How to Calculate Your Daily Ad Budget From Revenue
Divide your monthly revenue goal by your average order value to get monthly orders. Divide that by 30 for daily orders, then multiply by your target cost per acquisition. That is your daily ad budget. A $100,000 monthly goal, $65 average order value and $33.33 cost per acquisition require about $1,733 a day.
I've managed more than $121 million in Meta ad spend since 2013.
How do you turn a revenue goal into a daily ad budget?
Turn your revenue goal into a daily ad budget by calculating how many orders you need per day, then multiplying that number by your target cost per acquisition.
The whole method has four steps:
- Set the monthly revenue goal so you know what the advertising has to produce. Start with the revenue figure you want, not a budget you feel comfortable spending.
- Divide revenue by average order value so you know how many monthly orders you need. If the goal is $100,000 and your average order value is $65, you need about 1,538 orders a month.
- Divide monthly orders by 30 so you know the daily order target. In this example, that comes to 51.28 orders a day.
- Multiply daily orders by target cost per acquisition so you know the required daily spend. At a $33.33 cost per acquisition, the campaign needs to reach approximately $1,733.33 a day.
Always round the daily order count up. You cannot make a partial sale, so 51.28 becomes 52 orders a day.
This calculation works backward from the outcome the business needs. It tells you what the campaign eventually needs to spend if it can acquire customers at the target cost.
That last condition matters. Calculating a daily budget does not prove the campaign can spend it while maintaining the required cost per acquisition. It gives you the destination that testing and scaling have to reach.
How do you work out your target cost per acquisition?
Work out your target cost per acquisition by dividing your average cost per click by your sales page conversion rate.
If clicks cost an average of $2 and the sales page converts 6% of those clicks into buyers, your cost per acquisition is $33.33.
That number comes from the two front-end figures you are optimizing:
- Average cost per click
- Sales page conversion rate
Cost per acquisition is the trump card because different combinations of click cost and conversion rate can produce very different outcomes.
A $3 click may look expensive. But the real question is what happens after the click. At a 5% sales page conversion rate, that traffic produces a $60 cost per acquisition.
A $0.30 click at a 1% conversion rate takes 100 clicks to produce one sale. Those 100 clicks cost $30, so the cost per acquisition is half as much as the $3 click example.
The 1% conversion rate looks worse when viewed by itself, but the $30 cost per acquisition is better than $60. That is why a low conversion rate is not automatically a problem, and a cheap click is not automatically good.
You have to judge the complete path from click to customer.
Early in a campaign, your expected cost per click and landing page conversion rate are borrowed standards. You use them to create an initial target and judge the campaign.
Your own data eventually replaces those borrowed standards. Once you have enough traffic and sales, you can set expectations based on what your business actually produces.
What daily ad budget do you need to make $100,000 a month?
A $100,000 monthly revenue goal requires approximately $1,733.33 a day in ad spend when average order value is $65 and target cost per acquisition is $33.33.
Here is the calculation from start to finish:
| Step | Input | Arithmetic | Result |
|---|---|---|---|
| Set the revenue target | Monthly revenue goal | Starting target | $100,000 a month |
| Find the monthly order requirement | $100,000 goal and $65 average order value | $100,000 divided by $65 | About 1,538 orders a month |
| Find the daily order requirement | Monthly order requirement | $100,000 divided by $65, then divided by 30 | 51.28 orders a day |
| Round to whole orders | 51.28 daily orders | Round up because a partial sale is not a sale | 52 orders a day |
| Calculate target acquisition cost | $2 average click and 6% conversion rate | $2 divided by 6% | $33.33 per acquisition |
| Calculate the daily ad budget | 52 orders and the unrounded acquisition cost | 52 multiplied by the acquisition cost from $2 divided by 6% | $1,733.33 a day |
The $1,733.33 daily budget uses the unrounded cost per acquisition from the $2 click and 6% conversion rate calculation.
The target is tied to all three business numbers: revenue goal, average order value and cost per acquisition.
Change any one of them and the daily budget changes.
A higher average order value means you need fewer orders to reach the same revenue goal. A lower cost per acquisition means you need less ad spend to acquire the required orders.
But neither change should be assumed. Use the numbers your offer and campaign can actually produce.
How do you calculate an ad budget when you sell on sales calls instead of a checkout?
When sales happen on calls, replace average order value with revenue per booked consult and replace cost per acquisition with cost per consult.
The logic stays the same. You still begin with the revenue goal and work backward to the daily advertising requirement.
For example, take a consultation-based service business with a goal of $10,000 a month. If the plan requires about 30 consults a month, each booked consult needs to be worth roughly $333 in revenue for the plan to hold.
If each consult costs approximately $120 in ad spend, the monthly advertising requirement is:
30 consults multiplied by $120 per consult equals $3,600 a month.
Divide $3,600 by 30, and the required daily ad budget is $120.
The important point is that you do not begin with $120 because it feels affordable. You begin with the $10,000 revenue goal, determine the consult volume required, and then calculate what it costs to generate that volume.
This gives you a direct connection between the revenue goal, booked consults and daily advertising spend.
Should you start at the daily budget you calculated?
No, the daily budget you calculated is a destination, and your starting test budget should be based on your target cost per acquisition.
Your target cost per acquisition is your KPI, meaning the cost per result your numbers can afford. When a campaign is “in KPI,” its cost per result is at or below that target.
A new campaign is judged when it reaches a checkpoint of 1x KPI spent with zero results. At a $33.33 KPI, a $100 daily test budget buys three checkpoints of spend in one day.
That gives you enough room to judge the test against the target without jumping immediately to the $1,733.33 destination.
Use the Traffic Light rules as spend increases:
- Green keeps the campaign moving toward the target. Green means the campaign is at or below 100% of KPI.
- Yellow gives the campaign room while you watch it. Yellow means it is between 101% and 150% of KPI.
- Red stops more money going into a failed test. Red means zero results and/or a cost above 150% of KPI, so it comes off.
The campaign moves through three phases: Proof of Concept, Validation and Scaling.
In the Scaling phase, the campaign only scales. When it is in KPI and the full daily budget is actually spending, you raise the budget. When it is out of KPI, you leave it alone.
A vertical budget increase waits until the full daily budget has spent for 3 straight days.
Automated rules cap budget increases at 20% per 24 hours. The doctrine move is to double small budgets up to $250 a day, then use increases of 10% to 30% above that point. At the top of that range, a $250 daily budget goes to $325.
This incremental ramp protects more than the ad account. Volume can break fulfillment, warehousing or manufacturing before it breaks the advertising.
The orders-per-day figure is therefore an operations number too. Take it to whoever handles fulfillment and ask whether that volume will create a problem.
Stay 30 to 60 days ahead of any expected volume issue. Going directly from a test budget to the calculated destination can damage the business instead of growing it.
How long does it take to scale up to your target daily budget?
For most people, building the funnel and testing the advertising takes roughly 3 months before the numbers become predictable enough to support steady scaling.
When I built a brand-new funnel for myself, I gave myself a minimum of 2 weeks to have everything ready to run ads. When I worked with a client, I allowed 4 weeks.
Most people should expect the initial build to take 4 to 6 weeks. After that, allow another 4 to 6 weeks for testing.
That testing period is where you establish Proof of Concept, validate the numbers and find out whether the campaign can stay within KPI as spending rises.
A consultation-based sales process adds another delay. When the sale happens on a call, there can be about a 2 week lag between launching the ads and knowing whether those ads produced sales.
That means you cannot judge the advertising from lead or consult volume alone. The sales outcome needs time to come back through the system.
The target daily budget remains useful throughout this process. It tells you where the campaign needs to go, while the testing data tells you whether the business can get there.
Frequently asked questions
How much should I spend on ads per day?
Your daily ad spend should equal the number of orders you need per day multiplied by your target cost per acquisition. If you need 52 daily orders at a $33.33 target cost per acquisition, the destination is approximately $1,733.33 a day. Start testing from your KPI rather than launching at that full amount.
How do you turn a revenue goal into a daily ad budget?
Divide monthly revenue by average order value, divide the required monthly orders by 30, then multiply daily orders by target cost per acquisition. A $100,000 goal with a $65 average order value requires about 1,538 monthly orders, or 52 daily orders after rounding up.
How do you calculate target cost per acquisition?
Divide your average cost per click by your sales page conversion rate. A $2 average click with a 6% sales page conversion rate produces a $33.33 cost per acquisition. Use those figures as borrowed standards early on, then replace them with your own campaign data.
What daily ad budget do I need to make $100,000 a month?
At a $65 average order value and a $33.33 target cost per acquisition, the required daily ad budget is approximately $1,733.33. That supports 52 orders a day after the required 51.28 orders are rounded up. Treat $1,733.33 as a scaling destination, not a starting budget.
Should you start at the daily ad budget you calculated?
No, start with a test budget based on your KPI, which is the cost per result your numbers can afford. At a $33.33 KPI, a $100 daily test budget provides three checkpoints of spend. Scale incrementally only after the campaign reaches and consistently maintains the target metrics.
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