How much ad budget do you need? A step-by-step way to work it out
In short: start from the highest cost per order you can afford (average order value × your margin), then work out the budget that gives the platform enough results to learn. Meta, for example, needs about 50 results a week per ad set to leave the learning phase, and Google needs a minimum number of conversions before value-based bidding. If your budget is smaller, optimise for an earlier event (such as add to cart) or consolidate your ads into one ad set.
“How much should I put into ads?” The common answer is “it depends”, which is true but not useful. In this article we give you a clear way to work it out, starting from your own business numbers rather than general figures.
Step 1: the highest cost per order you can afford
Before any budget, know how much you can pay to get one order without losing money:
Highest cost per order = average order value × gross margin
Example: your average order is SAR 250, and your margin after product and shipping costs is 40%. Each order leaves you SAR 100. If you pay more than SAR 100 in ads per order, you lose money (unless customers come back and buy again, which we’ll account for later).
Aim clearly below that limit, say SAR 60 to 70 in this example, to keep a safety margin for your other costs.
Step 2: how many results does the platform need to learn?
Today’s ad systems run on AI and need enough data to learn who buys:
- Meta (Facebook and Instagram): its Help Center says an ad set needs about 50 results (of the event you optimise for) within 7 days after its last significant edit to leave the “learning phase”. Before that, performance is less stable.
- Google: for target ROAS bidding in Search and Shopping campaigns, Google requires at least 15 conversions in the past 30 days, and recommends reporting conversion values for four weeks before setting a target.
These numbers set a sensible minimum budget better than any general figure.
Step 3: work out the budget
With the same example (a target cost per order of SAR 70), if you want 50 orders a week from one Meta ad set:
50 × 70 = SAR 3,500 a week, about SAR 500 a day.
Many small businesses don’t start at that number, and that’s normal. The solutions:
- Optimise for an earlier event: such as “add to cart” or “initiate checkout”. It happens more often than a purchase, so the platform learns faster, and you switch to purchases as volume grows.
- Consolidate, don’t scatter: one ad set with several ads beats five small ad sets that each fall short of the threshold.
- Focus on one platform at the start instead of splitting the money.
A test budget
Before the full budget, run a two-week test: your offer, one landing page, and several ads. Its goal isn’t immediate profit but answering two questions: is the cost per order getting close to your target? And which ad and which audience work best? Set an amount for this test that you’re willing to treat as “the price of information”.
When should you raise the budget?
Raise it when three conditions are met: cost per order has been stable below your target for a week or more, tracking is reliable (the numbers are close to your actual sales), and your stock and team are ready for more orders. And raise it gradually, because big jumps send the platform back into learning. Details in How to scale your ad campaigns without the costs climbing.
Don’t forget long-term customer value
If your customers come back and buy a second and third time, you may be able to afford a higher cost on the first order. But calculate that from your real data (how many customers actually return within six months?), not from optimistic forecasts.
Frequently asked questions
Can I start with SAR 50 a day?
You can, but expect slower learning and less stable results. Optimise for an event earlier than the purchase, focus on one platform and one ad set, and judge over a longer period.
Is the budget paid to you or to the platforms?
The ad budget is paid to the platforms directly from your ad account, and management fees are separate. That way you keep ownership of the accounts and the data.
Why does cost per order change from week to week?
Because ads run on an auction affected by competitors, the season and ad fatigue. So judge on an average of two weeks or more, not on a single day.
The bottom line
The right budget starts from your numbers: how much you can afford per order, and how many results the platform needs to learn. Work it out, test, and raise gradually. If you want someone to work it out and run it with you, have a look at our digital advertising service.
To work it out now with your own numbers, try our free ad budget calculator.
