It is one of the hardest questions for any owner: how much should I actually spend on marketing? Spend too little and you stay invisible. Spend badly and it vanishes. Here is how to think about it properly.
The common rule of thumb
The figure you will hear most is 5 to 10 percent of revenue, leaning toward the higher end if you are actively trying to grow. It is a reasonable starting point, but it is a blunt tool. A better way to set your budget is to work from what a customer is worth and what you are trying to achieve.
Start from customer value, not a percentage
If one new customer is worth £1,000 to you, spending £200 to win them is a bargain. If a customer is worth £50, the maths is very different. Knowing your numbers, what a customer is worth and how many you want, tells you far more than any blanket percentage. Marketing is an investment, and the question is the return, not the cost.
Get the foundation right first
Before pouring money into ads or SEO, make sure the thing they point at actually works. Sending traffic to a website that does not convert is pouring water into a bucket with a hole in it. A site built to convert is where your marketing budget either pays off or leaks away. If you are not sure what that costs, see how much a website costs.
Then spend where it is measurable
Put your budget into things you can measure and improve:
- SEO, for enquiries that compound over time without paying per click.
- Paid ads, for enquiries now, judged on cost per enquiry. See SEO vs Google Ads.
- Automation and AI, to make sure none of the enquiries you pay for get wasted.
If you cannot measure what a pound of spend brings back, you cannot improve it.
Do not spread it thin
The most common mistake is splitting a small budget across too many channels, so none of them gets enough to work. Better to do one or two things properly than five things badly. Focus, measure, and scale what pays.
The right marketing budget is not a fixed percentage. It is whatever brings back more than it costs, spent on things you can measure and improve.
Want a budget mapped to your numbers and goals? Book a free call and we will help you work out what to spend and where, across our services.
Frequently asked questions
How much should a small business spend on marketing?
A common rule is 5 to 10 percent of revenue, higher when growing. But a better guide is what a customer is worth and what return you need. Marketing is an investment judged on return, not cost.
What should I spend my marketing budget on first?
Get the foundation right first: a website that converts. Then put budget into measurable channels like SEO and paid ads, with automation to make sure no enquiry you pay for is wasted.
Why is my marketing budget not working?
Often it is spread too thin across too many channels, or it points at a website that does not convert. Focus on one or two things done properly, and make sure the destination works.
Is marketing a cost or an investment?
An investment, when done right. If you know what a customer is worth and you can measure what each pound brings back, marketing should return more than it costs.