Start with the jobs you need, not a percentage
Four numbers give you a budget that means something:
- How many new customers do you need this year? Not want. Need, to hit the revenue target after accounting for repeat work.
- What is a customer worth? Average job value, times how many times they come back, minus the cost of delivering it.
- What can you afford to pay for one? A share of that gross profit, sized so the work is still worth doing.
- How many leads make one customer? If one in three quotes becomes a job, you need three leads per customer.
Multiply through and you have a monthly budget derived from your own business rather than from an industry average.
A worked example
Say you need 60 new customers this year. A customer is worth $1,200 in gross profit over their first year. You are willing to spend a quarter of that to acquire one, so $300. You close one in three enquiries, so you need 180 leads. If a lead costs $100 across your channels, that is $18,000 for the year, or $1,500 a month.
Those numbers are illustrative, and yours will differ. The point is the method: every figure is one you can check and improve, and when a channel misses the target you know by how much.
Split it by job, not evenly
Once you have the total, allocate it to the work you want more of rather than spreading it evenly. A high-margin service justifies a higher cost per lead than a low-margin one. Most small businesses discover that one or two services deserve most of the budget and one deserves none.
Leave room for the base layer
Some of the budget is not campaign spend at all: the website that all traffic lands on, photography that feeds every channel, the review routine, and the tracking that tells you what worked. Underfunding those makes everything else more expensive, in the same way that skipping maintenance makes every repair cost more.
Review quarterly, not monthly
Monthly reviews encourage panic. Most channels need a quarter to produce a signal you can trust, especially with small numbers. Look monthly at whether the leads are arriving and quarterly at whether the cost per booked job is where it needs to be.
When to spend more
If a channel produces booked jobs below your target cost and you have capacity to service more, the correct move is to spend more until either the cost rises or the capacity runs out. Most small businesses stop far too early, because the budget was set by a rule of thumb rather than by the maths.
Common questions
What percentage of revenue should I spend?
It is the wrong question, but if you need a sanity check, the number that matters is cost per booked job against gross profit per job. That ratio tells you far more.
Should the budget include my agency fee?
Yes. Total marketing cost is what you should judge against results, including fees, software and photography.
What if I do not know my numbers?
Start with rough figures and improve them. Even an approximate average job value beats setting the budget by feel.
How much should a new business spend?
More than an established one relative to revenue, because nothing is compounding yet. Size it to what you can sustain for six months, not one big month.
Where to start
Work out what one new customer is worth to you over their first year. Most owners have never calculated it, and it changes every marketing decision that follows. Setting the budget and the channel split is part of a marketing strategy engagement.