Most guidance lands somewhere between five and ten percent of revenue for marketing. Newer businesses and those pushing hard for growth sit toward the top of that range or above it, while established businesses that run on referrals sit lower. Treat the percentage as a starting point, not an answer, because your margin and goals matter more.
Why the percentage is only a starting point
The five-to-ten figure gets repeated so often that owners treat it like a law of physics. It is not. It is a rough average across wildly different businesses, and averages hide everything useful. A landscaping company with tight margins and a full crew cannot spend like a law firm where one new client covers a year of ads. Same percentage, completely different reality.
So use the range the way you would use a neighbor’s opinion at the counter: worth hearing, not worth building the year around.
Four things that should bend the number
Your margin
Marketing comes out of gross profit, not revenue. A business keeping fifty cents of every dollar can afford a bigger swing than one keeping fifteen. If margins are thin, a heavy marketing budget can put you in the strange position of growing revenue while going broke. Know your margin before you pick a number.
Customer lifetime value
If a customer buys once, you can only spend a slice of that one sale to win them. If a customer stays for years, calls you every spring, and refers their sister, you can spend far more to acquire them and still come out well ahead. HVAC, lawn care, accounting, and most service trades live on repeat business, which quietly justifies a bigger budget than the first invoice suggests.
Your growth goals
Maintaining is cheaper than growing. If you are comfortable at current volume, a lean budget that protects your reputation, your reviews, and your visibility may be enough. If you want to add a crew, a truck, or a second location, the budget has to fund the reaching, not just the maintaining.
Your stage
A business nobody knows yet has to buy attention. A thirty-year name in town already owns attention and mostly needs to defend it. That is why new businesses often spend above the range for a while and old ones can sit below it, sometimes for years, until the referral well quietly starts running low.
A better method: budget backward from the goal
Percent-of-revenue budgeting starts with what you made and works forward. Goal-based budgeting starts with what you want and works backward, and it usually produces a saner number.
- Decide the growth you actually want. Say, twenty more jobs a month.
- Estimate what a new customer costs to acquire in your market. If you have run any ads or tracked any leads, you have a rough idea. If not, that is the first thing to find out.
- Multiply, add the cost of the assets that do the converting (a website that works, follow-up email, review generation), and that is your budget.
Sometimes the backward math lands right inside the classic range, which is reassuring. Sometimes it tells you the goal costs more than you planned to spend, which is uncomfortable but far better to know in January than in November.
What actually counts as marketing spend
Owners often think they spend more than they do, or less. Count all of it: ads, the agency or freelancer, website hosting and maintenance, email software, photography, sponsorships, the lettering on the truck, print, and a fair share of any employee time spent on marketing. What does not belong in the bucket: discounts you give at the register, and general software the whole business uses. When everything is counted honestly, plenty of “we spend a fortune on marketing” businesses discover they are at two percent, and it explains a lot.
When to break the rule on purpose
- Launching or entering a new market: spend heavy early, because nobody can hire a business they have never heard of.
- A competitor closes or retires: their customers are choosing someone new right now. Temporary overspend can capture years of value.
- Revenue has gone flat: a plateau usually means the current inputs have found their ceiling. We cover that in our guide to breaking revenue plateaus, and holding the same budget while expecting a different result rarely ends the flat years.
- Cash is genuinely tight: cut with a scalpel, not a hatchet. Keep the website, the reviews, and whatever channel demonstrably brings customers. Pause the rest.
Give the number twelve months to be judged fairly
Whatever budget you set, judge it on honest timelines. SEO takes three to six months to show meaningful movement. A fair ad test runs for months, not weeks. A budget reviewed every thirty days by a nervous owner gets cut right before it works, and we have watched that movie more than once. Set the number, tie it to specific goals, check leads and jobs monthly, and judge the whole thing yearly.
If you want a second set of eyes on the math, this is exactly what our marketing strategy consulting is for, and our growth guides cover the surrounding decisions. Ten percent aimed at the wrong things loses to four percent aimed well, every time.
Want a budget built from your numbers, not a rule of thumb?
Bring your revenue, your margin, and your goal for next year. We will help you work the math backward to a number you can defend, on month-to-month terms with no long contract to regret.