How Much Should You Spend on Marketing?

Last updated July 29, 2026

Most small businesses should budget between 7% and 12% of gross revenue for marketing, based on U.S. Small Business Administration guidance and industry survey data, though the right number depends heavily on your margin, your growth stage, and how competitive your market is. That percentage-of-revenue rule works reasonably well once a business has steady revenue to take a percentage of. For a newer or growing local service business, a wedding venue in its second season, a clinic opening a new location, a trades company trying to fill a slow quarter, the more useful question is not "what percentage do other companies spend," but "what can I afford to pay to acquire a customer and still run a profitable business." This page covers both methods.

Quick answer

• General rule of thumb: 7% to 12% of gross revenue, assuming healthy profit margins (SBA guidance, detailed below).
• Newer businesses building initial demand often need to spend more, sometimes 15% to 20% of revenue in the first 2 years, since there is less existing word-of-mouth to lean on.
• Established businesses with strong repeat business or referrals can often sustain growth at 5% to 7%.
• Business-to-consumer companies (which most local service businesses are) tend to spend more of their revenue on marketing than business-to-business companies, since B2C sales cycles are shorter and more dependent on ongoing demand generation.
• For a business with no revenue history yet, or one deliberately trying to grow past its current size, a bottom-up budget built from customer acquisition cost is usually more useful than a percentage. That method is covered in the second half of this page.

The percent-of-revenue rule, and where the actual numbers come from

The most commonly cited guidance comes from the U.S. Small Business Administration, which recommends that businesses under $5 million in annual revenue budget 7% to 8% of gross revenue for marketing, provided the business is running healthy net margins, generally 10% to 12% or better. That margin condition matters more than most summaries of the guidance mention, and is covered in its own section below.

Survey data from larger companies tends to run higher, and has moved recently. The Deloitte/Duke CMO Survey (34th edition, 281 marketing leaders at U.S. companies, 99% VP-level or higher) found marketing budgets at 9.4% of company revenue as of spring 2025, up from 7.7% the year before, even as overall budget growth slowed. Gartner's 2026 CMO Spend Survey, which polls primarily larger enterprises (the vast majority of its 400+ respondents work for businesses with more than $1 billion in revenue), found a more conservative and essentially flat figure: marketing budgets at 7.8% of company revenue in 2026, up only slightly from 7.7% in 2025. The gap between the 2 surveys partly reflects company size and partly reflects timing, both are real, current data points rather than a single settled number, which is itself useful context: even marketing leaders at large companies don't agree on one right percentage.

Business model changes the number further. Research summarized by the Business Development Bank of Canada and echoed across CMO Survey breakouts shows business-to-consumer product companies allocating around 15.5% of revenue to marketing, compared to roughly 6.4% for business-to-business product companies and around 9% for B2B service companies. Local service businesses selling directly to consumers, venues, clinics, home service companies, sit closer to the B2C end of that range, since a couple choosing a wedding venue or a family choosing a chiropractor behaves more like a consumer purchase decision than a business procurement decision.

Why the SBA ties this number to your profit margin

The SBA's 7% to 8% figure is not a flat rule. It assumes the business is already running net margins in the 10% to 12% range or better. A business below that margin threshold is generally advised to spend less on marketing until the underlying operation is more profitable, since adding customer volume to a thin-margin business does not fix the margin problem, it just makes the business bigger at the same low profitability. A business running margins comfortably above 15%, by contrast, often has room to push spending to 10% or 12% of revenue and still come out ahead, because each additional dollar of marketing-driven revenue converts to more retained profit.

This is a useful gut check before adopting any percentage from the table above: know your margin first. A venue clearing 25% net margin on a booked event can typically afford to spend more aggressively on demand generation than a business clearing 8%, even if both businesses have identical revenue.

A better starting point for a newer or growing local service business: budget from customer acquisition cost, not revenue

Percent-of-revenue works well once a business has a stable base of revenue to measure against. It works poorly for 2 common situations: a business that is new or in its first full season, where trailing revenue understates what the business needs to spend to build momentum, and a business deliberately trying to grow faster than its current revenue would justify. In both cases, a bottom-up budget, built from what you can afford to pay to acquire a single customer, gives a more honest number.

The process has 5 steps:

1. Calculate the lifetime value of a typical customer. For a venue, this is average profit per booked event. For a clinic, this is the average net revenue across a typical patient relationship, not just the first visit. For a trades company, this is average profit per job, plus a discount for how often that customer refers new business. The full method for this calculation is covered in What Is Marketing ROI?, which walks through worked examples for a repeat-visit business and a single-job business.
2. Set a target ratio between that lifetime value and what you are willing to spend to acquire the customer. A commonly used minimum benchmark is 3 to 1, meaning a customer should be worth at least 3 times what it costs to acquire them, once every real cost is counted. Many healthy local service businesses run higher, 4 to 1 or 5 to 1.
3. Divide lifetime value by your target ratio to find your maximum affordable cost per acquisition. If a new patient is worth $810 over the relationship and you are targeting a 3 to 1 ratio, you can afford to spend up to $270 to acquire that patient and still hit the benchmark, though most businesses aim well under the ceiling for a comfortable margin of safety.
4. Multiply that per-acquisition ceiling by how many new customers you want this month or quarter. A venue targeting 6 new bookings a month at a $270 acceptable cost per booking is looking at a budget ceiling of roughly $1,620 a month, before accounting for the reality that not every dollar spent converts at the target rate.
5. Add a buffer for the learning curve. A new campaign, in a new channel, rarely performs at its eventual efficiency in the first month. Budget an extra 20% to 30% above the strict ceiling for the first 60 to 90 days while the campaign is being tuned, then tighten back toward the calculated number once real cost-per-acquisition data comes in.

Worked example: a wedding venue

A venue books an average of 30 events a year and wants to add 6 more bookings this year through marketing. Average profit per booked event, after food, staff, and venue overhead, is $3,200. At a conservative 3 to 1 target ratio, the venue can afford to spend up to roughly $1,065 per booked event and still clear the benchmark. Reported results from DGD's venue client The Grove show this kind of spend can perform far above the 3 to 1 floor: 67x return on investment, about $67,000 in booking profit for every $1,000 in ad spend (dogood.design/venue-marketing). That is an exceptional result specific to that client and should not be treated as a typical outcome, but it illustrates the gap between the minimum acceptable spend ceiling and what a well-targeted campaign in this vertical can actually return.

Worked example: a health and wellness clinic

A clinic wants to add 20 new patients this month. If a new patient's lifetime value across a typical treatment relationship is $810 and the clinic targets a 3 to 1 ratio, the acceptable cost per new patient is up to roughly $270, with a comfortable working target well below that. A DGD health and wellness clinic client has reported 9.5x return on ad spend with $12 per new patient booking (dogood.design/health-clinic-marketing), well under that kind of ceiling, which is part of why paid search performs strongly for clinics with a clear booking funnel.

Worked example: a trades company

A trades company (electrical, HVAC, plumbing) wants 15 more booked jobs this month. At an average net profit of $310 per job and a 3 to 1 target ratio, the acceptable cost per booked job is up to roughly $103. DGD's trades client Arctic Electricians reported 4.5x more leads in a month (dogood.design/work/arctic-electricians) after launching a campaign built around this kind of budget logic.

Where to put the dollars once the budget is set

Once you know your number, the sequencing of channels matters almost as much as the total. For a local service business with no existing digital presence, paid search targeting people already looking for what you sell (a venue, a clinic, a specific repair) tends to produce the fastest, most attributable results, since it reaches people at the moment of active intent rather than trying to create intent from a cold audience. Paid social can then layer on top to build awareness with people who have not started actively searching yet, and organic search and content compound in the background, becoming a larger share of new business over the following months as it ranks, since Search Engine Land's SEO timeline guide puts typical organic results at 3 to 6 months, longer in competitive categories (see how long SEO takes for a fuller breakdown of that timeline). This is also why DGD structures its own entry-level engagements around a paid search system first: it is the fastest channel to prove whether the acquisition-cost math above actually holds up in the real market, before committing a larger share of the budget to slower-building channels.

When to spend more, and when to spend less

That last row matters more for venues than most other local service categories. A venue's marketing spend needs to run well ahead of the season it is trying to fill, since couples typically book 9 to 15 months before their event date. A venue that only increases spend once bookings look thin for an upcoming season is usually too late to fully recover that season's calendar.

Frequently asked questions

What percentage of revenue should a small business spend on marketing?

The SBA's general guidance is 7% to 8% of gross revenue for businesses under $5 million in annual revenue, assuming healthy net margins of roughly 10% to 12% or better. Broader survey data from the Deloitte/Duke CMO Survey put the figure at 9.4% as of spring 2025, up from 7.7% the year before.

Should I use a percentage of revenue or a customer-acquisition-cost budget?

Percent-of-revenue works well for an established business with stable, predictable revenue. A newer business, or one trying to grow faster than its trailing revenue would justify, usually gets a more useful number by working backward from what it can afford to pay to acquire a single customer, then multiplying by the number of new customers it wants.

How much should a wedding venue or clinic spend on marketing?

It depends on booking or patient targets and average profit per booking or visit, not a flat percentage. A venue or clinic should calculate its acceptable cost per acquisition using the 3 to 1 lifetime-value ratio described above, then size the budget to the number of new bookings or patients it wants that month.

Is it normal to spend more on marketing in the first year or two?

Yes. Businesses in their first 1 to 2 years commonly spend 15% to 20% of revenue on marketing to build initial awareness, since there is little existing word-of-mouth or repeat business to rely on. That share typically comes down as the business matures and referrals start doing some of the work.

What marketing budget results has DGD's own clients reported?

Reported client results include a 67x return on investment for a wedding venue client, a 9.5x return on ad spend at $12 per new patient booking for a health and wellness clinic client, and 4.5x more leads in a month for a trades client. These are actual reported results for those specific clients, not a guarantee for any other business.

Related reading: What Is Marketing ROI?, Marketing Agency Cost Per Month, Marketing Agency Pricing Models Explained, How to Choose a Marketing Agency, Marketing for Small Businesses: The Complete 2026 Guide. If you run a venue or event space, see venue marketing. If you run a clinic or wellness practice, see health and wellness clinic marketing. For a general starting point, see how to get more customers.