More enquiries can make an advertising campaign feel promising. The next question is natural: if we spend more, will we get more of what is working?
Possibly. Before increasing a Google Ads budget, I would want to know what a new customer can cost and what has actually happened to the enquiries already received. A low cost per click answers neither question.
How much can you spend to win a new customer?
Start with what is left from a sale after paying to deliver the service or product. Decide what you need to keep for other costs, risk and profit. What remains can go towards advertising. If you assume repeat purchases, check how long customers actually stay.
This calculation helps you decide what the ads can cost. It does not show the whole business’s profitability. Your time, sales work, administration, refunds and capacity also matter. Count the same kinds of costs when comparing periods.
A fictional example: what do the numbers tell you?
Every figure here is fictional, not a client result or recommended benchmark. Suppose a service leaves SEK 3,000 per new customer after variable delivery costs. The business wants to retain SEK 2,000 for other costs, risk and profit. That leaves at most SEK 1,000 of advertising spend per new customer under these assumptions.
Also suppose one in four enquiries from potential customers leads to a paying customer. Each of those enquiries can then cost at most SEK 250 in ads on average: SEK 1,000 divided by four. That is not a limit for every button click or form event. It applies to enquiries about the right service and assumes one in four actually buys.
Now suppose you spend SEK 2,000 on ads and receive eight enquiries about a service you offer. That is SEK 250 per enquiry. If one person buys, ad spend per customer is SEK 2,000. If two buy, it is SEK 1,000. The same ad spend can give you different reasons to increase or hold the budget. Other business costs are not included in these calculations.
| What happened? | Ad spend per customer | What should you check? |
|---|---|---|
| One person bought | SEK 2,000 | The cost exceeds the example’s limit. Check costs and sales before increasing spend. |
| Two people bought | SEK 1,000 | The cost is at the limit. Check what you can afford before testing more. |
| People have not decided | Cannot calculate the final figure yet | Follow up and keep a set spending limit. Do not count ongoing conversations as completed sales. |
My decision using the example’s numbers
If only one of the eight people has bought, ad spend is SEK 2,000 per customer. The limit we calculated was SEK 1,000. I would therefore not increase the budget. First I would follow up on the other enquiries and check the costs. If everyone has decided and the same high cost keeps recurring, the ads or sales process need attention before a larger test.
If two people have bought, the cost is SEK 1,000 per customer, exactly at the limit. I still would not increase spend just because eight enquiries look promising. I would keep the agreed spending limit while checking delivery costs and available capacity. A small bounded test may make sense once those figures leave room. Two sales do not establish that a higher budget will achieve the same result.
Check which enquiries became sales
Do not count an ongoing conversation as a completed sale. If a customer needs time to decide, allow for that before calculating ad spend per new customer. The ad report may show an enquiry while the sale is still uncertain. Both records can be right, but they tell you different things.
I would write down who asked for a service we offer, who received a reply and who actually bought. You do not need a big system to start. Decide what you mean by an enquiry and a customer so that you compare the same things next time.
More spending may not produce the same result
Ads working at today’s budget does not mean every extra krona will bring the same return. Google says Ad Rank depends on factors including bids, quality and what happens in the ad auction. Clicks bought later may therefore cost a different amount and come from different people.
If you want to try a higher budget, decide how much extra you can spend and when you will review it. No percentage increase suits every business. The test needs to fit the cost you can accept and the work the business can deliver.
Increase, hold or reduce the budget?
- A small increase may make sense if you know which enquiries become sales, what it costs to win a customer and that you can deliver more work. Check that measurement works too. Write down the new spending limit and review date before starting.
- Hold the budget if customers have not decided yet or you have too few enquiries to judge the result. Follow up on those already received before deciding whether the ads work.
- Fix the problem or reduce ad spend if most enquiries concern work you do not offer, messages do not arrive or customers cost too much to win. Start with the cause. A bigger budget will not fix a broken form.
Decide what to check before increasing spend
Write down how much the test can spend, how long it will run and what you want to find out. Decide what you will count, such as enquiries about the right service and paying customers. When will you review it, and what will you do if the cost is too high? Those answers are more useful than simply saying you want to grow.
Want to go through the numbers together? Bring the costs, what people are asking for and which enquiries became customers. I can help identify what to check before changing your ads. The first conversation is free. We agree the work and fee before starting; advertising spend is separate.