How much should a business spend on marketing?

Is there a standard marketing budget?

There is no single right number, but there are useful starting points.

The 7 to 8 percent figure is a long-standing rule of thumb often credited to the U.S. Small Business Administration, aimed at businesses with less than $5 million in revenue and net margins of 10 to 12 percent. It is a good sanity check, not a law.

Remember that "marketing" here includes everything it takes to win customers, like your website, ads, search work, content, branding, sales materials, software tools, and any outside help.

Why is a percentage not enough?

A percentage tells you what similar businesses spend. It doesn't tell you what you should spend to hit your goals. Two businesses with the same revenue can need very different budgets depending on what a customer is worth, how competitive their market is, and how fast they want to grow.

That is why it helps to work out your own number.

How do you set your own marketing budget?

You need four numbers.

1. What a new customer is worth. Use the gross profit you earn from an average customer over a year, or over their whole time with you.
2. What it costs to win one. Total marketing spend divided by new customers. If you don't know, start with an estimate and measure.
3. How many new customers you need. Based on your growth goal.
4. How many leads it takes to win one. If you close one in four leads, you need four leads per customer.

A simple example

• A new customer brings in $4,000 in gross profit over a year.
• You are willing to spend up to $800 to win one, or 20 percent of that profit.
• You want 10 new customers a month.
• So your marketing budget is about $8,000 a month.

If your current marketing wins customers for $500 each, you can grow faster for the same money. If it costs $1,500 each, something needs fixing before you spend more.

How should you split the budget?

The right mix depends on your business, but most budgets cover a few buckets.

• Foundation. Your website, branding, Google Business Profile, and the tools that track leads. Fix this first, because every other dollar works better when it is solid.
• Paid ads. Google, Facebook, Instagram, and others. Fast results, but the cost never stops.
• Search and content. SEO, helpful articles, and showing up in AI answers. Slower, but it lowers your cost per customer over time. See SEO vs paid ads.
• Relationships. Email, follow-ups, referral programs, and reviews. Often the cheapest customers you will ever win.
• Testing. Set aside around 10 percent to try new channels and ideas.

What are common budgeting mistakes?

• Spending on ads before the website is ready. Paying for traffic to a slow, confusing site wastes most of the money.
• Stopping and starting. Marketing works best with steady effort. Turning it off every slow month resets your progress.
• No tracking. If you don't know where customers come from, you can't tell what to cut or grow.
• Judging by clicks or likes. Measure leads, customers, and revenue instead.
• Spreading too thin. Doing a little bit of everything usually does nothing well. Pick a few channels and do them properly.
• Forgetting existing customers. Repeat business and referrals are usually far cheaper than new customers.

Should you hire help or do it yourself?

Many growing businesses start with an outside partner, then build an in-house team once marketing is working and the needs are clear.

How do you know if your marketing is working?

Track these every month.

• Leads by source, such as Google, ads, referrals, or AI tools.
• Cost per lead and cost per customer for each channel.
• Close rate from lead to customer.
• Revenue from new customers.
• Return on spend, meaning revenue or profit from marketing divided by what you spent.

When a channel wins customers below your target cost, put more into it. When it doesn't, fix it or cut it.

How we approach it at dbVantage

We start with a one-page plan, so you always know what we are doing and why. We look at results together and adjust, and you work with Brennen directly. If your website is holding you back, we look at that first. Learn more on our marketing page.