What can you afford to pay for a customer?

Ad budget calculator

There is no universal right number for an ad budget. The right number is worked backward from what a customer is worth to you. Put in three figures you already know, and the tool shows the most you can spend to land one and still come out ahead.

The calculator

Average sale

What one customer pays you, on average.

Profit margin

The share of a sale you keep after your costs.

Close rate

Of the leads you get, the share that become paying customers.

$200

the most you can pay to win a customer and still break even

$200

profit per customer

$50

break-even per lead

$25

target per lead

Every customer is worth $200 in profit. So you can pay up to $50 for a lead and still break even, or aim for $25 to keep half the profit.

How to read it

A "lead" is one person raising a hand: a phone call, a form, a message. Not every lead buys, which is why the close rate matters. If one in four leads becomes a customer, four leads carry the cost of one sale, so a lead is worth a quarter of what a customer is worth.

The break-even figure is a ceiling, not a target. Paying it exactly means the ad spend eats all the profit on that sale. The target figure keeps half the profit for you and treats the other half as the cost of buying the customer. Set your own split, but leave yourself real margin.

Where the budget comes from

Your monthly budget is this number times how many customers you want and can actually reach in your area. The first dollars buy the cheapest, highest-intent clicks. As you spend more, you reach less ready buyers and the cost per customer climbs, so you scale up to the point where the next customer costs more than they are worth, then stop.

The catch: you have to measure it

These numbers only pay off if you can tell which customers came from the ads. Most local businesses run spend they cannot trace, judging it on clicks or impressions instead of booked jobs. Clicks are not customers. The fix is conversion tracking that connects a call or a form back to the ad that drove it, so you can put your real cost per customer next to the figures above and see whether the spend is working or leaking.

The full method, budget and measurement together, is in how much a local business should spend on Google Ads. The argument for putting the dollar where someone is already searching is in intent versus interruption advertising.

If you want the real cost per customer worked out for your business, and the tracking put in place to prove it, that is the work. Start a conversation at kyle@jensenoperations.com.