Google Ads

Google Ads Pricing: How Much Does Google Ads Cost?

Are you contemplating using Google Ads for your business? Or perhaps you are already using Google Ads and you are not sure if you’re using the right budget?

The good news is that you can run a Google Ads campaigns with pretty much any budget. It really depends on your industry and website how much volume you can generate with your budget.

Obviously, the more budget the more volume you would be able to get. The main goal of your Google Ads campaigns should be profitability. Once your campaigns are profitable you can look at scaling your reach. 


What is Cost Per Click?


Cost per click (or CPC) is what you pay on average for a person to click on one of your campaign’s ad.


So, let’s say in a given month you spend $1,000 and received 200 clicks your CPC will be (1,000 divided by 200) $5.

Screenshot of online calculator to calculate CPC.


CPC and PPC (Pay-Per-Click) are used hand-in-hand. Platforms like Google Ads, Bing Ads and Facebook Ads are all using a Pay-Per-Click model, which means all bidding is done based on a cost per click basis.

 

How much does Google Ads cost?


A fair question: how much does Google Ads cost? Truth is that you can use any budget you’re comfortable with.

Your actual budget will depend entirely on your goals.

Every industry has different CPC’s. It really depends on the number of competitors for each keyword and the CPC bids that they put in. To get a better understanding of this, see our previous article about the Quality score and how Google decides the ad ranking.


To get an indication of the CPC’s in your industry, you can use the Google Keyword Planner tool. Just try it. Add some relevant keywords in the “Get search volume and forecasts”:

Screenshot of Google Keyword Planner to use when get an understanding of the Google Ads pricing.

Then, look at the table that appears to see the average CPC’s. Of course, you can set a CPC bid that you’re comfortable with. But this will give you a rough indication of the CPC you can expect to have your ad shown.

Screenshot of average CPC within Google Ads.


How to decide your Google Ads budget


Your Google Ads budget depends on the cost-per-click and how well your website converts. You will have to make a calculation that takes into account the client revenue and conversion rate of your website.

It doesn’t have to be perfect, you will be able to finetune this at any stage.

Have a look at the below example for a commercial lawyer in Sydney:

Example of how to calculate your Google Ads budget.

So you basically want to funnel down your numbers based on the data that is available. If you’re not running any Google Ads yet, this might be rough guesses.

Based on this example data, the lawyer would be able to pay up to $16.50 for a click. If you add this to the data in the Google Keyword Planner tool, you are able to see how much volume you would be able to get for this CPC.

Now, this is just a starting point. Once you have keyword-specific data, you will be able to adjust your calculation on a keyword level and get more advanced.  


Why Cost Per Click doesn’t matter


Unless your campaigns are focussed on just generating a maximum amount of clicks, the cost per click is completely irrelevant for you.


However, most campaigns will be focusing on maximizing conversions. A conversion could be a sale or lead, or any other goal that you want your visitors to complete after clicking on your ad.


So the cost per click that you are paying doesn’t matter at all. It is the cost per conversion that should be the most important metric of your campaign.


For example, if you are reaching your goal of spending a maximum of $100 per conversion, who cares about the cost per click that you are paying?


As part of optimising our PPC campaigns, you want to get fewer clicks that don’t convert and more clicks that DO convert. Makes sense right?


Now, what if those clicks that don’t convert have a lower cost per click than the average of your campaigns. Pausing them will automatically increase the average cost per click of your campaigns. But this is fine, as you are just filtering out irrelevant clicks.


Why you would want to pay more for a click


Now I’m not talking about just spending more money at Google. Increasing your cost per click doesn’t mean you will increase your budget.

In our previous example, we have been filtering out irrelevant clicks. Now, the budget you saved by doing this you want to re-invest into relevant clicks. So to do this, you want to increase the bids of keywords that are converting. This will lead to higher rankings, more clicks from these keywords and more conversions.

Now, it is very unlikely that you will be able to fill the “gap” of clicks that were coming from the irrelevant keywords. However, this is fine as overall you will get more conversions which is the goal of your campaigns.


When optimising a Google Ads campaigns properly, you will notice that over time the number of clicks will reduce and the cost per click will increase. It is the logical outcome of focusing on relevant clicks.


To get more conversions, you want to increase your bids on relevant keywords. This will give you a higher ranking and more clicks, which will automatically lead to more conversions.


Ways to minimise your cost per click regardless


Now, even though I just mentioned that cost per click is irrelevant there are still ways to achieve higher rankings AND reduce your cost per click.

Google is all about relevancy, so the more relevant your ads are, the less you will be paying for a click.

We wrote a great article about the Google Quality Score, Google’s way of indicating how relevant an ad is. Have a read, it will give you a better understanding of how the Quality Score works and gives you tips on how to improve it.

The higher your Quality Score, the lower the cost per click that you will have to pay.

Factors that calculate the Google Quality Score.

However, you will still be re-investing the cost you save by improving your Quality Score. So overall, this might still not lead to a lower average cost per click. 


Conclusion


Cost Per Click is one of the metrics that stands out most when running a PPC campaign. It’s easy to focus on this metric and come to (wrong) conclusions.


However, cost per click is an irrelevant metric when analysing your campaign’s outcome. Each PPC campaign should be data-driven and results driven. The main goal of your campaign is to increase your conversions. Many tactics that are focussed on increasing conversions will decrease the number of clicks and increase your cost per click.


There are certain industries that can pay up to $100 per click via Google Ads. This might seem high to you. However, if they realise a CVR of 20% they end up paying $500 for a lead. Depending on the industry this might be profitable for them.


Your Google Ads budget depends on the cost-per-click and how well your website converts. You will have to make a calculation that takes into account the client revenue and conversion rate of your website. It doesn’t have to be perfect, you will be able to finetune this at any stage.


Google Ads Pricing FAQ

 

How much does Google Ads cost?

Every industry has different CPC’s. It really depends on the number of competitors for each keyword and the CPC bids that they put in. To get an indication of the CPC’s in your industry, you can use the Google Keyword Planner tool.

What is CPC?

Cost per click (or CPC) is what you pay on average for a person to click on one of your campaign’s ad.

How can I reduce my cost-per-click?

Google is all about relevancy, so the more relevant your ads are, the less you will be paying for a click.

How much should I spend on Google Ads?

Your Google Ads budget depends on the cost-per-click and how well your website converts. You will have to make a calculation that takes into account the client revenue and conversion rate of your website. It doesn't have to be perfect, you will be able to finetune this at any stage.

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Jeroen Minks

With over 10 years experience in digital marketing, Jeroen helps businesses to get more results out of their online advertising budgets.