Ad ROI CalculatorHow to calculate an ad budget from a goal
Ad budget = Target sales ÷ Conversion rate × CPCFor 200 sales, with 2.5% of clicks buying and a click costing 0.80: 200 ÷ 0.025 = 8,000 clicks. 8,000 × 0.80 = 6,400. Each sale costs 6,400 ÷ 200 = 32 in ads.
For leads and customers, go back through the funnel
Leads = Customers ÷ Close rate · Clicks = Leads ÷ Lead CVR · Budget = Clicks × CPCFor 50 new customers, with 20% of leads becoming customers, 5% of clicks becoming leads and a 2.00 CPC: 50 ÷ 0.2 = 250 leads. 250 ÷ 0.05 = 5,000 clicks. 5,000 × 2.00 = 10,000. That is a cost per lead of 40 and a cost per customer of 200.
Check what you can afford
A budget that reaches the goal can still lose money. On a single order, you can spend up to the gross profit that order brings:
Break-even cost per sale = Average order value × Gross marginIn the sales example the average order is 75. With a 40% margin, each order brings 30 in gross profit. The plan pays 32 per sale, so every sale loses 2 unless the customer buys again. To fix that, lower the CPC, raise the conversion rate or raise the order value. The profit goal planner starts from the profit you want and gives the budget that delivers it.
FAQ
How much should I spend on ads?
Start from the result you need, not from a round number. Ad budget = target sales ÷ conversion rate × cost per click. For 200 sales at a 2.5% conversion rate and a 0.80 CPC: 200 ÷ 0.025 = 8,000 clicks, × 0.80 = 6,400.
How do I calculate the budget for a leads or customers goal?
Go back through the funnel. Customers ÷ close rate = leads needed. Leads ÷ lead conversion rate = clicks needed. Clicks × CPC = budget. For 50 customers at a 20% close rate, 5% lead conversion and a 2.00 CPC: 250 leads, 5,000 clicks, a budget of 10,000.
How much can I afford to pay per sale?
On a single order, up to the gross profit that order brings: average order value × gross margin. With a 75 average order and a 40% margin, a cost per sale above 30 loses money unless customers buy again.
Where do I get the CPC and conversion rate?
Best from your own history: CPC from your ad account, conversion rate from your analytics, close rate from your CRM. For a new campaign, Google Ads Keyword Planner shows bid ranges for keywords; treat any estimate as a starting point and update the plan after the first week of data.