Budget Workbench
Set a marketing budget you can defend: four proven methods, each fully worked.
How to calculate a marketing budget you can defend
Most small businesses set their marketing budget by feel: whatever was left over last year, whatever a competitor supposedly spends, whatever seems affordable right now. The problem isn't the size of the number so much as its justification. A number without a method can't be defended, not to leadership and not to yourself when the year gets hard and marketing is the first line on the chopping block.
The Budget Workbench walks you through four proven budgeting methods, from the five-minute classic to the gold standard. Each one shows its complete working.
How much marketing budget is normal for a small business?
The most robust rule of thumb comes from reviews of the big effectiveness studies: 5 to 10 percent of revenue delivers the best return on investment across industries. A business with $500,000 in revenue lands at $25,000 to $50,000 a year, everything included: ads, website, fairs, sponsoring.
More important than the exact amount is the split: the research of Binet & Field shows roughly 60 percent should go into long-term brand building and roughly 40 percent into short-term sales activation.
Which budgeting method fits you?
- Advertising-to-sales ratio: you need a rough number in five minutes.
- Competitive parity & ESOV: you roughly know your market's ad spend and want to check whether your budget matches your ambitions.
- Objective & Task: you have funnel data and want to justify every dollar with an expected return.
- Triple-Cooked: you have neither competitor data nor a funnel. The best starting point for most SMEs and freelancers.
Frequently asked questions
What percentage of revenue should I spend on marketing?
Between 5 and 10 percent of annual revenue if you want to grow. Much less usually means staying invisible. Young businesses without awareness often sit above that.
Does my own working time count towards the marketing budget?
For budgeting, count external spend: ads, tools, agencies, production. Your working time is a second, separate budget worth planning on its own.