If you’re like most small business owners, you don’t have a set marketing budget. Or if you do, you might be unsure if it’s enough.
Some business owners assume marketing is too expensive, while others only invest in it when sales start to drop, leading to inconsistent results. But marketing isn’t just an expense; it’s an investment in growth. Without a structured marketing budget, businesses often either underspend—missing out on growth—or overspend in the wrong places when sales slow.
If you’re still unsure about the value of marketing, check out our previous post, The Hidden Trap: Why SMBs and Startups Can’t Afford to Ignore Marketing.
“Without a structured marketing budget, businesses often either underspend—missing out on growth—or overspend in the wrong places when sales slow..”
Ready to get your marketing spending established? The next step is setting a marketing budget that works for your business—and that’s what we’ll cover below.
Methods to Set a Marketing Budget for Your Business
So, how much should you be spending on marketing for your business?
There’s no one-size-fits-all answer, but most businesses set their marketing budgets in one of two ways:
- As a percentage of revenue, or
- As a percentage of total expenses
Let’s explore when each budget method works best for different business types.
Method 1: Marketing Spend as a Percentage of Revenue
A common approach is to set the marketing budget as a percentage of total revenue, allowing marketing investment to scale with business growth.
What percentage of total revenue should you allocate for marketing? The answer depends on your business type, industry, and situation. Below is data from The CMO Survey 2024 showing marketing budget allocations by business type and industry.
Marketing Budget by Business Type:
- High-growth businesses: Up to 20% or more of revenue, depending on expansion goals.
- Startups: Often 10% or more of projected revenue, especially in the early stages, to build brand awareness.
- Small businesses: Generally 2% to 5% of revenue, but this varies by industry.
- Established businesses: Typically 5% to 10% of annual revenue.
Marketing Budget by Industry Segment (% of Revenue):
| % Revenue | |
| B2B Product | 6.1% |
| B2B Services | 6.2% |
| B2C Product | 10.2% |
| B2C Services | 10.4% |
| Average | 7.7% |
Source: The CMO Survey (Fall 2024)
“A good rule of thumb is to allocate around 7.5% of annual revenue to marketing, adjusting up or down based on your industry and growth goals.”
Applying the Percentage of Revenue Method
Setting your marketing budget by revenue works well if your revenue is stable and predictable. It allows you to reinvest proportionally into marketing as your business grows.
A good rule of thumb is to allocate around 7.5% of annual revenue to marketing, adjusting up or down based on your industry and growth goals.
Method 2: Marketing Spend as a Percentage of Total Budget
A Practical Alternative
Newer businesses or those with unpredictable revenue may prefer to set their marketing budget as a percentage of total expenses to provide better financial control.
The table below features data from The CMO Survey 2024 showing businesses allocate marketing spending by industry.
Marketing Budget by Industry Segment (% of Budget):
| % Revenue | |
| B2B Product | 8.7% |
| B2B Services | 10% |
| B2C Product | 12.2% |
| B2C Services | 9.6% |
| Average | 10.1% |
Source: The CMO Survey (Fall 2024)
“If you follow [percentage of budget] method, allocating around 10% of your total budget to marketing is a strong starting point.”
Applying the Percentage of Budget Method
Setting your marketing budget as a percentage of your total budget is a good approach if you’re starting your business, as it ensures you’re spending what you can afford rather than tying your budget to unpredictable revenue.
If you follow this method, allocating around 10% of your total budget to marketing is a strong starting point.
Which Budget Method Is Right for You?
Choosing the most appropriate budgeting method depends on factors like your business stage, industry norms, and available resources.
General guidance:
- Established Businesses: If you’re an established business with steady revenue, using a percentage of revenue helps you reinvest in growth.
- Startups or Smaller Businesses: If you’re a startup or managing cash flow carefully, basing your budget on a percentage of total expenses may be more sustainable.
- Competitive Benchmarking: To stay competitive, research how much similar companies spend on marketing. While you may not match their budgets immediately, knowing industry benchmarks helps set realistic goals and ensures you’re not underspending compared to your competitors.
“To sum up, if you decide to set your marketing budget by revenue, 7.5% is a good target. If you want to go by your total budget, allocate 10% to marketing as a baseline.
To sum up:
- If you decide to set your budget by revenue, 7.5% is a good target.
- If you want to go by your total budget, allocate 10% to marketing as a baseline.
Where Should Your Marketing Budget Go?
After getting your marketing spending level in place, the next step is effectively allocating your budget for success. How to prioritize your marketing activities is a gigantic topic and will vary based on several factors. We will cover this in future posts.
Not sure where to start? Book a free consultation using the form below, and we’ll help you create a marketing budget and strategy tailored to your business needs so you can invest with confidence. And don’t forget to join our mailing list in the footer to get more content like this delivered to your inbox.
Still wondering if marketing is worth it? Our previous post covers why delaying marketing investment can hurt growth—and why starting sooner makes all the difference.
