Should my startup pay to advertise?

Ad Spend Calculator for Healthy Business by Qwilr

Don't listen to people who tell you paid advertising isn't a good idea. If an ad produces the right behaviors (e.g. sign ups to your site) at the right price, it absolutely can work in your go to market strategy. This tool helps you understand what you can afford to pay for advertising, based on the economics of your business and the conversion rate of your advertising and sales funnel.

We originally built this for internal use at Qwilr and we found it pretty darn useful, so like good netizens, we've decided to share it.

Business metrics

LTV - Life Time Customer Value

Your LTV is:


CAC - Customer Acquisition Cost

Let's assume here that this is going to be your only CAC for these customers. CAC no more than 1/3 LTV is a standard SaaS rule of thumb. CAC repayment in first 12 months is also a popular rule.

To acquire a customer, you can afford to pay:


Costs per method

Pay per signup

If you want to pay advertisers for each signup.

To get 1 paying customer

You'll need 20 signups

For each signup you can afford to pay:


Pay per click

Here we've assumed that each click on your ad, and resulting visit to your site, is from a unique visitor.

To get 1 paying customer

You'll need 80 visits to your site

For each visit you can afford to pay:


Pay per impression

Display advertising prices are usually quoted in CPMs (cost per mille, aka cost per thousand).
Don't ask us why 🙂

To get 1 paying customer

You'll need 2667 Impressions of your ad

For 1k displays you can afford to pay:


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About this tool

We first created this tool in 2014 and have been refining it as the performance marketing landscape has evolved. One constant concern for many founders and marketing leaders, however, is the risk associated with dependency on paid channels.

It's not unusual to see startups allocating more than 60% of their budget to performance marketing… Diversity, therefore, is key. An over-reliance on holistic paid marketing or on one or two volatile channels can place any business in a precarious position if a channel's ROI suddenly declines or market conditions shift.

That's why we advocate for a more balanced approach, that incorporates multiple channels and tactics - from SEM and paid social to other channels like SEO, content marketing, partnerships, product growth and brand marketing. Plus, it's essential to have a solid operational foundation with efficient marketing and sales tools. This ensures comprehensive reporting and minimizes time spent on low value admin.

A diverse channel mix not only mitigates some risk, it increases your chances of engaging potential customers at different stages of their decision-making journey. Different individuals have varied preferences when it comes to consuming content and making purchasing decisions. Therefore, with a multi-channel approach you're able to meet your audience where they are, maximize your reach, improve sales velocity and ensure your marketing efforts complement your sales process.

The Qwilr Ad Spend Calculator tool supports this moderated approach to performance marketing by ensuring you start with your metrics and cost guardrails. It's a practical way to get perspective and clarity prior to further investment in paid channels. This visibility enables informed decision-making, balanced spending, and ultimately, drives more sustainable growth.

If you'd like to learn more about Qwilr, a great place to get started is checking out our proposal templates or proposal generator. However, if you'd like to dig deeper, visit our homepage to learn more about why Qwilr is one of the most popular sales proposal software options.