How To Calculate If You Can Afford To Bid On The Top Keywords On Google Ads

There are lots of businesses that could benefit enormously if they were to implement a Google Ads campaign, but many do not because of concerns they have. One of those concerns is not knowing whether or not they could afford to bid on the keywords that they wish to target. Given that within any single business niche there could be hundreds of possible keywords all with varying costs per click (CPC) then the level of uncertainty can be high.

We are not here to criticize business owners for their uncertainty over whether they can afford to bid and that stopping them from proceeding with a Google Ads campaign. After all, it would be foolish to plough ahead into the unknown in any element of your business if you were not aware of what the costs are going to be. However, what we can do is give you a simple formula that you can apply to every keyword and establish if it is affordable for you.

To begin the analysis there are 4 specific numbers or pieces of data that you need. These are:

  • Profit Per Sale ($) e.g. $350
  • Profit Margin As A Decimal e.g. 30% Profit Margin = 0.3
  • Website Conversion Rate As A Percentage Converted To A Decimal e.g. 1 In 100 = 1% = 0.01
  • Estimated Cost Per Click Of Each Target Keyword As Per Google Keyword Planner e.g. $4.75