Costs and pricing
Part of Google Shopping free listings vs paid ads: a UK comparison
Google Shopping free listings vs paid ads: a UK comparison
Free product listings and paid Shopping campaigns do different jobs for UK retailers. Compare where each appears, what triggers a click cost and how VAT is treated.
What to take away
- Free listings and paid Shopping ads use the same product feed, but only paid placements charge for a click.
- Free listings give broad coverage on the Shopping tab; paid campaigns buy rank, priority and budget control.
- Neither is automatically cheaperfree listings cost staff time, paid ads cost media spend.
- VAT-registered businesses normally reclaim VAT on ad spend, and there is no media VAT on free listings.
- Compare the two on incremental profit, not attributed revenue.
Where each format appears
A free listing is built from your product feed. It appears on the Google Shopping tab and in some Search results, and Google charges nothing when a shopper clicks it. The Google Shopping surface aggregates merchant feed data rather than selling placement outright (Google Shopping).
Free listings vs paid Shopping ads
Free listings
- Click cost
- None
- Where shown
- Shopping tab, some Search
- Ranking control
- Feed quality
- Feed needed
- Same feed
- Typical use
- Whole catalogue
Paid Shopping ads
- Click cost
- Billed per click
- Where shown
- Shopping tab, Search, sponsored
- Ranking control
- Bids and budgets
- Feed needed
- Same feed
- Typical use
- Selected SKUs
Paid Shopping ads run through Google Ads, where position depends on your bid, the product data and expected performance (Google Ads). You pay for each click. Both formats read the same feed, so a weak title damages both.
Free listings
- Click cost
- None
- Where shown
- Shopping tab, some Search surfaces
- Ranking control
- Feed quality and relevance
- Feed needed
- Yes, same feed
- Typical use
- Whole catalogue, long tail
Paid Shopping ads
- Click cost
- Set by auction, billed per click
- Where shown
- Shopping tab and Search, marked as sponsored
- Ranking control
- Bids, budgets, priority settings
- Feed needed
- Yes, same feed
- Typical use
- Selected SKUs, peak trading
What free listings cost in practice
No click charge is levied, but the format still consumes resource. Someone has to keep prices, stock and delivery promises aligned between the feed and the landing page.
Eligibility is the other limit. Products with missing identifiers or mismatched pricing can be held back, and that is a feed problem rather than a bidding problem. Our guide to fixing Google Merchant Centre feed disapprovals covers the usual causes.
Free listings also tend to win lower-intent queries. That helps discovery, but it matters less when a shopper is ready to buy a specific model.
Where paid ads earn their place
Paid Shopping ads buy two things free listings cannot: priority in the auction and control over which products receive spend.
They also cover queries where free listings rarely appear, including searches on rival brand names. Paid placements must still be recognisable as marketing, which the CAP Code requires and the ASA enforces (CAP advertising codes).
That control has a price. Budget spent on a low-margin line can look efficient in a report that counts revenue only.
If you sell into the EEA, Shopping placements there must run through a Comparison Shopping Service. We compared Google Shopping CSS partners in the UK, including how each one charges.
Worked example: £2,000 a month in paid spend
These figures are illustrative, not benchmarks. Suppose a UK retailer lists 400 SKUs at an average price of £45, with £18 of gross margin per order.
Worked example: £2,000 monthly spend
- £2,000monthly paid spend
- £0.50illustrative cost per click
- 4%conversion rate
- £12.50media cost per order
Worked example: £2,000 a month
- Publish a clean feed so every SKU can appear as a free listing. Media cost is £0; the cost is a few hours of feed upkeep each month.
- Track free clicks and orders separately from paid ones so you know what coverage the catalogue already has.
- Put the £2,000 behind the 40 SKUs with the best conversion rate and the strongest margin.
- At an illustrative cost per click of £0.50 and a 4% conversion rate, each order costs £12.50 in media and leaves £5.50 of the £18 margin.
- Scale spend only while that £5.50 holds. At £1.00 per click, media cost per order reaches £25 and the line loses money.
How VAT applies to each format
Free listings carry no media charge, so there is no VAT to reclaim from Google. Feed software is an ordinary business expense, and VAT charged on it follows the usual input tax rules.
Paid ad spend does carry VAT. A VAT-registered business can normally reclaim VAT on media spend as input tax where the ads support taxable activity. If you are not registered, treat the 20% as part of the cost of the click.
Common questions
Do free listings cut what I pay for paid Shopping ads?
They change the mix of clicks you win, not your bids. Measure the two placements together.
Should I pause paid ads if free listings convert well?
Only if you can show the paid clicks were incremental. Pausing often loses sales that free listings would not have won.
Do both formats need the same product feed?
Yes. Shopping ads and free listings read the same feed, so a missing identifier or a price mismatch affects both.
Is VAT charged on free listings?
No. There is no media charge, so no VAT arises on the clicks themselves.
