What this calculator measures

This Google Ads ROI calculator follows your paid search budget all the way to closed deals and unit economics. It estimates impressions, clicks, leads, SQLs, deals, customer acquisition cost (CAC), lifetime value (LTV), the LTV to CAC ratio and payback period.

How to use it

  1. Business context: Monthly recurring revenue per customer, customer lifetime in months and gross margin.
  2. Campaign setup: Monthly budget, average CPC and CTR. Pull these from Google Ads or Microsoft Ads.
  3. Pipeline performance: Conversion rates from click to lead, lead to SQL and SQL to opportunity. Pull these from your CRM. The calculator counts every opportunity as a closed deal, so enter your SQL to closed deal rate in the SQL to opportunity field. The opportunity to deal field is not used in the calculation.
  4. New to paid search? Load an industry preset, then replace each value with your own as data comes in. Presets are estimates.

Formulas

  • Clicks = Budget ÷ CPC
  • Impressions = Clicks ÷ (CTR ÷ 100)
  • Leads = Clicks × (Click-to-lead rate ÷ 100)
  • SQLs = Leads × (Lead-to-SQL rate ÷ 100)
  • Deals = SQLs × (SQL-to-opportunity rate ÷ 100)
  • CAC = Budget ÷ Deals
  • LTV = MRR × Customer lifetime (months)
  • LTV to CAC = LTV ÷ CAC
  • Payback (months) = CAC ÷ (MRR × (Gross margin ÷ 100))

All rates and the gross margin are entered as percentages, which is why each one is divided by 100.

Example: with a CAC of $1,000, MRR of $100 and a gross margin of 80%, payback is 1,000 ÷ (100 × 0.8) = 12.5 months.

Assumptions

  • Results show steady-state performance after the campaign leaves its learning phase.
  • LTV uses revenue, not gross profit. For a stricter view, multiply LTV by gross margin.
  • No churn curve or expansion revenue is modeled.
  • The funnel uses three conversion rates. It treats every opportunity as a closed deal, so there is no separate opportunity to deal step. If you enter a true SQL to opportunity rate, deals will be overstated and CAC understated.
  • For one-time project revenue (common in construction), set customer lifetime to 1 and MRR to the average project value.

How to read your results

  • LTV to CAC: Higher means each customer returns more than it costs to win. Compare against the threshold your finance team uses.
  • Payback period: How many months of gross profit it takes to recover CAC. Shorter payback means you can reinvest sooner.
  • Biggest lever: Change one input at a time. Often a better click-to-lead rate (landing page work) moves CAC more than a lower CPC.

Frequently Asked Questions

How do you calculate ROI for paid search?

Follow budget to deals to get CAC, then compare CAC with the gross profit each customer returns over its lifetime.

Does this work for Google Ads and Microsoft Ads?

Yes. Enter the CPC, CTR and budget for either platform.

How should construction companies use it?

Treat each won project as a customer. Set customer lifetime to 1 and MRR to the average project value, or use the average value of repeat work if clients rehire you.

Why does my CAC look high?

Check the pipeline conversion rates first. Small changes in click-to-lead or SQL-to-deal rates move CAC significantly.