How much should I spend on ads?

Start from what you can afford to pay for one customer, not from a percentage of revenue. Take the gross profit a customer leaves behind, divide by the return you want, and that is your ceiling per customer. Multiply by how many customers you can actually serve and you have a budget grounded in your own economics.

What is a good cost per lead?

There is no universal answer, and anyone who gives you one is guessing about your business. What matters is the most you can pay per lead and still hit your target, which is your allowable cost per customer multiplied by the share of leads that become customers. This tool gives you that figure to go and check against your market.

Should I use revenue or profit to work out customer value?

Gross profit, always. Revenue-based lifetime value is the most common way a business overestimates what it can afford to spend, often by roughly double. A customer who pays you ten thousand dollars at a forty percent margin is worth four thousand to your acquisition budget, not ten.

What if my staff are paid whether they are busy or not?

Then filling an empty slot costs you almost nothing extra, and you can afford to pay far more for a customer than average margin suggests. This calculator asks about that directly, because it is the difference between two businesses with identical price lists having very different ceilings.

Ad Budget Calculator

Find out what you can afford to pay for a lead, and for a customer.

Two numbers come out of this: the most you can pay to win a customer, and the most you can pay for a lead. Both worked out from your own economics, in gross profit rather than revenue, so you can go and check them against what leads actually cost in your market.

Before you start

Built for owners about to start, or restart, paid ads.

In about three minutes you get the most you can pay to win a customer, what that means per lead, and where your real ceiling sits. Estimates are fine. If a number is a guess, say so, because a number you cannot state is one your marketing team cannot optimize toward either, and a team guessing at the target often optimizes against it: chasing efficiency when you wanted growth, or the reverse.

What you walk away with

The most you can pay to win a customer and still hit the return you want
The most you can pay for a lead, which is the number you take away and check against your market
Which changes to your pricing, retention, or sales would let you afford to pay more than that

Have these handy if you can

What a customer pays you
Roughly what it costs you to deliver
How many more customers you could serve

No exact figures needed. Directional numbers still produce a useful read.

What a customer is worth

Everything else on this page is built from this answer.

Do you already know your customer lifetime value?

How do customers pay you?

This shapes the right questions to ask about customer value.

What does a customer pay you, one time?

What it costs you to deliver

The highest-leverage question here. Getting it wrong moves every number below.

The value you just entered, what does it represent?

Give us your variable costs whichever way you know them. Fill in one, skip the other.

Contribution margin %

The share of each sale left after variable costs.

Or, variable cost per unit

What each sale costs you in materials, fulfillment, or contractor time.

Serving one more customer

When you serve one more customer, what actually costs you more?

Your funnel

Estimates are fine. Mark anything you cannot state as Not sure.

Have you closed a paying customer yet?

Lead to qualified rate

Of the leads you get, what share are genuinely qualified?

Qualified to customer close rate

Of your qualified leads, what share become paying customers?

What do you pay for a lead today?

Optional. If you have run ads before, this is what we check the plan against.

Cash and timing

Optional, but the cash question changes what you can actually afford.

What monthly budget are you considering?

Optional. Only used to work out how much cash this ties up.

Of what a new customer pays you, how much gross profit lands in the first thirty days?

How long is your sales cycle?

Typical time from first contact to a closed, paid customer.

Sales cycle length (months)

What return do you want on acquisition?

See your diagnosis

Last one. We read your numbers back to you and tell you what they mean.

Fill in enough above for us to work out what a customer costs you and what one is worth, and this unlocks. You do not need every field, and Not sure is a valid answer to most of them.

Your results build here as you fill in the form.

Locked · What one customer is worth to you

Unlock with what a customer pays you and what it costs you to deliver.

Locked · The most you can pay for a customer

Unlock with what a customer is worth and the return you want.

Locked · The most you can pay for a lead

Unlock by adding your lead to qualified and qualified to customer rates.

Your verdict

The verdict unlocks once we know what a customer is worth to you.

What this assumes

Customer value is counted only as far out as your horizon. Money arriving later is real but cannot fund acquisition today.
Every lever below moves one thing and holds everything else still. In practice they interact, so treat each as the effect of that change on its own.

None of these make the answer wrong, they make it a model. Directional inputs give you a directional answer, which is enough to decide what to do next.

Common questions

How much should I spend on ads?: Start from what you can afford to pay for one customer, not from a percentage of revenue. Take the gross profit a customer leaves behind, divide by the return you want, and that is your ceiling per customer. Multiply by how many customers you can actually serve and you have a budget grounded in your own economics.
What is a good cost per lead?: There is no universal answer, and anyone who gives you one is guessing about your business. What matters is the most you can pay per lead and still hit your target, which is your allowable cost per customer multiplied by the share of leads that become customers. This tool gives you that figure to go and check against your market.
Should I use revenue or profit to work out customer value?: Gross profit, always. Revenue-based lifetime value is the most common way a business overestimates what it can afford to spend, often by roughly double. A customer who pays you ten thousand dollars at a forty percent margin is worth four thousand to your acquisition budget, not ten.
What if my staff are paid whether they are busy or not?: Then filling an empty slot costs you almost nothing extra, and you can afford to pay far more for a customer than average margin suggests. This calculator asks about that directly, because it is the difference between two businesses with identical price lists having very different ceilings.

Not sure what your numbers are telling you?

Walk through your real marketing math with us. We will show you what the budget needs to be and what has to be true for it to work.

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