How do Google Ads Prices Go Into Budgeting?

Let's move on to the budgeting aspect of Google Ads cost. Too frequently, advertisers witness their monthly Google Ads budget being depleted in a matter of days, causing them to feel Google Ads is unaffordable. This isn't always the case; more frequently, it's due to an incorrect understanding of how Google Ads budgeting functions. So let's correct the record. The terms to understand are listed below:

- Budget: The maximum amount you can spend on Google Ads

- Your maximum price for a click on your ad is your bid.

- Spend: The sum Google deducts from your budget when an advertisement takes part in an auction.

- Cost: The actual sum paid for a click on your advertisement.

Google Ads


Daily Average Spending

You will be prompted for a daily budget when you create a campaign in Google Ads. Although there is a shared budget tool, it's recommended to give each campaign its own distinct budget when you first start off. However, the daily spending cap you set does not guarantee Google will spend that much every day. You're providing Google a ballpark figure for how much you want your daily spending to total up to at the end of the month, so it may go over or under that figure on any given day. It brings up financial restrictions.

Spending Caps

Until October 2017, when it revealed it may spend up to 100% more of, or double, your budget, provided it means more clicks or conversions, Google could only spend up to 20% more than your daily average budget in this way. This implies that your daily spending cap is $100 if your daily average budget is $50. You can set a monthly spend limit at the account level if you're not paying for Google Ads via the invoice method, but you will never pay more in a day than your daily spending limit and less in a month than your monthly spending limit (your average daily budget x 30.4).

How to calculate your daily budget on average

Simply divide your campaign's monthly budget by 30.4 to determine your average daily spending limit. How much money should you set aside each month? Depending on:

Your total budget for Google Ads.

The typical cost per click for the search terms you are using (which you can get with Google Keyword Planner or any other keyword research tool).

The significance of that campaign in comparison to your other campaigns.

For instance, you might want to spend more money on Campaign A, which advertises your best-selling product, than on Campaign B, which draws in new customers at the top of the funnel by promoting content.

The budget report stated above also allows you to enter various daily average budget amounts to see how they will affect your monthly spending.

You can see how much of your budget was used up on any given day thanks to the Google Ads budget report.

You can also experiment with various daily budget changes to see how they affect your monthly spending.

Check out our Complete, Digestible Guide to Google Ads Budgets for further assistance with budgeting.

Bidding

Your bid will also determine how much you pay for Google Ads, as we've already explained several times in this tutorial. This is the most you're willing to spend for someone to click on your advertisement. No problem, isn't it? No, as is the case with this post's theme. What you should know is:

You can't make your bids too low even though Quality Score encourages you to pay less for higher positions. You must make sure that your bids are competitively high.

If you manually place your bids, you can specify a separate maximum CPC for each ad group while also placing individual prices for each term.

You can still define maximum bid restrictions for strategies like maximize clicks, target impression share, tCPA, and tROAS if you opt for automated bidding. However, Google may spend more than your maximum CPC for improved CPC.


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