Solved: Google Ads Budget in Indianapolis (Find Your ROI)

Hi there,

Thanks for reaching out! Happy to give you some initial thoughts on figuring out a Google Ads budget for your business in Indianapolis. It's a really common question, and honestly, the answer isn't just a simple number. Most people get this wrong and either spend way too much on the wrong things or too little to even see if it's working.

The trick isn't to guess a budget, but to actually work it out backwards based on what you want to achieve. Instead of asking "how much should I spend?", the real question is "how much can I *afford* to spend to get a new customer?". Once you know that, setting a budget becomes a straightforward bit of maths. I'll walk you through how we figure this out.

We'll need to look at this backwards...

Right, so the first mistake most businesses make is they pick a number that 'feels' right. Maybe $500 a month, maybe $1,000. They run ads for a bit, don't see a flood of new business, and conclude "Google Ads don't work". The problem wasn't the platform; it was the lack of a proper strategy. You're trying to win a race without knowing where the finish line is.

We need to flip this on its head. The process should look like this:

1. Business Goal: How many new customers do you actually want each month?
2. Sales Process: How many leads does it take to get one new customer? (Your sales conversion rate).
3. Customer Value: What is a new customer worth to your business over their entire lifetime? (Your LTV).
4. Profitability: Based on LTV, how much can you profitably spend to acquire a new customer? (Your target Customer Acquisition Cost, or CAC).
5. Budget Calculation: Now, you can finally calculate a starting budget. (Leads needed x Cost per Lead = Budget).

See? The budget is the very last thing you figure out, not the first. It's an output of your strategy, not an input. Everything starts with knowing your numbers, and the most important one of all is the Lifetime Value of a customer. Without it, you're flying completely blind and just burning cash.

I'd say you need to know your numbers first: The LTV...

Forget Cost Per Click (CPC) for a minute. Forget impressions. The metric that truly matters for your budget is Customer Lifetime Value (LTV). This is the total profit you expect to make from an average customer over the entire period they do business with you. Why does this matter? Because if you know a customer is worth £10,000 to you in the long run, you'd be a fool to worry about paying £50 or even £100 to get them as a lead.

Most local service businesses drastically underestimate their LTV. They only think about the value of the first job. But what about repeat business? Referrals? Upsells? That all counts. A customer isn't just a one-off transaction; they're an asset. Calculating it is simpler than it sounds. You just need three pieces of information:

• Average Revenue Per Account (ARPA): How much revenue does an average customer bring in per month (or year, just be consistent)?
• Gross Margin %: What's your profit margin on that revenue after accounting for the cost of goods/services sold?
• Monthly Churn Rate %: What percentage of your customers do you lose each month on average? (If a customer stays for 2 years on average, your monthly churn is 1/24 = ~4%).

The formula is straightforward: LTV = (ARPA * Gross Margin %) / Monthly Churn Rate

To make this tangible, I've built a simple calculator for you below. Play around with the sliders to get a feel for your own LTV. You might be surprised at what a customer is actually worth to you.

You probably should link your LTV to what you can spend...

Once you have your LTV, you have your North Star. Now we can work out what you can afford to pay to get a customer. A healthy, sustainable business model usually aims for a LTV to Customer Acquisition Cost (CAC) ratio of 3:1. This means for every $3 of lifetime value you generate, you can spend $1 acquiring that customer. Some aggressive growth companies might go to 2:1, but 3:1 is a safe place to start.

So, your maximum affordable CAC is simply: Max CAC = LTV / 3.

But wait, we're not done. CAC is the cost to get a paying customer, but Google Ads generates *leads*, not customers. You still have to do the work to convert that lead into a sale. This is where you're sales conversion rate comes in. If you close 1 out of every 10 qualified leads you get, your lead-to-customer conversion rate is 10%.

This means your maximum affordable Cost Per Lead (CPL) is: Max CPL = Max CAC * Sales Conversion Rate %.

Let's use the example from the LTV calculator above. With an LTV of $8,750, your max CAC would be $2,916. If you close 1 in 10 leads (10% conversion rate), you can afford to pay up to $291 per lead and still run a very profitable business. Suddenly, worrying about a $10 or $15 click seems a bit silly, doesn't it? It frames the entire investment in a totally different light.

Here's another calculator to connect these dots for you.

You'll need a realistic idea of lead costs in Indianapolis...

Okay, so now you know what you *can afford* to pay for a lead. The next question is, what can you *expect* to pay on Google Ads in a market like Indianapolis? This is where some industry data comes in handy. Of course, this varies wildly by industry. A lead for a lawyer will cost hundreds of dollars, while a lead for a house cleaner might be much cheaper.

Based on our experience running campaigns for various B2C service businesses, you're probably looking at a range of $10 to $50 per lead. For more competitive niches, like emergency HVAC or electrical work, it can certainly be higher. We have an HVAC client in a competitive area who sees costs around $60/lead, but we've also managed campaigns for childcare services where the cost per signup was around $10, and one of our best campaigns for a home cleaning company brought in leads for about £5 each. It all depends on the level of competition for the keywords you're targeting and the value of the service.

The goal is to make sure the expected CPL is well below your maximum affordable CPL. If your max CPL is $292 and the market rate for a lead is $40, you're in a fantastic position to dominate. If your max CPL is $30 and the market rate is $40, then advertising will be unprofitable, and you need to work on your LTV or your sales process first.

Here's a visual breakdown of some typical CPL ranges we've seen for local services. Think of this as a rough guide for what you might encounter in Indianapolis.

We'll need to look at building your starting budget...

Now we have all the pieces of the puzzle. We know what a customer is worth, what we can afford to pay for a lead, and a rough idea of what a lead will cost. We can finally build a sensible starting budget.

It's a simple formula: Starting Monthly Budget = (Target Number of New Customers * Leads Needed Per Customer) * Expected CPL.

Or even simpler: Starting Monthly Budget = Target Number of Leads * Expected CPL.

Let's say your goal is to get 5 new customers next month. You know you close 1 in 5 leads (a 20% conversion rate), so you need 25 leads. And let's assume you're in an industry where the expected CPL is $40. Your starting monthly budget would be 25 leads * $40/lead = $1,000.

This is no longer a guess. It's a calculated investment tied directly to a business outcome. This is how you advertise with confidence. If you hit your numbers, that $1,000 spend will generate 5 new customers. You know you're LTV, so you know exactly what the ROI on that spend is. If you dont hit your numbers, you now have data to work with to figure out what's broken - is the CPL too high? Is you're sales conversion rate too low? Is your website not converting visitors?

To help you put it all together, here's one last calculator to build your own starting budget.

You probably should focus on the right kind of traffic...

A budget is useless if you spend it on the wrong people. For a local service business, you want to capture people who are actively looking for a solution *right now*. This means focusing your Google Ads budget on Search campaigns targeting high-intent keywords. These are the phrases people type into Google when they have a problem and need it fixed.

You need to think like your customer. What would they search for in a moment of need? It's almost never your brand name. It's the problem they're having.

Here are some examples of the kind of keywords you should be targeting:

By focusing your budget on these types of specific, problem-solving keywords, you ensure that every dollar is spent trying to reach someone who is already half-way to becoming a customer. Avoid broad keywords like "electrician" or "plumbing" as they will attract alot of clicks from people just doing basic research, which will waste your budget very quickly.

I'd say you need a plan to bring the costs down...

Your starting budget is just that—a start. It's designed to buy you data. After the first month or two, you'll have real numbers from the Indianapolis market for your specific service. You'll know your actual CPC, your actual CPL, and your actual website conversion rate.

The goal then shifts from 'finding a budget' to 'optimisation'. How can you get more leads for the same budget, or the same number of leads for less money? This involves a continuous process of improvement:

• -> Ad Copy Testing: Writing and testing different headlines and descriptions to see which ones get a higher click-through rate (CTR). A higher CTR lowers your CPC.
• -> Landing Page Optimisation: Making improvements to your website to increase the percentage of visitors who become a lead. Even a small increase in your conversion rate from 2% to 4% will cut your CPL in half. This is often the most impactful area to work on.
• -> Keyword Refining: Pausing keywords that are spending money but not generating leads, and discovering new, profitable keywords to target.
• -> Negative Keywords: Actively telling Google what searches you *don't* want to show up for (e.g., "jobs", "training", "DIY") to avoid wasted clicks.

This is where the real work of managing a paid ads account comes in, and it's a seperate skill set from just setting up a campaign. The initial budget gets you in the game, but ongoing optimisation is how you win it.

This is the main advice I have for you:

To wrap this all up, here is a step-by-step plan. Forget about guessing a budget and follow this process instead. It's the same framework we use for new clients to build a predictable, scalable lead generation engine.

As you can see, there's a bit more to it than just plugging a credit card into Google. Doing this initial strategic work is what seperates the businesses that succeed with paid ads from those that just burn through their money. It takes a bit of effort up front, but it pays off massively in the long run by giving you clarity and control over your marketing spend.

Getting this right can be tricky, especially when you're also busy running your business. It involves a deep understanding of the auction dynamics, keyword research, and conversion rate optimisation. This is often where working with an expert can save you a significant amount of time and wasted ad spend. We've been through this process hundreds of times and can help you get to the optimisation stage much faster.

If you'd like to chat through your specific situation and have us take a look at your numbers, we offer a free, no-obligation initial consultation. We can walk through this framework together and help you build a solid plan for launching or improving your ads in Indianapolis.

Hope this helps!

Regards,

Team @ Lukas Holschuh