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How much marketing budget
do I need?
Most SMEs pick an amount on gut feeling, or take whatever is left at the end of the month. Then you never know whether it was too much or too little. Work back from the number of clients you want instead. Here is how, in four steps.
A percentage of revenue is a starting point, not a plan
You often read that a business should spend a fixed percentage of revenue on marketing. That number says nothing about what you want to achieve with it.
A business with a full schedule and a business that wants to grow on the same revenue need very different budgets. That is why the calculation below starts from the goal: how many new clients per month, and what a new client may cost you.
Your budget in four steps
You need four numbers. You know the first two, the last two come from your own history or a careful estimate.
What is a client worth?
Take the gross margin of an average client, not the revenue. If clients come back, use the margin over the first two years.
What may a client cost?
Decide which share of that margin you want to spend to win a new client. That is your maximum cost per client. Once you know it, you can judge any campaign.
How many requests become clients?
Count how many of your last twenty requests or quotes became clients. That is your close rate. If you do not know it, start carefully and measure from today.
What may a request cost?
Your maximum cost per client times your close rate gives what a request may cost. The number of requests you need times that cost gives your monthly media budget.
An installer who wants four extra clients a month
Fictional numbers, to show the calculation.
| Step | Number | Result |
|---|---|---|
| Margin per client | €1,500 | Average job after materials and labour |
| Max. cost per client | 20% of margin | €300 per new client |
| Close rate | 1 in 4 requests becomes a client | A request may cost €75 |
| Goal | 4 clients per month | 16 requests needed |
| Media budget | 16 requests times €75 | €1,200 per month on ads |
If requests come in cheaper than €75 after a few months, you can scale up. If they cost more, the problem is usually the page the ad sends people to or the follow up, not the budget.
Below these amounts a channel learns nothing
A small budget spread over too many channels gives too little data everywhere. Pick one channel and give it enough.
Google Ads
For a local service business €300 to €800 per month usually works, on one region and a handful of keywords with buying intent. Advertising broadly on a small budget almost never pays off.
Meta Ads
Below €300 per month Meta gets too little data to optimise. For a local SME €400 to €1,000 per month is a workable start, depending on your margin and region.
Work and execution
Besides media you need someone to set up campaigns, create content and adjust. That is your own time, an employee or an agency. Count that cost separately, so you can judge media and work each on their own.
A budget is only too high when you do not know what it returns.
With the four numbers above you can check any proposal from an agency or platform yourself. Want to fill it in quickly? Use the free budget calculator.
Setting a marketing budget
What percentage of revenue should I spend on marketing?
There is no right percentage for every business. A fixed percentage is useful as a ceiling, but the budget you really need follows from the number of clients you want and what a client may cost you. Work it back as shown on this page.
How much ad budget do I need for Google Ads?
For a local service business €300 to €800 per month usually works. Focus matters more than the amount: one region and a few keywords with buying intent instead of all of Flanders.
Is ad budget included in an agency's price?
Usually not. With us the monthly price covers the work, and you pay the ad budget directly to Google or Meta. Marketing on Demand starts from €450 per month excl. VAT, separate from your media budget.
When do I know my budget works?
Give a campaign two to three months and measure from day one the cost per request and how many requests become clients. Without tracking on forms, phone clicks and bookings you cannot judge any budget.
Let us check your budget
A free 30 minute analysis. Using your numbers we calculate what a client may cost you and which channel fits that best.
Read more: Marketing on Demand · Google Ads · Meta Ads