Google Ads Cost Calculator – Shape Your Budget, ROI & More

Do you find yourself asking these common questions:

• How much should I spend on Google ads?
• Am I spending too much or too little?
• If I increase my ad spend by 10%, will I make more money or less?  
• If I improve my conversion rate by just 2%, what will the payoff be? 

The answers to these questions are the difference between a winning ad campaign that pays off month after month – or flushing money straight down the toilet.

Wouldn’t it be great if there was a simple tool that would give you the answers you need? 

If you had a tool like that, you’d know when to dial back a losing campaign while improving your conversion rate. 

At Mediaboom, we get it. It’s our job to get it.

We’ve managed hundreds of Google Ads campaigns for our clients, and each and every one of those clients had questions like yours.

That’s why we created the Google Ads Cost Calculator. 

What is the Google Ads Cost Calculator?

The Google Ads Cost Calculator is a free tool that dynamically calculates the cost and return on investment of Google Ads campaigns based on multiple factors that you input –  including ad spend, average CTR, rate of closing a deal, agency management fees, and more. 

You’ve probably felt the pain of staring helplessly at your ad campaign results and finally just trying “something,” praying that it works, and waiting days or weeks to get a definitive answer. 

Why You Should Use the Google Ads Cost Calculator

Because our paying clients have been so happy with our Google Ads Cost Calculator – and because our future dream clients are clients who understand the true potential and limitations of Google Ads – we decided to make it free to everyone. 

When you download our Google Ads Cost Calculator, you’ll be able to enter real data and calculate the business metrics you need the most, including Gross Revenue, Gross Profit, Return On Ad Spend, and Return On Marketing Investment. 

You’ll also calculate and compare what-if scenarios to determine if any tweaks need to be made to your campaign for the best ROI.

You’ll finally understand where your campaign dollars are going, which campaigns are winners, and which need help to improve ROI.

What Can You Calculate With The Google Ads Cost Calculator?

We created our Google Ads Cost Calculator with the business owner in mind. We made it easy to calculate the results that matter most.

• Number of Sales Per Month – You’ll have an estimate of the number of units you will sell each month as a direct result of your ad campaigns. In this context, a “unit” can be a widget or a service.
  
• Gross Revenue Per Month – The Google Cost calculator will calculate the estimated monthly revenue resulting directly from your Google Ads.
  
• Gross Profit Per Month-  The Google Cost Calculator will calculate your monthly post-marketing gross profit, including the cost of managing your Google ad campaigns.
  
• Return On Ad Spend (ROAS) – Return On Ad Spend is the “magic gumball machine”  number. It tells you how much money you receive (or lose) for every dollar you spend on Google Ads. Any campaign with a ROAS > 1 is a winner, but the higher, the better.
  
  Unlike the Google-centric ROAS reported in your Google ads account, this ROAS calculated by our Google Ads Cost Calculator includes off-Google costs of managing a campaign. If your off-Google ad costs are too high, even though Google is reporting a ROAS > 1, you may still be losing money. 
  
• Return On Marketing Investment (ROMI) – ROMI is a percentage calculated by dividing your total ad spend (including management costs) by your post-marketing gross profit.
  A positive ROMI tells you that the money you’ve spent on Google Ads contributes positively to your gross profits.
  
  

Getting Started with the Google Ads Cost Calculator – Step 1

If you haven’t done so already, download the free Google Ads Cost Calculator from Mediaboom. 

Step 2 – Collect your input data

Collect your initial input data. If you have existing campaigns, this can be your real data. We’ll show you shortly where to find it. If you’re just getting started with Google Ads, you’ll need to make some assumptions (or contact us, and we’ll get you started the right way from day one.) 

Here’s the data you’ll need.

Your Monthly Google Ads Spend

To find your monthly campaign ad spend, sign in to your Google Ads account and click on the “tool” icon and then click billing/Summary. On the resulting page, click on Transactions on the left-hand side. The resulting summary page will include your costs grouped by month.

If you are doing a purely hypothetical scenario, you’ll need to choose an arbitrary but realistic campaign budget.

If you’re entirely in the dark on this, one rule of thumb is a budget of 2X your pre-marketing gross profit per sale per keyword.

For example, if you sell a service for $500 and your cost of providing that service is $200, then your gross profit before marketing costs is $300. If you have five keywords in your hypothetical campaign, you might set your budget to $300 X 5 or $1500 per month.

Remember, this is a what-if calculator. One variable you will surely consider is different budgets. So, don’t get hung up on this. You’ll be able to plug in different budget scenarios and dial in an appropriate target for your business.

Average Cost-Per-Click (CPC)

The average cost per click is calculated by dividing your total cost for that campaign by the number of clicks.

Simplistically speaking, if you spend $100 on a campaign and received 23 clicks, then your Average CPC would be $100/23 or $4.34 per click.

If you have an existing campaign, you can find your average CPC in the column labeled Avg. CPC in campaigns.

Average CPC can vary widely depending on your market segment and geography and competitors placing ads as well.

Furthermore, it will go up and down as Google’s algorithm gets a sense of the match between your ads and your target audience.

Google’s algorithm rewards success. The higher your click-through rate, the better your Google quality score. The better your QS, the lower your CPC will be.

If you are working purely hypothetically, then Google’s free Keyword Planner should be your next stop.

Google Keyword tools are free tools from Google that estimate the volume, cost, and click-through rate for keywords targeted by Google Ads.

You’ll need a Google Ads account, but don’t worry. The account is free.

Once you’ve created an account, select “tools and settings” from the top menu and then “keyword planner.

Once you’re in the Keyword Planner, choose “Get search volume and forecasts.”
Google will prompt you to enter the keyword you have in mind and will return data that looks like this.

You should take these results with a large grain of salt but, if you’re just starting, the Avg. CPC presented in the last column of the second row of data is a good starting point for the average CPC you’ll input into the Google Ads Cost calculator.

PPC Lead Conversion Rate (Conversion Rate)

Your conversion rate (CR) is the percentage of customers who click on your ad and take some action. That action is not necessarily a sale. It could be sharing their contact information, requesting a quote or signing up for a newsletter, basically, any activity that you prompt on the landing page of your site that moves the customer forward on their journey from “information seeker” to “paying customer.”

As for all the data, if you have an existing campaign and you have conversion tracking correctly configured on your site, then your CR is readily available in your campaign data.  Reach out to us if you don’t know how to set up conversion tracking. We’ll be happy to help)

If you’re working with hypotheticals, then return to the data provided by Key Planner. Using the data in the first row, divide the estimated number of conversions by the number of clicks to get your placeholder estimate of the conversion rate.

To provide a reference point, as of the end of 2019, the average PPC conversion rate for search ads across all industries was 3.75%.

Sales Close Rate

Your close rate is based on your own business’s historical performance. It is the percentage of leads converted to sales.

Average Revenue Per Sale

As it sounds, this is specific to your business and is the average sale value for the product or service you are promoting with this ad campaign.

Product Cost

Product cost is your cost of goods sold for your product if selling a physical product, or the cost of services rendered if you sell a service.

Agency Management Fees

This number is your off-Google costs for managing your Google Ads campaign (s).  If you use a 3^rd party, then it is their fees plus any transaction costs. If you handle this in-house, then it’s the salary plus overhead of the staff involved in this function.

Step 3 – Decide which variables you want to test

Once you’ve input the data collected in step 2 into the Google Ads cost calculator, you’ll need to copy that data into scenarios 2 and 3.

Then edit the variable that you want to test in scenarios 2 and 3. The most common variables to test are; monthly budget, CPC, and conversion rate.

If you’re unsure where to start, try varying 10% – 20% up and down from your baseline estimate in scenario 1.

We recommend varying only one factor at a time. If you want to do sensitivity testing around multiple variables, create a separate spreadsheet with the different variables in column one and record the ROAS and ROMI from the Google Ads Cost Calculator for all the different scenarios.

You’re looking for the scenario with the maximum ROAS and ROMI.

Step 4 – Contact our team at Mediaboom to help put your plan into action!

Google ads can be an unlimited source of high-value prospects and new customers, or it can be a bottomless pit you pour money into.

Knowing your Google performance metrics and how they impact your bottom line can make all the difference. 

Stop guessing!

Download the Google Ads Budget Calculator from Mediaboom and take control today!