Before you ask how much you should spend on marketing, answer an easier question: how much are you spending right now? Run the number, even roughly, and keep the result nearby. Further down, we’ll give you a worksheet to download and fill in with more specific numbers.
Most founders can't answer exactly how much they’re spending on marketing, and it’s not because they’re careless. Marketing costs hide in subscriptions, one-off projects, and the hours you spend on it yourself.
Here's what that looks like in a real calculation. A business bringing in $50,000 a month spends $50 on email software, $20 on a social posting tool, and about $1,000 worth of the founder's own time. That's $1,070 in total, or 2.14% of revenue, and more than 93% of it is the founder.
Start with what you're spending now
The formula is simple. Add up every marketing expense for a month, divide by that month's revenue, and read the result as a percentage.
The hard part isn’t the math, it’s deciding what counts. Count everything that supports lead generation and awareness:
- Software. Email marketing, social posting, automation, and analytics tools.
- Website and hosting. Your domain, hosting, maintenance, and any SEO tools.
- Your own time. If you spend 10% of your working hours on marketing and your effective annual cost is $120,000, that's $12,000 a year, or $1,000 a month.
- Content creation. Writers, designers, video editors, and photographers.
- Printed items. Business cards, brochures, and signage.
- Advertising. Even small test budgets count.
- Agency and freelancer fees. Anyone producing marketing output for you.
Leave out the cost of selling, such as your CRM, salespeople, outbound vendors, and association memberships, because those belong to your sales number. Leave out operations and client work too.
Keeping marketing and sales cleanly separate matters, because you'll want to see each half on its own and avoid counting anything twice.
The two surprises
Founders who run this calculation for the first time usually land in one of two places, and both are useful.
You're spending less than you thought. You've been counting software and ad spend and forgetting your own time. Once you add it, the number jumps, and you see how much of your marketing really depends on you.
You're spending more than you thought. Tools, subscriptions, and one-off agency projects add up quietly. One founder totaled it and found they had spent $30,000 over 18 months with nothing measurable to show for it.
Either result tells you something specific. The first says you're probably underinvesting. The second says you're spending without a plan, which is a different problem with a different fix.
Why a percentage, and what it does when revenue moves
A dollar figure tells you what you spent. A percentage can help you compare to the size of your business to your own history and to everyone else's average marketing spending.
It also moves when revenue moves, which catches people off guard. Say the same business grows from $50,000 to $75,000 a month and keeps marketing spending exactly $1,070, so its marketing allocation falls from 2.14% to 1.43%. Even though they haven’t increased or decreased spending, that marketing allocation number is relative to how much the business is earning, so if revenue increases, but marketing budgets stay the same, you’re committing even less to marketing now.
That business became less committed to marketing as it scaled, and that was not an intentional choice. To hold the marketing allocation at 2.14% as the businesses scaled to $75,000, it would need to spend $1,605 a month.
So calculate the number for each of the last six to twelve months, because the direction matters as much as the level. A falling percentage with flat revenue is a warning sign. A rising percentage that tracks rising revenue is a growth story.
Ready to run your own? Pull your last three months of books and use this worksheet.
Marketing Allocation: your number in one line
Marketing expenses: $___ ÷ Monthly revenue: $___ = ___% of revenue spent on marketing
(That's the whole worksheet. Grab a clean copy below and fill in your last three months →)
Is your number actually a problem?
Not necessarily. If you're hitting your revenue goals and taking home what you want, your percentage may be fine wherever it sits. Plenty of businesses thrive at 2% because a strong referral engine or strong in-person presence carries the load.
The picture changes if you missed your revenue goal last year or you find your business behind this year. In that case, marketing allocation is often the first place to look, because the businesses that stall out are almost always the ones underinvesting in revenue generation.
Treat 2.14% as a typical starting point for a founder-led business that grew on personal effort. If it looks low to you, it probably is.
Where benchmarks fit
Once you have your number, the natural next question is what it should be to stay competitive. Across the major studies we draw on, the average floor for a business that wants consistent growth is 7% of revenue on marketing alone.
Run that against our example. Seven percent of $50,000 is $3,500 a month, compared with the $1,070 the business actually spends. That's a gap of $2,430 a month, or about $29,000 a year.
Industry averages from The CMO Survey, which we site in our RevenueScaling workshops, add useful context:
- Professional services: 11.06%
- Healthcare: 9.31%
- Real estate: 9.28%
- Tech software and platforms: 9.16%
- Manufacturing: 6.67%
- Retail and wholesale: 5.46%
Treat these as descriptions, not instructions. They average companies of different sizes and growth goals, so a professional services firm growing 40% a year probably spends more than 11%, and one happy with flat revenue probably spends less. If you want more on using industry standards to set a budget, our guide to the true cost of marketing walks through it.
What a gap actually means
Suppose your number sits below the floor. That points to one of two situations.
The Freebie Zone is still working. Word of mouth and your own effort are generating revenue, so you may not need to invest more yet. Enjoy it, and prepare for the day it slows down.
You've hit the ceiling. The growth that came from personal effort has maxed out, and you're underinvesting in what would unlock the next level. This is the most common case we see, and it's the pattern behind why growth stalls.
Competition adds another angle. If a peer going after your prospects spends 11% and you spend 2%, they're outspending you roughly five to one on reaching the same people, and that gap compounds over time. You don't have to match them, but you should know it exists and decide on purpose whether to close it or find a more efficient channel.
The benchmark is interesting, and your CAC decides
Here's what we tell every workshop audience. A company at 3% with a healthy cost per customer is winning, while a company at 15% with an unhealthy one is bleeding.
The percentage tells you how much you're spending. Your results tell you whether it's working, and the quickest way to see that is what each new customer costs you. You can calculate it with our CAC calculator for founders in a few minutes.
Marketing is also only half of your total investment in new business. Add your sales number to it and you get your revenue generation commitment, which is the figure that turns into customers and revenue.
Once you know the total, deciding where to put it comes next. Our guide to marketing budget allocation for optimal ROI covers that step, and the usual best move is to double down on the channel already working.
Do this week
You can finish this in under an hour:
- List every marketing expense for each of the last three months, including your own time.
- Divide each month's total by that month's revenue.
- Average the three months to get your current number.
- Compare it to the 7% floor and to your industry's average.
- Look back six to twelve months to see whether the percentage is rising, falling, or flat.
If your sales cycle runs long or your business is seasonal, use 12 to 24 months instead, because a short window can make good marketing look like it isn't working.
Write the number down. You'll use it in every calculation that follows.
If your marketing allocation stays exactly where it is for the next 12 months, what happens to your revenue?
If you'd like a second set of eyes on your number, reach out to us and we'll work through it with you.
