10 Reasons You Don’t Need a 10% Marketing Budget

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Every company is different — every marketing budget should be different too!

When calculating a marketing budget as a percentage of revenue, the typical rule you hear is to invest 10% and call it a day. This typical marketing budget percentage is often lauded by business coaches and CEOs as the formula for marketplace success. But here’s the problem with that — every business, every industry, and every business owner’s goals are different. Your marketing budget allocation needs to be different, too.

While calculating a marketing budget as a percentage of revenue — and using a 10% figure — is a fine place to start, your unique circumstances determine your actual marketing budget. Some companies need to spend more than 10% of revenue to compete — while other companies can spend less and still enjoy runaway success.

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Small and Large Business Marketing Budgets: 10 Unique Factors to Keep in Mind

As you read this list, think about if any of these factors sound like you and your business. That’s a sign that those traditional marketing budget allocation best practices DON’T work for you.


4 Reasons You Need MORE than a 10% Marketing Budget

  1. You’re entering a brand-new target area — You’re entering a brave new world, and no one knows who you are. You’re competing against established companies with loyal customer bases. To break into your prospective customers’ consciousness, you need to do something big, and that often necessitates a larger marketing budget.
  2. You serve a massive area or sell online —  Small business marketing budgets are one thing, but what if you ship your product nationally or sell from your online storefront? You aren’t just trying to show the features & benefits to people who live in your own town — instead, you’re marketing to thousands of cities, dotting up and down the map. To compete with local sellers and the juggernaut of online sales, you need to amplify your investment.
  3. You’re on the ropes — Trouble looks different for every business, but if you’re facing a serious challenge and you know it, you need to act fast. When calculating a marketing budget as a percentage of revenue, you’ll need to spend more vigorously to overcome the new competitor, the negative publicity, or whatever other hurdles you’re facing.
  4. You’re launching a new product, line, or division —  A temporary reason to boost your marketing budget allotment, big changes often require a big marketing push. After all, if its new to you, its new to your customer base too. You have a full arsenal of marketing tactics at your disposal — you just need to make room in the budget for it.



6 Reasons You Need LESS than a 10% Marketing Budget

  1. You can’t afford to grow too quickly —  If your capacity is limited by your physical space, the number of qualified employees, or another limitation, you may not be able to afford to be skyrocketing success right now. If you can’t handle an influx of attention, the typical 10% marketing budget might be too aggressive for you.
  2. You primarily bid on all of your work —  Companies who earn most of their work through an open bidding process can often afford to slip under that typical marketing budget percentage. Since you earn your work by winning bids based on price and experience, you don’t need to spend as heavily to get your foot in the door.
  3. Few local competitors —  The bad news about working in a niche industry: you find yourself explaining what you do over and over again at parties. The good news: you have fewer competitors and thus a greater market share by default. If this is you, celebrate! For businesses without much natural competition, dipping below a 10% marketing budget as a percentage of revenue is often safe.
  4. Referrals will ALWAYS be your main source of clients — Often the case for companies that work in the healthcare field, if your customer base will ONLY need your services after a professional referral, a higher marketing budget allocation likely won’t result in more leads.
  5. You’re a franchise of a national company — One of the benefits of being a franchisee of a national company is that they do everything in their power to get your name out there. In some cases, they even foot the bill on your local efforts — provided their brand shares some space, too. If this is the case for your business, it’s safe to trim your marketing budget percentage as they have your back.
  6. You or your business is nationally famous —  We can all dream, can’t we? If your business is a nationally-recognized, Travel Channel favorite — like Pat’s or Geno’s — you don’t need to spend 10% of your revenue on marketing. For everyone else who’s not perpetually in the spotlight, we need to earn our public attention.


Discover Your Marketing Budget & Your Marketing Partner

Part of being a business owner is maximizing your assets and your revenue. You do it for your payroll, physical supplies, and more — your marketing spend shouldn’t be exempt from that careful scrutiny.

Check out our custom marketing budget QUIZ to start with a solid estimate of your marketing budget as a percent of revenue.

While marketing budget best practices work for some companies, a custom approach and a custom perspective is always your best bet. That’s why we begin ALL of our marketing programs with a conversation — to ensure that our efforts meet your goals, helping you succeed online and beyond.

We’d like to invite you in for a conversation about how much you’re spending on your marketing — and the return on investment you’re seeing as a result.  Contact us today to schedule a free marketing consultation.