Why Your Service Business is Losing Money on Ads (And How to Fix It)

By: Jyll Saskin Gales, Google Ads Coach

 If you’re a therapist, a plumber, or a consultant, you have probably asked yourself the million-dollar question: "Should I actually be spending money on Google Ads?"

Maybe you have heard horror stories of people burning through cash with nothing to show for it. Or maybe you are currently running ads, but you have a sneaking suspicion that you’re paying way too much for every new client.

Here is the truth: You don’t need to guess, and you certainly don’t need to rely on "gut feeling." You just need a little bit of math.

This matters because marketing is often treated like a slot machine—you put money in and hope you get lucky. But for service-based businesses, Google Ads should be a vending machine. You put money in, and you get a predictable result out. If you don't know your numbers, you aren't investing; you're gambling.

In this post, we are going to walk through a simple framework to help you decide if Google Ads is right for your business and exactly how much you should be spending. Here is what we will cover:

• The three critical numbers you need to find (and where to look for them).

• The "100-Click" formula to calculate your real Customer Acquisition Cost.

• How to fix your campaigns if the math doesn't add up.

• The golden rule for setting your daily budget.

Step 1: Gather Your Three Critical Numbers

Before we do any calculations, we need to gather some data. If you are already running ads, look at your account. If you aren't, use tools like Google Keyword Planner to get estimates.

1. Average Cost-Per-Click (CPC) How much does it cost to get one person to your website?

• For Therapists: Expect $10–$15.

• The Red Flag: If you see CPCs under $5 for professional services in North America, be careful. You might be paying for low-quality traffic from the Display Network or Search Partners rather than high-intent search traffic.

2. Conversion Rate (CVR) This is the percentage of people who click your ad and then take a step to contact you—filling out a form, calling your number, or booking a consultation.

• Good Website: 10–12%

• Average Website: 5–7%

• The Danger Zone: If it’s around 1%, something is broken. You are either attracting the wrong people, or your website isn't doing its job.

3. Actual Conversion Rate (Lead-to-Customer) This is the metric Google Ads can't show you. Of the people who call or email you, what percentage actually hire you?

• Do you close 50% of the people you talk to? 20%?

• Note: If you don't track this, check your emails or CRM. This number is vital.

Step 2: The "100-Click" Test

Now, let’s do the math. To keep it simple, we are going to simulate what happens when you buy 100 clicks.

The Scenario: Let’s say you are a therapist.

• CPC: $10

• Lead Conversion Rate: 6% (6 people contact you out of 100)

• Sales Conversion Rate: 50% (You close half the people who contact you)

The Calculation:

1. The Cost: 100 clicks × $10 = $1,000 Spend

2. The Leads: 100 clicks × 6% = 6 Leads

3. The Customers: 6 leads × 50% = 3 Paying Clients

4. The Result: You spent $1,000 to get 3 clients.

$1,000 ÷ 3 = $333 Cost Per Customer (CAC)

Now, ask yourself: Is a new client worth $333 to me?

If you charge $50/hour, the answer is likely no. You would be losing money for weeks before you broke even. But if you charge $250/hour, you are profitable by the second session.

Step 3: What to Do If the Math Doesn't Work

Let’s say your CAC came out to $333, but you can only afford to pay $200 for a new client. Does that mean you should quit Google Ads? Not necessarily. It means you need to pull one of three levers.

Lever 1: Lower Your CPC You can try to pay less for traffic. This is the hardest lever to pull because the market dictates the price. However, you can:

• Improve your Quality Score (make your ads and landing pages more relevant).

• Test different campaign types, like Demand Gen, which might have cheaper clicks (though often lower intent).

Lever 2: Improve Your Website Conversion Rate If you can get 10 people to contact you instead of 6 for the same $1,000 spend, your cost drops significantly.

• Is your phone number easy to find?

• Does your form work?

• Does your page clearly explain how you can help?

• Analogy: Think of your website like a physical store. If the door is stuck and the lights are off, it doesn't matter how great your ads are—people are going to walk away.

Lever 3: Improve Your Sales Conversion Rate This is the lever most people ignore because it happens offline. But it often has the biggest impact. If you can improve your sales skills so that you close 4 out of 6 leads instead of 3, your CAC drops from $333 to $250 instantly without changing a single thing in your Google Ads account.

• Follow Up Faster: If you wait 24 hours to call a lead back, they have already hired someone else.

• Be a Helper, Not just an Answer Machine: When someone calls and asks, "Is this Joe’s Plumbing?", don't just say "No, this is Susan's." Say, "No, this is Susan's Plumbing, but tell me what's going on—I can probably help you."

Step 4: The Budgeting Rule of Thumb

If the math makes sense and you are ready to launch, how much should you spend?

The "10 Clicks" Rule You want to budget enough to buy at least 10 clicks per day.

• If your CPC is $5, budget $50/day.

• If your CPC is $15, budget $150/day.

Why? Because algorithms need data to function. If you are only buying one or two clicks a day, it’s like trying to fill a swimming pool with a thimble. It will take forever to see results, and you won’t have enough data to know what is working.

Summary: Should you use Google Ads?

Google Ads isn't magic; it's math. By understanding your CPC, lead conversion rate, and sales conversion rate, you can predict your success before you spend a dime.

• Know your "Real" numbers: Don't just look at cost per lead; look at cost per paying customer.

• Fix the leaks: If your costs are too high, look at your website and your sales process before you blame the ads.

• Budget for data: Ensure you can afford at least 10 clicks a day to give the system a fighting chance.

Running a service business is hard enough without wasting money on marketing that doesn't work. Run the numbers, check your math, and you can advertise with confidence.