I remember one of my first conversations with a new client. I asked him what his average customer was worth, how much revenue a typical job brought in. He grouchily asked me why I needed to know that; I wasn't his accountant or anything! 

He was right, I wasn't his accountant (thank god). But I did need to know these numbers, and here's why.

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The numbers you need to know before you run Google Ads

Google Ads costs money every time someone clicks your ad. Though it would be nice, not everyone who clicks on your ad becomes a lead; you might get people browsing, people not ready to buy, people who click and then decide not to reach out, for whatever reason, and so on.

And then when you DO get leads, not every one becomes a customer, either. Again, some are shopping around, they receive your quote, and decide against working with you.

So before you start spending on Google Ads, you need to know whether the maths works in your favour.

Here's a simple example:

Let's say you're a service business with a $2,000/month ad budget.

Every time someone clicks on your ad, it costs you about $5. This means you get around 400 clicks a month (because $2,000/$5 = 400).

If 8% of those clicks turn into leads, that's 32 leads (because 0.08 x 400 = 32), at a cost of roughly $62.50 per lead.

If 30% of your leads become paying customers, that's roughly 10 new customers (because 0.3 x 32 = 9.6).

And if each customer is worth $3,000 to your business, that's $30,000 in return on $2,000 spent (because $3,000 x 10 = $30,000). That's something worth investing in!

But on the flip side, say each customer is worth $150, that same $2,000 in spend suddenly doesn't stack up. Because, 10 customers x $150 = $1,500. You're actually getting less back.

And without running these numbers first, you'd have no idea.

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What to do with your numbers

Google Ads doesn't automatically know whether a lead turned into a paying customer, or how much that customer was worth to you, as we've just figured out using the sums above. That would require a more advanced setup that connects your CRM or sales process back to your ad account, and most small businesses aren't there yet.

So to judge whether your ads are actually profitable, we use the closest metric that DOES show in a Google Ads account: your Cost Per Lead.

Google can track how much you've spent on ads, and how many leads you got from that spend (provided your conversion tracking is set up properly!).

Then, using a simple calculator and your own business numbers, you work out what Cost Per Lead is actually profitable for you. And that becomes the goal you track inside Google Ads.

When your Cost Per Lead stays under your target, you know you're in profitable territory. When it creeps above it, you know exactly where to start fixing things.

You're not guessing if your ads are "working", you know whether or not it's even viable to promote a particular service at all in the first place through Google Ads, and you can also make decisions about what to do inside your account based on real data!

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Run your numbers now

Plug your own figures into the calculator below. It'll tell you whether Google Ads is likely to be viable for your business, and what your target Cost Per Lead should be.

If you're working through setting up Google Ads yourself, the Google Ads calculator is explained in more detail and with examples in Step 4 of my Setup System. For a limited time, you can get started with a $250 discount, use the code LAUNCH250 at check-out to redeem!