How much should a small business spend on Google Ads?

Start with one number

What is a customer worth? Average revenue multiplied by gross margin, multiplied by how many times they buy. That is your contribution per customer.

Then work backwards

• A customer worth $2,000 at 40% margin contributes $800
• If one in four enquiries closes, an enquiry is worth about $200
• Paying $60 for an enquiry is a good trade. Paying $150 might still be, if you want volume

The practical minimum

Below roughly $600–$1,000 a month in media, most local accounts cannot gather enough data to optimise. Clicks in Calgary run about $4–$20 depending on category. At $300 a month you might buy thirty clicks, which teaches you nothing.

If your budget is smaller than that

Put it into your Google Business Profile, reviews and website instead. Those produce enquiries without a per-click cost, and they keep working when you stop paying.

Management is separate

Google bills you directly for the media. A management fee is what an agency charges to run the account. Ask whether that fee is fixed or a percentage of spend — a percentage means your agency earns more when you spend more.