How to Calculate Your PPC ROI for Service Businesses

Many service business owners look at their Google Ads dashboard, see they spent $2,000, and have no idea if they actually made any money. Clicks and impressions don’t pay the bills. Booked jobs do.

PPC ROI is the number that answers the question. This guide walks through the five figures behind it, the difference between ROI and return on ad spend (ROAS), and a worked example you can copy with your own numbers. It builds on our Paid Advertising Guide, and if you would rather skip the arithmetic, the free PPC ROI calculator does it for you.

PPC ROI vs ROAS: Two Numbers, Two Jobs

Return on ad spend is the number your ad platform shows you. It is revenue divided by ad spend, written as a multiple: $9,000 in jobs from $2,000 in ads is a 4.5× ROAS.

PPC ROI goes one step further. It subtracts what you spent before dividing, and it counts every cost of running the ads, including management fees. ROAS tells you whether a campaign is working. ROI tells you whether it is worth doing.

A campaign can post a healthy ROAS and still lose money once fees and the cost of doing the work are counted, which is why you want both.

1. Cost Per Click (CPC)

Cost per click is what you pay each time someone clicks your ad. It is the first number in the chain, but on its own it says very little. A $12 click that books a $9,000 roof replacement beats a $2 click that books nothing.

What matters is how many clicks it takes to produce a lead. If your landing page turns 10% of clicks into calls or form fills, a $5 CPC becomes a $50 lead. Raise that page to 20% and the same click produces a $25 lead.

2. Cost Per Lead (CPL)

Your cost per lead is how much you spend to get one person to call you or fill out a form. If you spend $1,000 on ads and get 20 calls, your CPL is $50. But remember, a lead is not a customer yet.

3. Cost Per Acquisition (CPA)

Your cost per acquisition is how much you spend to actually book a paying job. If you got 20 leads at $50 each but only closed 5 of them, you spent $1,000 to get 5 jobs. Your CPA is $200.

This is the most important metric in PPC advertising. If your average profit on a job is $500 and your CPA is $200, your ads are highly profitable. If your profit is $150, you’re losing money.

4. Customer Lifetime Value (LTV)

Most businesses only look at the revenue from the first job. But if an HVAC customer pays $200 for a tune-up today, they might pay $8,000 for a new system in three years. When you factor in LTV, you realize you can afford to spend much more to acquire a customer than your competitors.

5. The PPC ROI Formula, With an Example

PPC ROI = ((revenue from ads − total ad cost) ÷ total ad cost) × 100.

Here is one month for a home service company, using the numbers from the sections above:

• Ad spend: $2,000, plus a $497 management fee. Total ad cost: $2,497.
• Leads: 40, which is a $50 cost per lead on the ad spend.
• Close rate: 25%, so 10 booked jobs and a $200 cost per acquisition.
• Average job: $900, so $9,000 in revenue.

That one month gives you three different answers, and all three are correct:

• ROAS: $9,000 ÷ $2,000 = 4.5×.
• PPC ROI on revenue: ($9,000 − $2,497) ÷ $2,497 = 260%.
• PPC ROI on profit: if your gross margin is 40%, those jobs produced $3,600 in gross profit. ($3,600 − $2,497) ÷ $2,497 = 44%.

The last number is the one to run the business on. It is smaller, and it is the only one that already accounts for the cost of doing the work. It also leaves out repeat business, so if those 10 customers come back, the real return is higher.

6. How to Track PPC ROI

The formula is only as good as the revenue figure you put into it. To get that figure you need call tracking and a CRM, so every booked job can be tied back to the keyword and ad that produced the call. Without that link you are measuring leads and guessing at revenue.

If you need help setting this up, our paid advertising systems include full closed-loop reporting.

Run Your Own Numbers

The PPC ROI calculator takes your monthly budget, industry, customer value and close rate and returns the leads, customers, revenue and return on ad spend to expect. Every result is a link you can save or send. If you are weighing ads against organic search, the SEO vs PPC calculator puts the same budget into both.

Frequently Asked Questions

If you are weighing Local Services Ads specifically, the pricing model is different from everything here – we break it down in how much Google Local Services Ads cost.