Do you struggle with knowing how much to spend on marketing? You’re not alone. Many business owners I talk to feel like they’re just guessing when it comes to marketing budget planning.
A client of mine who runs a small accounting firm used to set her marketing budget by looking at what was left over after all other expenses. She was spending about 2% of her revenue on random marketing efforts. After creating a strategic marketing budget plan, she increased her spending to 8% of revenue and saw her business grow by 27% the next year.
Let me show you how to create a marketing budget that builds your business.
Why Marketing Budget Planning Matters for Business Growth
Think of your marketing budget like planting seeds for your future harvest. Plant too few seeds, and you’ll get a smaller crop. Plant them randomly without a plan, and you’ll waste good seeds.
A good marketing budget plan helps you:
- Generate consistent leads and sales
- Plan your cash flow more accurately
- Make smarter decisions about where to invest
- Measure what’s working (and what’s not)
- Beat your competition
One business owner told me, “Once I had a real marketing budget plan, I stopped panicking about spending money and started seeing marketing as an investment.”
How Much Should Your Business Spend on Marketing?
Here’s what successful businesses typically spend on marketing:
- Small businesses (under $5 million revenue): 7-12% of revenue
- Mid-sized businesses ($5-20 million): 6-10% of revenue
- Large businesses (over $20 million): 5-15% of revenue (varies by industry)
Different industries have different norms:
- Retail: 4-10% of revenue
- Professional services: 5-15% of revenue
- Software/tech: 10-20% of revenue
- Healthcare: 6-12% of revenue
New businesses usually need to spend more (10-20% of revenue) to build awareness. Established businesses with loyal customers might spend less.
5 Steps to Create Your Marketing Budget Plan
Step 1: Set Clear Business Goals
What do you want marketing to help you achieve? For example:
- Increase revenue by 25%
- Add 100 new customers
- Launch a new product line
- Enter a new market
- Boost your average sale by 15%
The more specific your goals, the easier it is to build your budget.
Step 2: Know Your Customer Acquisition Cost
How much does it cost to get one new customer? Calculate:
- Add up all marketing expenses for the past year
- Divide by the number of new customers you gained
- That’s your Customer Acquisition Cost (CAC)
For example, if you spent $50,000 on marketing and gained 500 new customers, your CAC is $100.
Now calculate your Customer Lifetime Value (CLV)—how much a typical customer spends with you over time. Your marketing budget should keep your CAC well below your CLV (a good rule is CAC should be 1/3 of CLV or less).
Step 3: Create a Channel-by-Channel Plan
List all your marketing channels and allocate budget to each:
- Website ($2,000-10,000/year for maintenance and updates)
- SEO ($1,000-5,000/month for ongoing optimization)
- Content marketing ($1,500-7,000/month)
- Social media ($1,000-3,000/month)
- Email marketing ($500-2,000/month)
- Paid advertising ($1,000-10,000/month)
- Events/trade shows ($5,000-50,000/event)
- PR ($2,000-10,000/month)
Don’t try to do everything! Focus on 3-5 channels that work best for your business.
Step 4: Build in Flexibility
Smart marketing budget planning includes:
- 70% for core marketing activities that you know work
- 20% for testing new channels and ideas
- 10% for unexpected opportunities
This approach lets you experiment without risking your whole budget.
Step 5: Create Measurement Systems
You can’t manage what you don’t measure. For each marketing channel, track:
- Cost per lead
- Conversion rate
- Customer acquisition cost
- Return on investment (ROI)
Review these numbers monthly and adjust your budget accordingly. Move money from low-performing channels to high-performing ones.
Marketing Budget Planning Tools and Templates
Make your life easier with these tools:
- Spreadsheet templates: Start with a simple Excel or Google Sheets template to track expenses and results
- Project management tools: Asana, Trello, or Monday.com help you manage marketing campaigns and budgets
- Marketing platforms: HubSpot, Marketo, or SharpSpring include budget tracking features
- Analytics tools: Google Analytics helps track website performance
One of my clients uses a simple monthly dashboard that shows exactly how much they’re spending and what results they’re getting. It takes them 30 minutes to update and keeps their entire team on the same page.
Common Marketing Budget Planning Mistakes
Avoid these budget blunders:
- Not having a real plan: Random spending leads to random results
- Cutting marketing first when times get tough: This is like eating your seed corn
- Spending too much on one channel: Diversify for stability
- Setting and forgetting: Review and adjust your budget quarterly
- Ignoring the data: Let results—not hunches—guide your decisions
Building a Marketing Budget Plan That Grows With You
Your marketing budget planning should evolve as your business grows:
Startup Phase
- Higher percentage of revenue (15-20%)
- Focus on brand awareness and customer acquisition
- Test multiple channels to see what works
Growth Phase
- Moderate percentage (8-12%)
- Focus on scaling what works
- Add marketing team members or agency support
Established Phase
- Lower percentage (5-8%)
- Focus on efficiency and customer retention
- More sophisticated tracking and optimization
Ready to Create Your Marketing Budget Plan?
Creating a strategic marketing budget isn’t about spending more—it’s about spending smarter. Even small businesses can see big results with the right marketing budget planning process.
Start by analyzing what you’re currently spending. Then create a plan that aligns with your business goals. Track your results, adjust as needed, and watch your business grow.
Need help creating your marketing budget plan? Download our free Business Marketing Budget Planning Template or schedule a free 30-minute strategy session to discuss your marketing budget.
Note: If you work with a nonprofit organization, take a look at our guide on creating an effective nonprofit marketing budget for strategies tailored to mission-driven organizations.
Remember: in business, marketing isn’t an expense—it’s an investment in growth.
Winged Gods Creation helps businesses create marketing that works. We’ve been helping organizations tell their stories for nearly 30 years.
