“How much should I spend on ads?” It’s one of the questions store owners ask most, and the answer is often a random number: “start with SAR 100 a day”, or “spend 10% of sales”. Those numbers can be too small to gather enough data, or too large and wasted before you know what works.
The clearer approach is to flip the question: instead of “how much should I spend?”, ask “what do I want to achieve?” — then work out the budget that goal requires from your own store’s numbers. This guide explains the method step by step, then how to split, monitor and adjust the budget.
The reverse formula: from goal to budget
Every order in your store passes through a simple chain: a click on an ad, a visit, and a share of visitors who buy. Know three numbers and you can calculate the rest:
- Average order value (AOV): what a customer pays per order on average.
- Conversion rate (CR): the share of visitors from ads who buy.
- Cost per click (CPC): what you pay the platform for each visit.
Then:
- Orders needed = target revenue ÷ average order value
- Clicks needed = orders ÷ conversion rate
- Budget = clicks × cost per click
A full example
A store wants SAR 50,000 in revenue from ads over a month. Average order value is SAR 250, the conversion rate from ads is 2%, and CPC is SAR 1.5:
| Step | Calculation | Result |
|---|---|---|
| Orders | 50,000 ÷ 250 | 200 orders |
| Clicks | 200 ÷ 0.02 | 10,000 clicks |
| Monthly budget | 10,000 × 1.5 | SAR 15,000 |
| Daily budget | 15,000 ÷ 30 | SAR 500 |
| Cost per order | 15,000 ÷ 200 | SAR 75 |
| Expected ROAS | 50,000 ÷ 15,000 | 3.33 |
The figures are illustrative, but their value is that they turn a goal into a clear budget you can discuss: is SAR 15,000 available? Is a SAR 75 cost per order acceptable for your products? Our ad budget calculator runs these steps instantly, from a revenue goal or an orders goal.
The key question: is the plan profitable?
Hitting the sales target doesn’t mean profit. In the example above, if your gross margin (before ads) is 40%, each SAR 250 order leaves you SAR 100; with a cost per order of 75, that’s SAR 25 profit per order and SAR 5,000 on the whole plan. If the margin is 25%, each order leaves only SAR 62.5, so a cost per order of 75 means a loss on every order — and the plan loses SAR 2,500 despite hitting its sales goal.
So always add your margin when planning. The rule: the expected cost per order must be lower than the order’s profit before ads. To understand how margin relates to break-even, read our ROAS guide.
If the plan isn’t profitable on current numbers, there are only three levers: raise average order value, raise conversion rate, or lower cost per click. Changing any one changes the required budget immediately — try it in the calculator to see which makes the biggest difference.
Where do the numbers come from?
If you have past campaigns
Use averages from the last 60–90 days in your ads manager and store analytics: actual CPC, the conversion rate of ad traffic specifically (not the store’s overall rate), and average order value. Tracking campaigns with UTM links makes these numbers far more accurate. You can calculate CPC and CTR from raw figures with our CPM, CPC and CTR calculator.
If you’re starting from scratch
You won’t have precise numbers, and that’s normal. Use conservative estimates (a lower conversion rate than you expect, a higher CPC) and treat the first month as a test phase whose goal is gathering data, not hitting the final target. After two weeks of real spend, enter the actual numbers and recalculate.
How to split the budget
Between testing and scaling
A new campaign needs time and data to settle. Set aside part of the budget to test several ads and audiences, then shift budget gradually to what proves itself. Raising a budget suddenly and sharply can push a campaign back into learning and raise costs temporarily.
Across funnel stages
- Cold audiences (prospecting): people who don’t know you; cost per order is higher, but it’s the source of growth.
- Retargeting: people who visited your site or engaged with your account; lower cost and higher conversion, but its size is limited by your cold audience.
- Existing customers: offers for repeat purchases or complementary products.
Neglecting cold audiences entirely makes retargeting dry up over time; the reverse keeps costs needlessly high.
Across platforms
Don’t split evenly between Meta, TikTok, Snapchat and Google just for the sake of spread. Start with the platform closest to your audience and product type, and add others once the first is stable. For choosing channels, see our digital advertising strategies guide.
Seasonality: budget isn’t a fixed number
Ad costs change through the year. In big seasons like Ramadan, Eid and White Friday, competition rises, so CPM and CPC usually go up — but so does purchase intent. Plan each season with its own numbers: higher CPC, a conversion rate that may rise, and an order value that may change with offers. And remember that discounts reduce your margin, so check profit per order after the discount, as in our discount strategy guide.
Monitoring and adjusting
A plan is a starting point, not a promise. Each week, track three numbers and compare them with your assumptions:
- Actual CPC versus assumed.
- Actual conversion rate of ad traffic.
- Cost per order versus the maximum your margin allows.
If CPC is higher, review the creative and audience. If conversion is lower, the problem is usually after the click — product page, price or shipping — and our conversion funnel calculator helps you find the stage where customers drop off.
Common mistakes that waste budget
- A very small budget spread across many campaigns, so none gathers enough data.
- Judging a campaign after two days, before it settles.
- Raising budget in big jumps at the first good result.
- Using the store’s overall conversion rate instead of the rate for ad traffic.
- Ignoring margin and focusing only on revenue.
- Sending ads to a page that isn’t ready: slow, or without clear shipping information.
Frequently asked questions
Is there a fixed percentage of sales to spend on ads?
Some companies use a percentage of sales as an internal rule, but it ignores your margin and the acquisition costs in your niche. Calculating budget from the goal and real numbers is more accurate.
What’s the minimum budget to start with?
One that lets you gather a reasonable number of clicks and conversions during the test period. Work out how many clicks you need for at least a handful of orders, and start there rather than with an arbitrary daily figure.
Daily or lifetime budget?
Daily budgets are easier to control and monitor; lifetime budgets give the platform flexibility to spend more on better-performing days. Both work — what matters is that the total matches your monthly plan.
The right budget isn’t what you can spend — it’s what your goal requires and your numbers allow. Work out your next plan with our free ad budget calculator — and if you want a complete ad plan for your store with clear goals, budgets and measurement, get in touch.
