Strategy
How Much Should a Small Business Spend on Marketing?
How much should a small business spend on marketing? See common percentage-of-revenue guidelines, how to split your budget, and how to adjust as you grow.
Every business owner eventually asks it: how much should I actually be spending on marketing? Spend too little and growth stalls. Spend too much without a plan and money disappears fast.
There's no single right number, but there are reliable guidelines. Here's how to set a marketing budget that fits your business.
The Common Rule of Thumb
A widely cited guideline is that small businesses should spend about 7% to 8% of gross revenue on marketing. Many businesses fall somewhere between 5% and 12%, depending on their goals and industry.
Here's what that looks like at different revenue levels:
$250,000 in revenue: about $12,500 at 5%, $20,000 at 8%, or $30,000 at 12%.
$500,000 in revenue: about $25,000 at 5%, $40,000 at 8%, or $60,000 at 12%.
$1,000,000 in revenue: about $50,000 at 5%, $80,000 at 8%, or $120,000 at 12%.
$3,000,000 in revenue: about $150,000 at 5%, $240,000 at 8%, or $360,000 at 12%.
That total includes everything: advertising, agency or freelancer fees, content creation, software, printing, sponsorships, and events.
When to Spend More
You may want to budget toward the higher end if:
You're a new business trying to build awareness quickly
You're entering a new market or launching a new service
Your industry is competitive, like legal, home services, or healthcare
You have strong margins and a proven way to turn leads into customers
You're behind competitors and need to catch up online
When You Can Spend Less
A lower budget can work if:
Most of your business comes from referrals and repeat customers
You're in a niche market with little competition
You're at capacity and focused on keeping current customers happy
How to Split Your Marketing Budget
Every business is different, but a balanced budget often includes:
Content creation: photos, video, and written content that fuel every other channel
Paid advertising: Google, Meta, or other ads to drive leads now
SEO and website: long-term visibility that keeps working month after month
Social media: staying visible and building trust with your community
Tools and tracking: analytics, CRM, and software that help you measure results
A healthy mix pairs short-term channels like paid ads with long-term investments like SEO and content, so you're not starting from zero every time you pause your ads.
Think in Terms of Return, Not Just Cost
Marketing isn't just an expense. The real question is what you get back.
Track these numbers to see what's working:
Cost per lead: how much you spend to get each inquiry
Close rate: how many leads become customers
Customer lifetime value: what a customer is worth over time
Return on ad spend: revenue from ads compared to ad spend (our free ROAS calculator can help)
When you know a customer is worth $2,000 over time and it costs you $200 to get one, it becomes much easier to decide how much to spend.
Start With a Plan
The worst marketing budget is one that's spent randomly: a boosted post here, a sponsorship there, with no way to measure what worked. A clear plan with defined goals and tracking turns your budget into an investment.
Get a Marketing Plan That Fits Your Budget
At AdVantage Marketing, we help businesses across Utah and Idaho build marketing plans that match their goals and budget, with content, SEO, and ads working together. Learn more about our strategy services or get in touch.
