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How much should you spend on marketing?

How much should you spend on marketing?

By on Mar 1, 2018

Reading time: 4 minutes

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The question I often hear and it’s probably one of the most important one:

How much should I spend on marketing?

Earlier, when only the big companies did marketing, it was a business expense, nothing more.

The general attitude was: “Ok, we have a yearly budget, let’s spend this amount on marketing, just because we must do some marketing.”

Marketing expenditures were usually big brand campaigns, nothing like the sophisticated, multi-faceted approaches used today.

Now, business owners are starting to see that marketing costs are not an expense, but an investment.

What does marketing achieve?

You put money into it, and it generates a return that can be twice, three times, ten times more than your investment. How does this happen?

With a sales funnel that converts leads into buyers.

But who generates the leads?

Marketing does.

What is the outcome?

Sales. More sales. And more sales!



So how much should I spend on my marketing?

Small businesses spend an average 7-8% of their revenue on marketing.

Entrepreneurs spend way less on their marketing, typically only 1-4%.

How much you should spend depends on a lot of factors. For example: How much money you have, how much money your marketing generates, or which marketing channels you use.

If you see a marketing tool is working (generates more money than it costs), you can put more money in it as long as you see a rising curve of return on investment.

As soon as the curve starts to flatten out , you might lower the marketing budget, find other marketing tools that work, or change something in the current marketing plan.  

What should I spend my marketing budget on?

Good question. The range of marketing tools you can buy and use is virtually endless. It depends how on the size of your company, how much revenue you earn, and how big are your goals. Here is an example of a simple plan for entrepreneurs who make under $60,000 a year.

Name What is it for Price
Domain Have a website $10/year
Hosting Have a website $100/year
WordPress Have a blog Free
Mailchimp Email marketing Free (up to 2000 subscribers)
Facebook ads Facebook is one of the best place for advertisers. If your audience is not on Facebook, find another social media channel. 4-5% of your revenue
Other marketing channels For best results, use more than one marketing channel and tactic 3-4% of your revenue
Other For unexpected costs 1% of your revenue
Total   8-12% of your revenue


These are just the core marketing tools that a startup entrepreneur typically needs.

If you tend to spend more, raise the amounts you spend on each, or include more marketing channels in your plan.

If you are not creative enough to build your own website, blog, and autoresponder, you can hire someone, but the costs will increase. However, the positive impact of a professionally built website can more than outweigh the costs.  


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