How Much Should I Spend on Google Ads? A Small Business Budgeting Guide for 2026

"How much should I be spending on Google Ads?" is the question we hear more than almost any other from Australian small business owners. And it is one of the most frustrating questions to answer — because the honest answer is: it depends. But that is not helpful on its own. So in this guide, we are going to give you a genuine framework for setting a Google Ads budget that is tied to your actual revenue goals, not just a round number someone in a suit told you sounded right.

The good news is that Google Ads does not require a massive budget to work. The bad news is that a budget that is too small will actively mislead you — you will run a campaign, see poor results, and conclude that Google Ads doesn't work for your business, when the real issue was that the campaign never had enough data to optimise. Getting the budget right is not just a financial decision. It is the difference between a campaign that compounds and a campaign that flatlines.

Why Most Budget Advice Is Wrong

Search "how much should I spend on Google Ads" and you will find a dozen articles telling you to "start with $10–$20 a day" or "spend at least $1,000 a month." These figures are not wrong, exactly — but they are disconnected from the only number that actually matters: your Cost Per Acquisition (CPA), and what a customer is worth to your business.

An emergency plumber in Sydney and a yoga studio in Geelong are both "small businesses." But the plumber's average job is worth $800 and a customer books once or twice a year. The yoga studio's average client is worth $60 a month for two years. Their budgets, their bidding strategies, and their definition of "ROI" are completely different. Generic budget advice ignores this entirely.

According to WordStream's Google Ads Industry Benchmarks, the average cost per click across all industries sits between $2 and $5 — but in Australia's competitive service industries, CPCs can range from $3 for a local café to $45+ for a personal injury lawyer. Before you set a budget, you need to understand where your industry sits.

Step 1: Work Backwards from What a Customer Is Worth

The most robust way to set a Google Ads budget is to reverse-engineer it from your customer lifetime value (CLV) and your conversion rate. Here is the formula:

1. What is a customer worth to you? Think about the full value — not just the first transaction, but repeat purchases and referrals over a 12-month period.
2. What is your website's conversion rate? If you are unsure, assume 2–3% as a starting benchmark. (If you have a well-optimised website and Google Business Profile, you may be closer to 5%.)
3. What is the maximum you are willing to pay per lead? A common rule of thumb is 10–20% of the customer lifetime value. If a client is worth $1,000 to you over 12 months, you should be comfortable paying up to $100–$200 per lead.
4. Work out how many clicks you need. If your landing page converts at 3% and you need 10 leads, you need approximately 333 clicks. At $5 per click, that is $1,665 in ad spend.

This is a dramatically more useful framework than "spend $500 a month and see what happens."

Australian Industry Benchmarks: What Are Others Spending?

Based on current market data, here are realistic monthly Google Ads budgets for common Australian small business categories in 2026:

• Local trades (plumber, electrician, tiler): $1,500–$3,500/month. High intent, high CPC, but high job values justify the spend.
• Professional services (accountant, lawyer, mortgage broker): $2,000–$5,000/month. Very competitive CPCs but strong client lifetime values.
• Health and wellness (physio, dentist, GP): $1,000–$2,500/month. Moderate competition, strong repeat business.
• Retail (local shops, e-commerce): $500–$2,000/month. Lower CPCs but also lower margins — volume matters here.
• Hospitality (café, restaurant, catering): $500–$1,500/month. Often better served by Google Maps and GBP investment before heavy paid spend.
• Education and training: $1,000–$3,000/month. High intent keywords, strong conversion when landing pages are right.

These are starting ranges, not targets. Your goal should always be to reduce cost per acquisition over time as you accumulate data — not to spend more.

Step 2: Understand the Minimum Viable Budget

One of the most damaging mistakes a small business can make with Google Ads is underfunding a campaign to the point where Google's Smart Bidding algorithm never receives enough conversion data to optimise. Google's own guidance on Smart Bidding suggests a campaign needs at least 30–50 conversions per month for automated bidding to work reliably.

If your target CPA is $80 and you need 30 conversions for the algorithm to function, your theoretical minimum monthly spend is $2,400. Run it at $600 and the algorithm is flying blind — which means you are too.

This is not an argument for overspending. It is an argument for focusing your budget. Better to run one well-funded campaign targeting your single highest-value service than to spread $500 across five campaigns that all starve.

The One-Campaign Rule for Tight Budgets

If your monthly budget is under $1,500, concentrate all of it on your single most profitable service and your highest-intent keyword group. For a plumber in Brisbane, that might mean running only on "emergency plumber Brisbane" and nothing else. This delivers the clearest data, the fastest learning, and the most defensible ROI. Once that campaign is profitable, you add the next. This approach is the backbone of what we teach in our Digital Marketing Deluxe Course.

Step 3: Factor In the Quality Score Effect

Your budget is only half the equation. Two advertisers spending $50 a day will get dramatically different results if one has a high Quality Score and one does not. Quality Score — Google's rating of your ad's relevance and landing page quality — directly affects how much you pay per click. A Quality Score of 8/10 versus 4/10 on the same keyword can mean you are paying 50% less for the same position.

This means investing time in your landing pages (we like to use a landing page dedicated to the keyword we are chasing) and ad relevance will deliver a better return than simply increasing your budget. The cheapest way to get more from Google Ads is to make your existing spend more efficient — not to spend more.

Step 4: Set Up Conversion Tracking Before You Spend a Dollar

This sounds obvious. Astonishingly, Google's own research has found that a significant proportion of advertisers are running campaigns with no conversion tracking at all. Without it, you cannot calculate your CPA, you cannot judge whether your budget is working, and you are handing Google permission to optimise for the wrong outcomes.

Before launching any campaign, set up conversion tracking for every meaningful action: form submissions, phone calls, purchases, and chat initiations. If you are using Google Tag Manager alongside Google Analytics, this process is significantly faster. No tracking, no budget — that is the rule.

Step 5: Build in a Testing Budget

In the first 60–90 days of any new campaign, you are buying data as much as you are buying clicks. Expect your CPA to be higher than steady-state as the algorithm learns which searches, times of day, and audience segments convert best for your business. Budget for this explicitly — do not judge a campaign in its first month by the same standards you would use at month six.

A practical approach: allocate 20% of your monthly budget to testing new ad variants, keywords, and audience signals. The other 80% runs your proven performers. This stops you from stagnating on a setup that worked 12 months ago but has since been overtaken by competitors.

What About Agencies? When to DIY vs. Delegate

A Google Ads agency in Australia typically charges $1,000–$2,500 per month in management fees on top of your ad spend. For a business spending $1,500/month in ads, the management fee represents a 67–167% overhead. That is a meaningful number. (Thats a polite way of saying a waste of money!)

The case for an agency is strongest when your ad spend is high (above $5,000/month), your campaigns are complex (multiple product lines, national targeting), or your time is more valuable than the fee. For most small businesses spending under $3,000/month, a well-trained owner running their own campaigns will outperform a mid-tier agency that is managing 40 other clients simultaneously — because you understand your business, your customers, and your margins better than anyone.

According to HubSpot's Marketing Statistics, businesses that train their own marketing capabilities see significantly higher long-term ROI than those that perpetually outsource. The skill compounds; the agency fee does not.

A Simple Budget Planning Worksheet

Use this framework before setting your monthly budget:

1. What is one customer worth to my business over 12 months? $___
2. What is my maximum acceptable cost per lead? (10–20% of above) $___
3. What is my estimated landing page conversion rate? ___%
4. How many leads do I need per month? ___
5. Estimated clicks needed (leads ÷ conversion rate): ___
6. Estimated average CPC for my keywords: $___
7. Minimum monthly budget (clicks × CPC): $___

If the resulting number is higher than you can currently afford, do not halve the budget and run a thin campaign. Instead, narrow your targeting to your single highest-value service and your tightest geographic area. A lean, well-funded campaign beats a broad, underfunded one every time.

The Bottom Line for Australian Small Business

There is no universal answer to "how much should I spend on Google Ads" — but there is a universal method: start from what a customer is worth, work backwards to a CPA target, and fund your campaigns adequately for the algorithm to learn. Budget under that minimum and you are not saving money; you are wasting it.

Google Ads remains one of the highest-ROI marketing channels available to Australian small businesses when set up correctly. The platform rewards relevance, patience, and discipline — not just budget size. Understanding the mechanics, not just the dollar amount, is what separates the businesses that profit from those that give up after 30 days.