How much should you spend on ads? A practical way to set your budget

"How much should I spend on ads?" is one of the first questions every business asks, and most answers are useless — either a random number or a vague "it depends." It does depend, but on things you can actually calculate. Here's a practical way to set a budget grounded in your own economics rather than guesswork.

Start from what a customer is worth, not what you can afford

The wrong starting point is "I can spare €500 a month." The right one is "a customer is worth X to me, so I can afford to pay up to Y to acquire one." Once you know what you can profitably pay per customer, budget becomes a maths problem, not a gut feeling.

Two numbers anchor everything: your average order value (or better, customer lifetime value) and your profit margin. Together they tell you how much profit a new customer brings — and therefore how much you can spend to win one.

Work out your maximum cost per acquisition

If your average order is €100 at a 40% margin, each order yields €40 of gross profit. That €40 is the ceiling on what you could pay to acquire the sale and still break even. In practice you want to keep some of it as profit, so you might set a target cost per acquisition (CPA) of, say, €20 — leaving €20 profit per order while still buying growth.

Max CPA ≈ profit per sale. Target CPA = the slice of that profit you're willing to reinvest in growth. The gap between them is your margin of safety.

Turn target CPA into a budget

Now budget flows from your goals. Want 50 new customers a month at a €20 target CPA? That's a €1,000 monthly ad budget. Want 100? That's €2,000. Instead of plucking a figure from the air, you're sizing spend to the number of customers you want and what each is worth. This also keeps expectations honest — if you want 100 customers but only budget for 20, the maths says so upfront.

Respect the minimum viable budget

There's a floor below which ads simply can't work well. The platforms need enough conversion data to optimise, and spreading a tiny budget across keywords, audiences and placements starves every one of them. As a rough guide, paid media management tends to make sense from around 200,000 HUF per month per platform — below that, there's rarely enough data or volume for management to pay off. If your numbers don't reach the floor, it's often better to concentrate spend on one channel and one tight objective.

Budget for learning, then scale what works

Your first month or two is partly an investment in data. Early performance won't reflect the optimised state, because the platforms — and you — are still learning what converts. Plan for this: start at a level you can sustain through the learning phase, prove the economics, then scale budget into what's working. Marketing is a marathon, not a sprint, and budgets should grow with evidence.

A simple framework

1. Calculate profit per customer (order value × margin, ideally over their lifetime).
2. Set a target CPA below that, keeping a healthy profit slice.
3. Multiply target CPA by your customer goal to get your budget.
4. Check it clears the minimum viable spend for your channel.
5. Fund the learning phase, then scale what proves profitable.

Budgeting this way removes the anxiety. You're not gambling a number — you're investing a calculated amount to buy customers at a price you know you can afford. If you'd like help pressure-testing your figures, that's a natural part of our marketing consulting and Google Ads management.