Paid search test budget
A team tests $3,000 in ads at a $1.80 CPC, 2.4% conversion rate, $89 order value and 62% gross margin.
- Budget: $3,000
- Average CPC: $1.80
- Conversion rate: 2.4%
- Gross margin: 62%
Paid acquisition
Ad Budget Calculator
Estimate clicks, orders, gross revenue and contribution profit from a paid acquisition budget.
Paid acquisition
Ad Budget Calculator
Use this to model small experiments for search, social or sponsor placements before raising the budget.
How to use this calculator
Start with conservative inputs, copy the result, then test a best-case and worst-case version. For production decisions, compare the estimate against actual accounting, analytics and payment data.
Best used for
Use this to plan a small paid acquisition test and see how CPC, conversion rate, order value and margin affect contribution profit.
Formula
Ad budget planning starts with traffic, then moves to orders and contribution profit. The important question is not just how much revenue appears, but whether gross profit covers the media spend.
Formula
Clicks = budget / CPC. Orders = clicks * conversion rate. Contribution = revenue * gross margin - budget.
Example
How to read the result
- Contribution profit above zero means gross profit covers the modeled media spend.
- If contribution is negative, improve conversion rate, AOV or gross margin before scaling.
- A capped first test is safer than assuming platform averages will hold at larger budgets.
Common mistakes
- Judging ads only by revenue without subtracting gross margin and media cost.
- Using platform clicks without checking landing page and purchase conversion.
- Scaling before the first test has enough conversion data.
FAQ
Is ad budget the same as total marketing cost?
No. Ad budget is media spend. Creative, tools, agency fees and team time should be modeled separately if they are material.
Why include gross margin?
Revenue alone can hide losses. Gross margin estimates how much revenue remains to pay for ads after direct costs.
What should I test first?
Start with conservative CPC and conversion assumptions, cap spend, and compare the estimate with actual platform and payment data.
Important limits
- Paid acquisition models can fail quickly if CPC rises or conversion quality drops.
- Start with capped tests before scaling spend.