Free tool · Planning
Marketing budget calculator
Two quick ways to set a marketing budget you can defend: a percentage of revenue, and working back from what a new customer is worth.
Or work back from what a customer is worth
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How to use the Marketing Budget Calculator
How this calculator works
The first part applies the U.S. Small Business Administration's rule of thumb: about 7 to 8 percent of revenue for businesses under $5 million in sales with 10 to 12 percent margins. (SBA) Move the slider up if you're launching or growing fast, down if margins are thin.
The second part works back from a customer: profit per customer × close rate = the most you can pay for a lead and break even. Aiming for half of that leaves room for profit.
For the full reasoning, examples and common mistakes, read how much a small business should spend on marketing. Running ads already? Check them with our ROAS calculator.
FAQ
Common questions
What percentage of revenue should I spend on marketing?
The U.S. Small Business Administration suggests 7 to 8 percent of revenue for businesses under $5 million in sales with net margins around 10 to 12 percent. Use it as a starting point and adjust for your goals and margins.
Which method should I trust: percentage of revenue or customer value?
Use both. The percentage gives a sanity check; the customer-value method tells you what you can afford to pay to win each customer. If they are far apart, your growth goal or your conversion rate needs a second look.
Does the budget include tools and agency fees?
Yes. Count your website, software, freelancer or agency fees and ad spend together. Otherwise you will underestimate what marketing really costs.
Is the suggested split a rule?
No. It is a reasonable starting point for a local service business. Move money toward the channels that bring customers at the lowest cost once you have a few months of data.
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