Lately, we’ve been having deep dives into finances with our strategy clients — specifically around marketing budgets. Most understand that marketing is necessary, but the big questions are always the same: When should we start spending? And how much is enough?
Let’s knock out the first question right away: marketing is something you should start investing in as early as possible. As for how much to spend… well, here comes the classic consultant answer — it depends.
But stick with us — we’re going to walk you through the exact framework we use with clients to figure it out. By the end of this post, you’ll be able to set a smart, strategic marketing budget that actually moves the needle.
First Things First: What Counts as Marketing Spend?
It’s easy to assume you’re not spending anything on marketing — especially if you’re not running ads — but chances are, you absolutely are.
Marketing isn’t just flashy Facebook ads or billboards in Times Square. It’s every tool, platform, and person you rely on to get your brand out there.
Let’s break it down:
Tools & Tech
Think about everything powering your marketing engine:
- Your email marketing platform (we use Kit)
- Paid social media tools and features (yes, even those LinkedIn premium subscriptions)
- Web hosting (we’re on Bluehost)
- CRM systems, analytics dashboards, scheduling tools — the works
Note: Some of these are affiliate links, which means we may earn a commission if you choose to sign up — at no cost to you.
People
Whether it’s an in-house team or a group of freelancers, people make the marketing magic happen:
- Graphic and web designers
- Copywriters, ghostwriters, and content creators
- Marketing consultants and strategists
- Agencies and project-based experts
Even if you’re a one-person show, the tools you use are doing the heavy lifting — and that’s a form of investment, too. So yes, everyone is spending on marketing. The question is: are we spending enough to grow?
General Guidelines for Marketing Budgets
Let’s talk numbers. Here’s what businesses across the board are spending on marketing, based on revenue:
- B2B companies: Typically 2–5%
- B2C companies: Closer to 10%
- Average in 2021: 6.4% of revenue
- Average in 2023: 9.1% of revenue
These numbers are trending upward as marketing becomes more competitive and digital channels increasingly pay-to-play. Here’s a peek at average spend by industry (via Deloitte’s CMO Survey):
- Banking & Finance: 9.5%
- Media & Communications: 14.3%
- Consumer Goods: 25.2%
- Professional Services: 7.1%
- Service Consulting: 21%
- Software/Tech: 11.8%
But remember: averages don’t tell the whole story. We need a budget that fits our stage of business and growth goals.
How to Budget for Marketing (Based on Business Stage)
Here’s a high-level look at how we help clients figure out what to allocate based on where they are in their journey.
Launch Phase: Just Getting Started
If we’re building from the ground up, it starts with covering the basics — infrastructure like a website, email list, social media setup, and branding assets. That alone can often be done for less than $300/month (excluding staff).
We recommend setting aside about 20% of the total startup budget for marketing. This covers strategy help, freelancers, and early visibility efforts.
Stabilization Phase: Steady Revenue, Solid Systems
Now we’re in a groove. Revenue is consistent, and the business model is proven.
This is the moment to:
- Build loyalty and retention strategies
- Revisit branding (what worked at launch might not reflect who we are now)
- Strengthen what’s working before expanding to new channels
In this phase, the budget typically lands around 10% of revenue or 20% of profit, depending on margins.
Growth Phase: Scaling Up
This is the green-light moment — we’re ready to expand.
Growth demands a bigger investment. This is where the marketing budget should stretch the furthest. A few benchmarks to work with:
- 20% of revenue
- 40% of profit
- Or: 50–60% of recent profit gains, especially if marketing was the driver behind that growth
For example, let’s say we started running Meta ads in February and they brought in an extra $3,000/month. We could allocate $1,500–$1,800 of that toward reinvesting in what’s working — whether that means scaling the ads or testing new platforms.
Crafting a Budget That Reflects the Business
No two businesses have identical budgets. Some years we go big with a rebrand, new hires, or a full-funnel ad strategy. Other years, we stay lean and make it work with what we’ve got.
Especially for solo founders or small teams, the line between business and personal income gets blurry. Deciding whether to invest in a marketing consultant or take a long-overdue vacation? That’s real.
But when it comes to setting a marketing budget, here’s what we recommend:
Let Your Goals Drive Your Spend
If we don’t have a documented strategy, we’ll end up chasing trends instead of building traction. Set the goals, define the metrics, and ask the magic question:
What will it actually take to reach those goals?
Here’s how to find the answer:
- Analyze competitors: What assets and platforms are they using? What gaps can we fill with our unique approach?
- Study the market: Is demand growing or shrinking? Are there emerging opportunities we can tap into?
- Reverse-engineer the math from the results we want.
Reverse-Engineer Your Budget
Let’s say the goal is a 20% revenue increase this year. Work backward:
- What’s the current conversion rate?
- How many leads or visitors do we need to hit the target?
- Where is our audience spending time online?
- What would it cost to show up in those spaces — people, tools, ads included?
One mistake we see often: trying to grow in a market that’s simply too small. No matter how much is spent, if the audience is limited, we’ll hit a ceiling. In those cases, we either expand the market or diversify the channels.
Pro tip: Use a TAM to SOM breakdown to estimate how much of your market you can realistically reach.
When Not to Cut Your Marketing Budget
If the current economy has you on edge, you’re not alone. We anticipated some bumps following the 2024 election, and unfortunately, that prediction’s playing out.
In uncertain times, the knee-jerk reaction is often to slash marketing. But usually, that’s a misstep. When buyers are more cautious, it takes more effort — not less — to earn attention and trust.
If cuts are necessary, cut what’s not working — not everything. Brands that stay visible are the ones people remember when they’re ready to spend again.
Final Thoughts
There’s no one-size-fits-all formula for marketing budgets. But there is a smart, strategic way to figure it out.
Know your stage. Get clear on your goals. Reverse-engineer the spend. And above all, don’t let fear or comparison stop you from investing in the one thing that keeps your business alive and growing: visibility.
