Alternatively why not start by determining how many customers you want deciding on an acceptable customer acquisition cost and then multiplying the two?
How Much Should You Budget For Marketing?
This is one of those questions that business owners wonder about, but aren’t sure who to ask. And yes, you should have marketing in your budget. It’s not a “wait until a good opportunity comes along” sort of thing.
If you budget for marketing and create an actual plan – you are 95% more likely to:
- Actually market consistently
- Spend to your budget, rather than impulse shop
- Track and measure success of marketing efforts
- Be consistent in your message and delivery
So back to…how much should you spend? A good rule of thumb is at minimum of 4-7% of your gross sales. Some marketers recommend as much as 10%. There are many variables, like the maturity of your business, percentage of repeat business and the lifetime value of a client. (We’ll talk about how to figure that out soon!)
But if you’d like to get some specific, every industry has a typical percentage of sales that is generally used for advertising and marketing expenditure projections.
Why not reach out to your industry trade and professional groups? They should be able to give you the specifics in your field.
Author: Drew McLellan (35 Articles)
Drew McLellan gets branding and marketing and he really wants you to get it too. So for the past 20+ years, he’s told stories, asked questions, and milked sacred cows. All to help clients discover their brand so they can create authentic love affairs with their customers. Considered a national branding expert, Drew is a highly sought after speaker and has given about a zillion presentations at national conferences, key note addresses, training for his peers in the profession, college students and even his daughter’s tenth grade class. Over the years, Drew has lent his expertise to clients like Nabisco, IAMS pet foods, Kraft Foods, Meredith Publishing, John Deere, Iowa Health System, Make-A-Wish, University of Central Florida, SkiDoo and a wide array of others. Today, he and his agency work primarily with BtoB clients who recognize the power of knowing and living your own story. Blog: http://www.DrewsMarketingMinute.com E-mail: drew@mclellanmarketing.com Twitter: http://www.twitter.com/drewmclellan Facebook: Drew McLellan
4 comments - add yours
John
May 27, 2008
Noobpreneur
May 27, 2008
Drew,
I agree – you could get out of control if you don’t have budget in place 
My marketing budget for my offline business is 5% from revenue/sales. For my online busienss, I budget 20% for the marketing.
Cheers!
Drew McLellan
May 28, 2008
John,
Without a doubt, there are many ways to set a marketing budget. And there is probably not one absolutely correct way. My point is — you need to have one.
As long as the methodology is sound — you are probably ahead of 95% of your competitors simply by having a budget at all!
Drew
Drew McLellan
May 28, 2008
Noobpreneur –
Bravo for having budgets in the first place. How did you come to determine your percentages?
Drew
