Free tool · 6 numbers · 30 seconds

Marketing budget calculator: how much should you spend on ads?

Enter your product price, what it costs you and how many sales you want. Add your cost per click and conversion rate, or keep $1 and 1%. See what each customer costs you, what you can afford, and the monthly ad budget you need.

Your product
What the customer pays
$
What it costs you, with shipping and packaging
$
Orders from new customers
Your ads
What you pay for one visitor. $1 is a common start
$
Visitors who buy. 1% is a common start
%
Your customers
1 = they buy once. Many stores see 1.2–1.5
×

Every business starts somewhere

Losing money today doesn't mean it can't work.

Most stores start with numbers like these: clicks that cost $1, 1 in 100 visitors buying, and ads that cost more than a sale brings in. That's not a reason to stop. It's a list of numbers to improve. None of the steps below is a big jump on its own, but together they can turn a loss into a profit. Move the sliders above and watch it happen.

StepCost per customerProfit, first ordersProfit with repeat orders
Your budget at different conversion rates
Conversion rateCost per customerAd budget / monthProfit, first ordersProfit with repeat orders

Tap a row to try that conversion rate.

What to do nextfrom your numbers

    How to work out your marketing budget in 4 steps

    1. Find what one sale leaves you. Price, minus what the product costs you with shipping, minus about 3% in payment fees. A $120 product that costs you $40 leaves about $76. That's the most you can pay to get a customer. Aim for about two-thirds, $51, so a third of every sale stays as profit.

    2. Work out what a customer costs you. You pay for clicks, but only some visitors buy.

    Cost per customer = cost per click ÷ conversion rate

    At $1 a click and a 1% conversion rate you pay for 100 clicks to get one buyer: $100. That's more than the $76 a sale leaves you.

    3. Find the conversion rate you need. Cost per click ÷ what you can pay: $1 ÷ $76 = 1.3% to break even, $1 ÷ $51 = 2% to keep a healthy profit.

    4. Multiply out the budget.

    Marketing budget = sales you want ÷ conversion rate × cost per click

    Visitors for 300 sales at 1%300 ÷ 1%30,000
    Budget at $1 a click30,000 × $1$30,000 / month
    Profit at 1%300 × ($76.40 − $100)−$7,080 / month
    Budget at 2% conversion15,000 × $1$15,000 / month
    Profit at 2%300 × ($76.40 − $50)$7,920 / month

    Same product, same ads, same 300 sales. Going from 1% to 2% conversion turns a $7,080 monthly loss into a $7,920 profit, on half the budget. Profit here is before your other costs: team, apps, rent. To see every cost line, use the Shopify profit calculator.

    What about LTV (repeat orders)?

    Some customers come back. If an average customer orders 1.5 times in a year, they leave you 1.5 × $76 = $115 before ads, not $76. That's their lifetime value (LTV), and it's the most you could pay for them over a year.

    Most you can pay over 12 months = what one sale leaves × orders per customer

    At $1 a click and 1% conversion, a $100 customer loses $24 on the first order and earns it back on the repeat order: about $4,380 profit over the year from 300 customers. That works only if they really come back, and you pay for the ads today while repeat orders come months later. That's why the calculator shows both: profit on first orders (your cash now) and profit with repeat orders (the year).

    Be careful: your industry may cost more

    A common range for online stores selling through Meta, Google and TikTok is a customer cost of 30–40% of the price. Many industries pay more: expensive products, competitive niches like beauty or supplements, and anything people think about for weeks before they buy. Clicks cost more there too. Start with $1 and 1% if you have no data, then replace them with your real numbers from your ad account and store analytics after the first weeks.

    If the cost per customer is more than one sale leaves you, ads lose money at this price. Raise the conversion rate, raise the price, or sell more per order. The product pricing calculator shows the price you need.

    Marketing budget as a percentage of revenue

    The classic advice is 7–10% of revenue. That fits a shop where customers walk in. An online store that sells through ads usually spends 15–35%, because ads are its shop window. Start from your own price, click cost and conversion rate, not a percentage.

    The cheapest way to get customers for less

    Doubling your conversion rate halves what every customer costs, with the same ads. That's why the best-run brands improve and A/B test the pages their ads land on before they spend more.

    Frequently asked questions

    How do I calculate my marketing budget?

    Divide the sales you want by your conversion rate to get the visitors you need, then multiply by your cost per click. 300 sales at a 1% conversion rate need 30,000 visitors; at $1 a click that is a $30,000 budget. Each customer costs you $1 ÷ 1% = $100.

    How do I calculate cost per customer from CPC and conversion rate?

    Cost per customer (CAC) = cost per click ÷ conversion rate. At $1 a click and 1% conversion, you pay for 100 clicks to get one buyer: $100. At 2% conversion it halves to $50. That is why conversion rate matters as much as your ad costs.

    How much can I pay to get one customer?

    At most what one sale leaves you: the price, minus what the product costs you (with shipping), minus payment fees. A $120 product that costs you $40 leaves about $76 after fees. Pay $76 for a customer and you make nothing. Aim for about two-thirds of it ($51) so a third stays as profit.

    What conversion rate do I need to make money from ads?

    Divide your cost per click by what you can pay for a customer. At $1 a click and $76 left per sale, you need at least 1.3% just to break even, and about 2% to keep a healthy profit. Below that, more ad spend means more loss.

    Should I count customer lifetime value (LTV) in my ad budget?

    Yes, but carefully. If customers order 1.5 times a year, each one leaves you 1.5 × what one sale leaves, so you can pay more to get them. But you pay for ads today and repeat orders come later, and they only come if you work for them (email, SMS, a good product). Plan your budget so the first order covers most of the cost, and count repeat orders as profit on top.

    What is a normal customer acquisition cost for e-commerce?

    For online stores selling through Meta, Google and TikTok ads, a customer often costs 30–40% of the price of what they buy: $36–$48 on a $120 product. Some industries pay more, for example expensive, competitive or considered purchases. Use it as a reality check against your own numbers.

    What percentage of revenue should go to marketing?

    The classic advice for small businesses is 7–10% of revenue. Online stores that sell through ads usually spend more, often 15–35%, because ads are how customers find them. The calculator shows your number from your price, your click cost and your conversion rate.

    More free calculators

    See all calculators →
    Am I making money?Shopify profit calculatorWhat price should I charge?Product pricing calculatorWhy aren't my ads profitable?ROAS calculatorIs my conversion rate good enough?Break-even conversion rate calculator

    How to unlock 25% more revenue from your existing traffic.

    Watch the free training

    A planning tool, not financial or tax advice. Payment fees are counted at 3%. $1 per click, 1% conversion and a customer cost of 30–40% of the price are starting points, not promises: replace them with your own results. Profit is before your other costs and tax. Nothing you enter leaves your browser.