the wrong direction.

The budget isn’t the problem

Most small businesses don’t have a budget problem, they have a conversion problem dressed up as a budget problem. Fix the close rate first, then scale the spend. The other way around just means losing money faster.

The move:

Calculate your real cost per acquired customer before touching your ad budget. If you don’t know your close rate, that’s the first thing to fix.