There is no correct Google Ads budget that applies to every business, and anyone who quotes one without asking about your margins is guessing. A better approach is to work backwards from what a new customer is worth to you, then spend enough to learn something useful.
Work back from customer value
Start with what an average customer is worth and how much of that you can afford to spend to win one. Then estimate how many leads you need to win a customer. That gives you a target cost per lead. If a customer is worth a lot and you close one enquiry in four, you can afford a much higher cost per lead than a business selling a small one-off item.
Spend enough to learn
A budget that buys only a handful of clicks a day takes a very long time to tell you anything. You need enough clicks on each keyword and ad to see patterns. If money is tight, narrow the campaign instead of spreading it thin: fewer keywords, a smaller area, limited hours. A focused small budget teaches you more than a scattered one.
How Google spends a daily budget
You set an average daily budget for each campaign. Google may spend more than that on busy days and less on quiet ones, while keeping the month within your daily amount multiplied by the average number of days in a month. Knowing this avoids alarm when one day's spend looks high. Judge spending by the week or month.
Where budgets leak
Money usually disappears in predictable places: broad keywords that match irrelevant searches, no negative keywords, ads shown outside your service area, clicks sent to a slow or generic page and campaigns with no conversion tracking. Fixing these often improves results more than raising the budget. Plug the leaks before you turn up the tap.
When to increase
Raise the budget when a campaign is producing leads at a cost you are happy with and is being limited by budget rather than by search volume. Increase gradually and watch whether cost per lead holds. If results slip, find out why before spending more. Scaling a campaign that is not yet working only makes the loss larger.
When you plan the budget, allow for managing the account and producing the ads as well as the ad spend itself. If you would like help working out a sensible starting budget for your business, book a free consultation.