Most advertising money is wasted not because the channel is wrong, but because the budget was a guess. Here’s a simple, margin-based method to set a number you can defend.
Key takeaways
- Start from margins and goals, not a random figure.
- Know your break-even ROAS = 1 ÷ profit margin.
- Budget enough for a real test (data), then scale winners.
- Use the ROAS calculator to sanity-check profitability.
Step 1: Know your unit economics
Work out your profit per sale and your conversion rate. If you profit 400৳ per sale before ad cost, you can afford to spend up to 400৳ to acquire a customer and still break even.
Step 2: Find your break-even ROAS
Break-even ROAS = 1 ÷ profit margin. A 33% margin breaks even at 3x; you need to beat that to profit. This single number tells you whether a campaign is working.
Step 3: Fund a proper test
A test that’s too small never gathers enough data to judge. For Google Ads, plan ~30,000–40,000৳/month; for Facebook, enough to run 7–14 days across a few creatives. Estimate outcomes with the Google Ads and Facebook calculators.
Step 4: Scale what works
Once a campaign beats your break-even ROAS, increase budget gradually and keep watching cost per result. Cut losers fast. Budgeting is a loop, not a one-time decision.
Frequently asked questions
How much should a small business spend on advertising?
There's no single number, but many small businesses allocate a percentage of revenue (often 5–15% depending on growth stage) and then work backwards from a target cost per customer and their profit margin to set a testable monthly figure.