How much should a small business spend on marketing?
A common starting point is 7 to 8 percent of revenue, a rule of thumb from a U.S. Small Business Administration planning worksheet for businesses under $5 million in revenue with margins of 10 to 12 percent. If your margins are thinner, start lower. Turn the percentage into a monthly number, then split it into fixed costs, someone's time and paid ads. If you want one person to handle your social media, Google profile and small website updates, boomp.net's Local marketing plan is $900 a month. These are our prices, not an industry average, and ad spend is not included.
What the SBA actually says
The 7 to 8 percent figure is quoted everywhere, and its conditions usually are not. We read the SBA's own pages on October 21, 2026.
The SBA's main marketing and sales guide gives no percentage. It tells you to "Include a complete breakdown of the costs of your marketing plan." It also says: "Plan to compare your marketing and sales costs to the revenue it generates."
The percentage comes from the SBA's Ascent program, in its Create Your Marketing Plan worksheet, a PDF file created in 2020. It says: "As a general rule, small businesses with revenues less than $5 million should allocate 7–8 percent of their revenues to marketing." It attaches two conditions and a range:
- Revenue under $5 million. The rule is written for businesses below that size.
- Margins of 10 to 12 percent. The worksheet says the percentage "assumes you have margins in the range of 10–12 percent (after you've covered your other expenses, including marketing)."
- A wide range around it. It says budgets "can vary widely, from 2 percent of sales to 20 percent (while gearing up a new product or service)."
The worksheet also splits the budget into brand development, such as your website, blog and sales material, and promotion, such as campaigns, advertising and events.
An SBA blog post by Rieva Lesonsky, published July 9, 2019, is plainer still: "There's no hard and fast answer to how much your marketing budget should be." It suggests that a startup use projected revenue as the base. So the rule is a starting point with conditions, not a requirement.
What larger companies spend, and why it is a different number
The CMO Survey, sponsored by Duke University's Fuqua School of Business, Deloitte and the American Marketing Association, surveyed marketing leaders from January 7 to 29, 2026. Its 2026 highlights report puts marketing at 9.0 percent of company revenues and 9.6 percent of overall company budgets. The topline report shows a median answer of 5 percent of revenue, so half the companies that answered spent 5 percent or less.
Who answered matters. The survey went to 2,111 marketing leaders at for-profit U.S. companies. Of the 308 who responded, 97 percent were VP-level or above. Its smallest revenue group was companies under $10 million, and only 20 of them answered the spending question, according to the firm and industry breakout report. They averaged 13.3 percent of revenue, a figure from too few answers to plan around.
These numbers describe companies with a marketing department and a senior marketing leader. A single-location service business where the owner does the marketing between jobs is a different case. Use the survey as context, not a target.
Turn the percentage into your monthly number
- Start from revenue. Use the last 12 months. A new business uses a conservative projection, as the SBA post suggests.
- Check your margin. The SBA rule assumes margins of 10 to 12 percent after all other expenses, including marketing. If yours are lower, start below 7 percent.
- Pick a percentage and divide by 12. Five percent of $300,000 is $15,000 a year, or $1,250 a month.
- Split it into three lines. Fixed costs, work and paid ads, as in the table below.
- Set a review date. Look at the numbers after three months and decide what stays.
| Line | What goes in it | How it behaves |
|---|---|---|
| Fixed costs | Website hosting, your domain, an email tool, booking or scheduling software | About the same every month; review once a year |
| Work | Someone's time: yours, an employee's, a freelancer's or a monthly service | Set by scope and quantity; the real question is who does it |
| Paid ads | Money paid to an ad platform, plus management if someone else runs the ads | Can be paused any day; judge it by booked work, not clicks |
Some foundations cost time and no money. Google says "creating a Business Profile and listing your business on Google is free" on its Business Profile page, read October 21, 2026.
Keep the three lines separate. When one number covers everything, a month of heavy ad spend can hide whether the steady work is paying its way.
Your own hours belong in the budget
The owner's time is the cost most budgets leave out. Say you spend four hours a week on posts, your website and your Google profile, and an hour of your time is worth $60 to the business. That is about $1,040 a month of work that never shows up on a bill. Those hours also come out of the time you would spend on paid work.
For social media, the DIY or in-house vs agency cost calculator puts a number on that trade. If social media is the only line you are setting, use the social media management cost calculator or our guide to budgeting for social media management.
How to budget when revenue is small or new
When revenue is small, the percentage gives a small number. Five percent of $60,000 is $3,000 a year, or $250 a month. At that size, your own hours do most of the work, and the paid lines are a few tools. Spend in this order:
- Foundations first. An accurate Google Business Profile, a website page that says what you do and where, and a contact path that works.
- Then the recurring work. Pick the one job that keeps falling off your list, and decide whether you, software or a person does it.
- Ads last, with a cap and an end date. A test with a fixed amount and a set number of weeks tells you something. An open-ended ad budget is hard to judge and easy to forget.
A new business has no revenue history. Use a conservative projection and revisit the number once you have three months of real sales. The SBA worksheet ties its 20 percent to "gearing up a new product or service." Treat a higher share like that as a launch period with an end date, not a standing level.
For a ninety-day plan that spends your number one channel at a time, see marketing plan with AI.
A worked example: one location, three revenue levels
This is an example budget, not a recommendation for your business.
Take a house-cleaning company with one location. It serves homeowners in one metro area, gets most of its work from search and referrals, and the owner has been doing the marketing. The table uses 5 percent for a thin-margin year and 8 percent, the top of the SBA rule, for a healthy one.
| Annual revenue | At 5 percent | At 8 percent | Monthly range |
|---|---|---|---|
| $180,000 | $9,000 a year | $14,400 a year | $750 to $1,200 |
| $450,000 | $22,500 a year | $36,000 a year | $1,875 to $3,000 |
| $1,200,000 | $60,000 a year | $96,000 a year | $5,000 to $8,000 |
At $180,000 a year
Say fixed costs are $100 a month for hosting, the domain and an email tool. That leaves $650 to $1,100 a month for work and ads. Software you review yourself, from $9 a month, keeps most of that free for photos or a small ad test. Social, handled at $275 a month fits if posting is the job you most want gone. Local marketing at $900 a month fits only near the top of the range and leaves little for ads.
At $450,000 a year
Say fixed costs are $150 a month. That leaves $1,725 to $2,850 a month for work and ads. Local marketing fits at the low end, with room at the high end for photos or a capped ad test. Marketing partner at $1,800 a month fits only toward the high end.
At $1,200,000 a year
Say fixed costs are $300 a month, including booking software. That leaves $4,700 to $7,700 a month for work and ads. Marketing partner fits, with room for ad spend, a photo shoot or part of a staff member's time. At this size, some owners also consider a fractional CMO for strategy, which is a different job from doing the monthly work.
In each case the plan fee is one line, not the whole budget. Ad spend, photo shoots and website rebuilds sit outside every boomp.net plan, so they come out of what is left.
Where boomp.net's prices sit
Here are our prices as reference points, ordered by who does the work.
| Who does the work | Monthly price | Ad spend |
|---|---|---|
| You, with no paid help | Your hours | Separate |
| Software prepares the posts; you review them | From $9 for self-serve software | Not included |
| Kathleen reviews and schedules your social posts | $275 for Social, handled | Not included |
| Kathleen adds Google profile updates, review requests, one search page and up to two small website updates a month | $900 for Local marketing | Not included |
| Kathleen coordinates the monthly marketing work, with a monthly call | $1,800 for Marketing partner | Not included |
| An agency or freelancer | Their quote, for the scope they name | Ask whether it is included |
Ad spend is not included in any boomp.net plan, and no plan includes ad management. Local marketing and Marketing partner cover one business at one location. We commit to the agreed work, not to returns, rankings or a number of customers.
For a side-by-side of what each package includes, see small business marketing packages. For what local work involves, see local marketing services. If you are comparing outside quotes, see hiring a small business marketing agency and local SEO pricing.
How to tell whether the spend is working
The SBA's test is the right one: compare what marketing costs with the revenue it brings in. For a service business, that comes down to three numbers each month.
- Inquiries. Calls, form submissions and messages you can count. Note where each came from when you can.
- Booked work. Which inquiries became paying jobs. Only you know this, so write it down.
- Cost per new customer. The month's marketing spend divided by the number of new customers.
Here is the math with example numbers. A month of $1,500 in marketing spend that brings 6 new customers costs $250 per customer. If a new customer brings $400 of gross profit on the first job and often books again, that cost can be worth paying. If a new customer brings $150 of gross profit and rarely returns, it is not.
Judge each line on its own clock. Paid ads suit a short, fixed test: a set amount, a set number of weeks, then a count of booked work. Search work is slower. Google's SEO starter guide, last updated December 10, 2025 and read October 21, 2026, says: "Some changes might take effect in a few hours, others could take several months." A search page judged after one month has not had a fair test. Views, likes and clicks are useful signals, but they are not sales.
When to cut
Cut in this order.
- The line with no job and no measure. If nobody can say what a cost is for or how you would know it worked, it goes first.
- Ads that miss after a fair test. If the cost per booked customer stays above what a customer is worth, pause the ads. They are the easiest line to stop and restart.
- Work that does not match the job. Before dropping paid help, check whether the scope was wrong. Changing the scope can serve you better than starting over.
Keep the foundations until last: an accurate Google profile, a working website and a clear way to make contact support every other line. If margins fall below the 10 to 12 percent the SBA rule assumes, lower the percentage rather than stopping marketing altogether. If you take work back from paid help, put those hours on your calendar.
What stays with you
Whoever does the work, some parts of the budget come only from the owner.
- Your revenue and margin figures, and the choice of percentage.
- Which inquiries became customers, and what a customer is worth to you.
- Current business facts, access to your accounts and approval of any claims about your work.
- Customer conversations, replies and messages.
- Decisions about ad spend: how much, where and when to stop.
If your number has room for help, compare the three service plans and talk with Kathleen.
