B2B Google Ads: UK Budget Guide (Stop Wasting Money!)

One of the first questions any UK founder asks when they think about Google Ads is, "How much should we spend?" It's a fair question, but it's also completely the wrong one to ask. There is no magic number. £1,000 a month isn't a magic starting point. Neither is £5,000. Anyone who gives you a number without first asking about your business model is just guessing.

The truth is, your B2B ad budget isn't a number you pick out of thin air. It's the end result of some simple, but crucial, business maths. It's an output, not an input. So, instead of asking how much to spend, you should be asking a much more powerful question: "How much can my business profitably afford to pay to acquire a new customer?"

Once you know that number, everything else falls into place. This guide will walk you through the exact framework we use to answer that question. We'll ditch the guesswork and build a budget based on your actual business economics. It's a process that separates the businesses that burn through cash from those that build a predictable engine for growth. Lets get into it.

Why your 'Ideal Customer Profile' is probably useless

Before we even touch Google Ads, we need to sort out who you're actually targeting. Most businesses I see have an Ideal Customer Profile (ICP) that looks something like this: "We sell to CMOs at tech companies in London with 50-200 employees."

This is utterly useless. It’s a demographic, not a profile. It tells you nothing about their motivations, their problems, or why they would ever give you a single pound of their budget. It leads to generic ads with weak messaging that get ignored. You end up bidding on broad, expensive keywords that attract researchers and tyre-kickers, not buyers.

To stop wasting money, you have to define your customer by their pain. By their specific, urgent, and expensive nightmare. Your Head of Sales isn't just a job title; he's a leader who's just had his top three reps threaten to quit because their CRM is a mess and lead quality is tanking. Your target isn't "a construction firm in Manchester." It's a project manager terrified of a delayed project triggering six-figure penalty clauses because his team can't get the right materials on site.

Your ICP isn't a person; it's a problem state. Once you've identified that nightmare, you've found the core of your entire advertising strategy. You'll know exactly what they're typing into Google at 10 PM on a Sunday night. Those are your keywords. Everything else is a distraction. If you can't articulate that specific pain, you have no business spending money on ads just yet.

How to Calculate Your UK Customer Lifetime Value (LTV)

Right, now for the maths. The most important number you need to know before you spend a penny on ads is your Customer Lifetime Value (LTV). This tells you how much gross margin a typical customer will generate for your business over their entire relationship with you. Knowing this figure is the difference between gambling and making a calculated investment.

The calculation is pretty straightforward. You just need three bits of information:

1. Average Revenue Per Account (ARPA): How much revenue does one customer bring in each month, on average? Be honest here.
2. Gross Margin %: What is your profit margin on that revenue after accounting for the cost of goods sold (COGS) or the direct costs of servicing that client? For a SaaS business, this might be 80-90%. For a service business, it might be lower.
3. Monthly Churn Rate: What percentage of your customers do you lose each month? (Calculated as: Customers who cancelled this month / Total customers at start of month).

The formula is:

LTV = (ARPA * Gross Margin %) / Monthly Churn Rate

Let's take a hypothetical London-based B2B SaaS company.
-> Their ARPA is £400/month.
-> Their Gross Margin is 80% (0.80).
-> Their Monthly Churn is 5% (0.05).

LTV = (£400 * 0.80) / 0.05
LTV = £320 / 0.05
LTV = £6,400

This means every new customer is worth, on average, £6,400 in gross margin to the business. This number is your north star. It dictates how much you can afford to spend to get that customer. To get a better handle on your own numbers, I've built a simple calculator for you below.

From LTV to a Real Budget: How Much to Pay for a Lead

Knowing your LTV is powerful. Now you can use it to determine your target Customer Acquisition Cost (CAC). A healthy, sustainable B2B business model often aims for an LTV to CAC ratio of 3:1 or better. This means for every £3 of lifetime margin you generate, you can spend up to £1 to acquire the customer.

Using our example LTV of £6,400:

Max Affordable CAC = LTV / 3
Max Affordable CAC = £6,400 / 3 = ~£2,133

So, this business can afford to spend up to £2,133 to acquire one new customer and remain very healthy. This is your budget ceiling for a single sale. But people don't buy directly from a Google Ad in B2B. They become a lead first. So we need to work one step further back to find our target Cost Per Lead (CPL).

You need to know your lead-to-customer conversion rate. Let's say your sales team converts 1 in every 10 qualified leads into a paying customer (a 10% conversion rate).

Max Affordable CPL = Max CAC * Lead-to-Customer Rate
Max Affordable CPL = £2,133 * 10% = £213

There it is. That's your number. The business can afford to pay up to £213 for a single qualified lead from Google Ads. This isn't a guess; it's a number rooted in the financial reality of your business. Now, instead of worrying about a high CPL, you know exactly what a 'good' CPL looks like for you. A £150 lead isn't expensive; it's a bargain.

So, What Do B2B Leads Actually Cost on Google Ads in the UK?

Now that you know what you *can* afford to pay, we can look at what you should *expect* to pay. B2B keywords in the UK are not cheap, especially in competitive sectors like finance, law, and enterprise software. A general click might cost a few quid, but a high-intent, bottom-of-funnel keyword can easily cost £10, £20, or even £50+ per click.

I've run many campaigns for B2B clients across various sectors. For instance, in one campaign for a medical job matching SaaS client using Google Ads, we managed to reduce their Cost Per User Acquisition from an initial £100 down to just £7 after significant optimisation. Of course, this is an exceptional result and not a typical starting point. Costs can vary widely depending on the industry and competition, but this shows what's possible with a focused strategy.

Landing page conversion rates for a high-friction B2B offer (like a demo request or consultation booking) are typically in the 2-5% range. So if you're paying £10 per click, with a 4% conversion rate, your CPL would be £250 (£10 / 0.04). You can see how quickly the costs add up and why knowing your max CPL is so important.

Here's a rough guide to what we see for typical Cost Per Lead (CPL) in various UK B2B sectors. These are just ballpark figures, your milage may vary depending on how niche your service is and how good your campaigns are.

Building Your First UK Google Ads Budget: A Phased Approach

Okay, we've done the maths and looked at the benchmarks. Now, how do you actually set a budget and get started? I recommend a phased approach. Don't go all-in from day one.

Phase 1: The Data-Gathering Budget (£1,500 - £3,000 per month)

Your first one to two months are not about making a profit. They are about buying data. Your goal is to find out what your actual CPL is on Google Ads. You need enough budget to get a statistically significant number of clicks to see what converts.

• Goal: Get 10-20 conversions to establish a reliable baseline CPL.
• Focus: Target only your most high-intent, "nightmare-solving" keywords. Think "emergency X software" or "specialist Y consultant near me", not "what is Y". Be ruthless. You can find more advice on this in our guide on how to stop wasting money on the wrong keywords.
• Spend: A budget in this range should give you enough clicks in most UK B2B niches to see if your offer and landing page are working. If you can't get a single lead with this spend, you have a problem with your offer, not your budget.

Phase 2: The Validation Budget (CPL x Lead Goal)

Once you have a CPL you're confident in (e.g., £150 per lead), you can switch to a goal-oriented budget. This is where you start treating it like a proper marketing channel.

• Goal: Generate a specific number of leads per month for your sales team.
• Formula: Monthly Budget = Target Number of Leads * Your Baseline CPL.
• Example: If you need 20 qualified leads a month and your CPL is £150, your budget is 20 * £150 = £3,000 per month. Now you have a predictable, scalable model.

Phase 3: The Scaling Budget (Reinvesting for Growth)

Once your sales team is closing deals and you can prove a positive Return On Ad Spend (ROAS), it's time to scale. Scaling isn't just about increasing the number in the "daily budget" box.

• Goal: Increase lead volume while maintaining a profitable CPL/CAC.
• Actions: This is where you start expanding to slightly broader keywords, testing new ad copy, optimising landing pages, and potentially layering in other platforms. For many UK businesses, this is the point where we see them really start to scale their Google Ads effectively.
• Budget: Your budget becomes a function of your growth goals and cash flow. The ceiling is no longer your starting budget, but your LTV:CAC ratio.

Why Your First Budget Will Probably Fail (And How to Fix It)

I need to be brutally honest. Even with this framework, your first attempt might not produce the results you want. When a campaign underperforms, founders often blame the budget ("we're not spending enough!"). 9 times out of 10, that's not the real issue. The problem usually lies in one of two places.

1. Your Offer is Weak. The single biggest point of failure in B2B advertising is the offer on the landing page. The "Request a Demo" button is arrogant. It asks your busy, high-value prospect to commit to a sales call before you've provided any value. It's high friction and low reward. If you're getting clicks but no leads, this is almost certainly the problem. We often find that a lack of conversions isn't about the traffic, it's about a fundamental mismatch between the ad and the landing page experience, something we cover in our guide on what to do when Google Ads leads don't convert.

Instead, you must offer a moment of undeniable value. A free, automated audit tool. A valuable industry report. A short, interactive calculator. For our agency, it's a free, no-obligation strategy session where we audit campaigns. You must solve a small problem for free to earn the right to solve the bigger one.

2. Your Targeting is Wrong. You might be targeting keywords that are too broad, too informational, or simply not aligned with the "nightmare" your customer is trying to solve. Someone searching for "what is project management software" is not ready to buy. Someone searching for "best Smartsheet alternative for construction firms" is. You must focus your limited test budget on these high-intent, bottom-of-funnel keywords first.

Getting this right is the core of running successful B2B lead generation campaigns on Google. It requires discipline and a deep understanding of your customer's journey.

My Main Recommendations for You

To wrap this all up, here is a clear plan of action. Don't just read this; go and do it. This is the path to building a predictable lead generation machine with Google Ads.

As you can see, determining your Google Ads budget is a strategic process, not a simple question of picking a number. It requires a solid understanding of your business's finances and a disciplined approach to testing and validation.

Navigating this, especially in the competitive UK B2B market, can be a challenge. It takes expertise to select the right keywords, structure campaigns effectively, and create landing pages and offers that actually convert. If you'd like an expert eye on your strategy to ensure you're setting yourself up for success from day one, consider booking a free, no-obligation consultation with us. We can walk through your LTV and CAC calculations together and build a realistic, data-driven plan for growth.