Solved: Ideal Google Ads Budget for Barcelona?

Hi there,

Thanks for reaching out!

Happy to give you some initial thoughts on your question about Google Ads budgets in Barcelona. It's a common stumbling block, and tbh most people approach it from completely the wrong angle. They look for a magic number, a monthly figure that will magically unlock customers. That number doesn't exist.

The good news is there's a much better way to think about it. It’s less about picking a budget and more about understanding the maths of your own business. Once you get that right, the "ideal budget" becomes obvious. Let's walk through it.

You'll need to stop thinking about budget and start thinking about maths...

Right, first things first. Let's get rid of the word 'budget'. It encourages you to think of advertising as a cost centre, a necessary evil you have to pay for each month. That's a losing mindset. Paid advertising should be a profit centre. You put £1 in, and you get more than £1 out. The moment that's happening, your 'budget' is technically infinite, right? You'd keep putting money in as long as it kept spitting more money out.

The entire game is about figuring out how to make that equation work. The question isn't "What's the ideal Google Ads budget?". The real questions are:

• How much is a new customer worth to my business over their entire lifetime?
• Based on that value, how much can I afford to spend to acquire one new customer?
• How many new customers do I want to acquire each month?

Answer those three questions, and your budget calculates itself. It's not guesswork; it's a simple business calculation. Most businesses skip this part, set a random budget like €500 a month, see poor results because it's not enough to gather any meaningful data, and then conclude "Google Ads doesn't work". It's not that it doesn't work; it's that they didn't do the basic maths first.

So, the first and most fundamental step is to figure out what a customer is actually worth to you. This is called Customer Lifetime Value, or LTV.

I'd say you first need to calculate your Customer Lifetime Value (LTV)...

This is the absolute bedrock of any successful advertising campaign. If you don't know this number, you are flying blind. You have no way of knowing if your ads are profitable or just burning cash. The real question isn't "How low can my cost per lead go?" but "How high a cost per lead can I afford to acquire a truly great customer?" The answer is in its counterpart: Lifetime Value (LTV).

Let's break it down with an example. Let's imagine you're an electrician in Barcelona. Your business isn't just about one-off jobs. A good customer might call you for an emergency repair, then later for an installation, and maybe a year later for a safety inspection. They might even recommend you to a neighbour. That's their lifetime value.

To calculate it, you need three pieces of information:

1. Average Revenue Per Account (ARPA): What do you make from an average customer per month or per year? Let's stick to a year for a service business. You might find that the average customer brings in about €800 in revenue over a year.
2. Gross Margin %: What's your profit margin on that revenue after accounting for the costs of doing the job (materials, your own time if you pay yourself a wage, etc.)? Let's say your gross margin is 60%.
3. Monthly Churn Rate: What percentage of customers do you lose each month? This is a bit trickier for a service business, but you can estimate it. Think about it as 'customer lifetime'. If an average customer sticks with you for, say, 4 years (48 months), then your monthly churn rate is (1 / 48) = about 2.1%.

Now, the calculation is straightforward:

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

Using our electrician example (and let's use annual figures to make it simpler):

Let's say the average customer lifetime is 4 years. Annual Churn Rate = 1 / 4 = 25% or 0.25.

• ARPA = €800/year
• Gross Margin = 60% (or 0.60)
• Annual Churn Rate = 25% (or 0.25)

LTV = (€800 * 0.60) / 0.25

LTV = €480 / 0.25 = €1,920

So, in this example, each new customer you acquire is worth, on average, €1,920 in gross margin to your business over their lifetime. This is the number that changes everything. It's your North Star.

Here's a little calculator to help you figure out your own LTV. Play around with the numbers to see how they affect the final value. It's a simplified model, but it'll give you a much clearer picture than you have now.

We'll need to look at your allowable Customer Acquisition Cost (CAC)...

Now you have the truth. You know what a customer is worth. With a €1,920 LTV, you can now figure out the absolute maximum you should ever spend to get a new customer. This is your Customer Acquisition Cost, or CAC.

A healthy, sustainable business model usually aims for an LTV to CAC ratio of at least 3:1. This means for every euro you spend on acquiring a customer, you should get at least three euros back in lifetime gross margin. It gives you enough room to cover all your other business costs (rent, salaries, software, etc.) and still make a healthy profit.

So, let's do that simple bit of maths:

Max CAC = LTV / 3

Max CAC = €1,920 / 3 = €640

This is your new magic number. You can afford to spend up to €640 to acquire a single new customer and still run a very profitable business. Suddenly, worrying about a €5 or €10 cost per click seems a bit silly, doesn't it? The game isn't about getting the cheapest clicks; it's about acquiring customers for less than they are worth.

This also depends on your cash flow. You'll spend the €640 today, but you'll only make the €1,920 back over 4 years. So you might want a more agressive ratio, maybe 4:1 or 5:1, which would mean a Max CAC of €480 or €384. But 3:1 is a solid industry benchmark.

Here's how that logic flows. It's a simple path from your business numbers to your marketing allowance.

You probably should work backwards from your goals...

Okay, we have our Max CAC of €640. Now we can finally talk about a budget. The process is simple: decide how many new customers you want, then multiply that by how much you're willing to pay for them.

Let's say your goal is to acquire 5 new customers a month from Google Ads.

Monthly Budget = Target # of Customers * Max CAC

Monthly Budget = 5 * €640 = €3,200

There's your answer. Based on these numbers, your ideal budget is €3,200 per month. But wait. This is your *ideal* budget once the campaign is optimised and working perfectly. You don't start there.

You start with a smaller testing budget. The goal of the first month or two isn't necessarily to be profitable. It's to buy data. You need to spend enough to find out which keywords work, which ads get clicks, and what your actual conversion rates are. I usually recommend a starting budget of around €1,000 - €2,000 per month for a service business in a competitive city like Barcelona. This is usually enough to get a statistically significant amount of clicks and see what's what. I remember one campaign we worked on for an HVAC company in a competitive area, and they were seeing costs of around $60 (€55) per lead. If you need 10 leads to get one customer, your real-world CAC would be €550. That's very close to your max allowable CAC of €640, so it's viable.

The process looks like this:

1. Set a testing budget (e.g., €1,500 for month 1).
2. Run the ads and gather data. Aim for at least 100-200 clicks to make decisions.
3. Analyse the data: What's your click-through rate (CTR)? What's your cost per click (CPC)? Most importantly, what's your website's conversion rate (leads/visitors)?
4. Calculate your actual CAC from the test period.
5. If your actual CAC is below your Max CAC, you're in a good place to start scaling the budget up towards your ideal €3,200. If it's higher, you need to optimise before spending more.

This data-led approach removes all the guesswork. You're not just throwing money at Google; you're making calculated investments based on real performance.

You'll need to understand the local market in Barcelona...

Everything we've discussed is theoretical until you clash it with reality. And the reality in Barcelona is that it's a competitive market. You're not the only electrician trying to get clicks. So, you need to do some research to see what you're up against. This is where you use Google's own Keyword Planner tool (it's free inside your Google Ads account).

Your job here is to estimate two things:

• Search Volume: Are enough people actually searching for your services in Barcelona each month?
• Cost Per Click (CPC): How much are other advertisers paying for a single click on those keywords?

For our electrician example, you'd research keywords like:

• "electricista barcelona" (electrician barcelona)
• "electricista 24 horas barcelona" (24 hour electrician barcelona)
• "reparaciones electricas barcelona" (electrical repairs barcelona)
• "instalador electrico barcelona" (electrical installer barcelona)

Google will give you a range for the CPC, for example, "Top of page bid (low range): €1.50" and "Top of page bid (high range): €4.50". This tells you that to be visible, you'll likely need to pay somewhere in that ballpark for a single click.

Now, let's connect this back to your CAC. Remember, your CAC is determined by your CPC and your website's conversion rate.

CAC = (Cost per Lead) * (Number of Leads needed for 1 sale)

And your Cost per Lead (CPL) is:

CPL = CPC / Website Conversion Rate

Let's say your website converts 5% of visitors into a phone call or a form fill (a lead). This is a decent starting benchmark. If your average CPC is €3.00, then:

CPL = €3.00 / 0.05 = €60 per lead.

And if you know from your sales process that you close 1 out of every 10 leads into a paying customer, then:

CAC = €60 * 10 = €600.

Look at that. Our real-world estimate of €600 CAC is just below our maximum allowable CAC of €640. This means the plan is viable. The maths works out. If the estimated CPCs were much higher, say €8, your CAC would be (€8 / 0.05) * 10 = €1600, which is way over your max CAC. You'd know from the start that you either need to improve your conversion rate dramatically or that Google Ads might be too expensive for you in that market. This research is what separates pro advertisers from amateurs.

Here's a rough idea of what that keyword research might look like. Note these are just illustrative numbers.

I'd say your website and offer are more important than the budget...

Here's a brutal truth. You could have the most perfectly calculated budget in the world, but if you send that expensive traffic to a poor website, you're just setting money on fire. I've seen it countless times. A client comes to us wondering why their ads aren't working, and we see why in five seconds of looking at their landing page. Your website has one job: to convert a visitor into a lead.

Look again at the maths: CPL = CPC / Website Conversion Rate. The conversion rate is the most powerful lever you have. Doubling it from 3% to 6% literally cuts your cost per lead in half, without spending a single extra euro on ads.

Before you spend seriously on ads, your website needs to be in order. For a service business, this means:

• A clear, bold headline that states what you do and where you do it. E.g., "Reliable 24/7 Electricians in Barcelona".
• An obvious Call to Action (CTA) above the fold. This should be a clickable phone number and a simple contact form. Make it incredibly easy for someone in a hurry to contact you.
• Trust signals. This is huge. Include customer reviews, photos of your team/work, any certifications or guarantees you offer. People are inviting a stranger into their home; they need to trust you.
• It must be fast and mobile-friendly. Most people searching for local services are doing it on their phone. If your site is slow or hard to use on mobile, they will leave instantly.

The same goes for your offer. Why should they choose you over the other ten electricians on the Google results page? Do you offer a free quote? A satisfaction guarantee? A faster response time? Your ads and website need to communicate this value clearly.

Spending money on ads before fixing your website is like pouring water into a leaky bucket. Fix the leaks first. Your "budget" will go twice as far.

This is the main advice I have for you:

To wrap this all up, here is the step-by-step process I would follow. It’s a framework, not just a bunch of loose advice. Following this will put you ahead of 90% of your competitors who are just guessing with their ad spend.

As you can probably see, determining the right budget is a process of strategic analysis, not a simple answer. It requires a deep understanding of both your business's economics and the advertising platform itself. It can feel like a lot to get right, especially when you're also busy running your actual business.

Getting this framework set up correctly from the start is the difference between a campaign that profitably brings in new customers month after month, and one that sputters out after burning through a few thousand euros with little to show for it.

If you'd like to walk through these calculations with your own numbers and build a specific, data-driven plan for your business in Barcelona, we offer a free, no-obligation initial consultation. We can take a look at your specific situation and give you a clear roadmap. Sometimes an expert eye can spot opportunities or pitfalls that aren't immediately obvious.

Hope this helps!

Regards,

Team @ Lukas Holschuh