Work backwards from customers and margin to choose a sensible campaign spend. This guide offers a practical starting point, not a substitute for specialist advice.
1. Find the contribution from a customer
Estimate revenue or, preferably, gross profit earned from a first purchase and expected repeat business. Avoid using lifetime value assumptions without supporting retention data.
2. Set a maximum acquisition cost
Choose a customer acquisition cost that leaves enough to deliver the service, pay overheads and remain profitable.
3. Estimate required leads
Use past lead-to-customer conversion rates. For example, a 10% qualified-lead conversion rate means about ten leads are needed per acquired customer.
4. Calculate a campaign budget
Multiply target customer acquisitions by planned acquisition cost. Keep a small initial test budget and scale only when tracking is trustworthy.
5. Look beyond ROAS
Return on advertising spend measures attributed sales, not the profit after product costs, refunds or salaries. Compare campaign revenue with gross contribution.
Put it into practice
Use the tools below with numbers from your own business, then revise your assumptions against real results. Keep a record of the decisions you make and why.