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3.  Marketing budget

# How much should a business spend on marketing?

By the MPower Global team Updated November 2026

Set aside **at least 5% of revenue** for marketing, every month. For an established local business, **7 to 8%** is the standard; it is what the U.S. Small Business Administration recommends for businesses under $5 million in revenue. When you are pushing to grow, plan on **10 to 15%**. Fund it first, the way you set aside money for taxes, and spend it on two engines from day one: ads for calls now, and SEO for calls that keep coming.

## Key takeaways

-   Set aside **5% of revenue** at minimum, **7 to 8%** as the standard, **10 to 15%** to grow.
-   The budget covers everything, ad spend included.
-   Fund it first, like taxes, before anything new and shiny.
-   Run ads and SEO side by side from day one: calls now, and calls that keep coming.
-   Set the plan once a year. Adjust it every quarter.

On this page

1.  [What it looks like in dollars](https://www.mpowerglobal.ai/resources/marketing-budget/#in-dollars)
2.  [A set-aside, not leftovers](https://www.mpowerglobal.ai/resources/marketing-budget/#set-aside)
3.  [Fast results and compounding results](https://www.mpowerglobal.ai/resources/marketing-budget/#two-engines)
4.  [How to split it: 70/20/10](https://www.mpowerglobal.ai/resources/marketing-budget/#split)
5.  [By trade](https://www.mpowerglobal.ai/resources/marketing-budget/#by-trade)
6.  [The yearly plan](https://www.mpowerglobal.ai/resources/marketing-budget/#annual)
7.  [The quarterly check-in](https://www.mpowerglobal.ai/resources/marketing-budget/#quarterly)
8.  [Get the template](https://www.mpowerglobal.ai/resources/marketing-budget/#template)
9.  [Questions, answered](https://www.mpowerglobal.ai/resources/marketing-budget/#faq)

## What that looks like in dollars

A percentage is easy to nod at. Here it is as a monthly number, ad spend included.

Your yearly revenue

Monthly marketing budget by yearly revenue
| Yearly revenue | Floor, 5% | Standard, 7 to 8% | Growth, 10 to 15% |
| --- | --- | --- | --- |
| $500K | $2,083 | $2,917 to $3,333 | $4,167 to $6,250 |
| $1M | $4,167 | $5,833 to $6,667 | $8,333 to $12,500 |
| $2M | $8,333 | $11,667 to $13,333 | $16,667 to $25,000 |
| $5M | $20,833 | $29,167 to $33,333 | $41,667 to $62,500 |

The SBA ties its 7 to 8% to businesses that keep net margins of about 10 to 12% after marketing. If your margins are thinner, start at the floor and earn your way up.

Plan the whole year in one sheet, with this math built in.

[Get the free template](https://www.mpowerglobal.ai/resources/marketing-budget/#template)

## A set-aside, not leftovers

Most owners spend on marketing when things get slow, or when someone shows up selling something. That is backwards. Marketing is what keeps the phone ringing, so it gets funded the way taxes do: off the top, every month, before the new truck, the new software, or the next shiny idea.

The percentage moves up as you push to grow. Across U.S. companies, marketing averaged 9.0% of revenue in 2026, and smaller companies put in more: about 13% for those under $10 million in revenue, according to The CMO Survey from Duke University (a small sample, so read it as a direction, not a decimal). In a 2026 study of professional services firms, the fastest-growing spent about 12% of revenue on marketing, against 5% at firms that were not growing.

Growing businesses spend more. That does not mean spending more guarantees growth. It means growth gets funded on purpose.

## Fast results and compounding results, side by side

Your budget should pay for two engines at once, from the first month.

**Ads are the fast engine.** Turn them on and the phone can ring this week. Turn them off and it stops the same day. Which platform and which kind of ad is right (search, map, social, video) depends on your business and on what is working, and that changes. The principle does not.

**SEO is the compounding engine.** It is slow to start; Google's own guide says some changes "could take several months" to show up in search. But what it builds keeps working and stacks on itself: pages that rank, reviews that pile up, a name Google and AI tools learn to trust. The sooner you start it, the sooner it pays you back.

-   Ads: calls now, while funded
-   SEO: slow start, then it compounds
-   Both together

Illustration, not data. The shape is the point: ads carry the phone while SEO builds, and over time SEO carries more of the load.

Run only ads and you rent every lead, forever: the month you stop paying, the calls stop. Run only SEO and you wait months for the phone. Run both from the start and you never have to choose between this month and next year.

## How to split it: the 70/20/10 rule

A common rule of thumb, popularized by Coca-Cola's marketing team around 2011: put about **70%** on what is proven to bring in customers, **20%** on what looks promising, and **10%** on experiments. There is no study behind the exact numbers. It is a guide, and a good one, because it forces the right order.

Your foundation lives in the 70 once it is working: a website that is kept up, the ads that bring in calls, and the SEO that keeps building. When you are just starting, the foundation is the plan, so most of the money goes there and only a small slice goes to tests. New and shiny lives in the 10, and it never gets funded ahead of the foundation.

The website belongs in the foundation because both engines run through it. Every ad click lands on it, and every search ranking points to it. A bad website, or even a decent one nobody keeps up, sabotages both: you pay for ad clicks that never turn into calls, and you work for rankings that send people to a site that lets them down.

## How much should my trade spend?

Trade benchmarks are thinner than you would hope. Here is what holds up, and where it comes from.

Marketing as a share of revenue, by trade
| Trade | What growing businesses spend | Where it comes from |
| --- | --- | --- |
| Plumbing, HVAC, electrical, roofing | About 7 to 10% of revenue for growing shops; 5% is treated as a maintenance level | Guidance from the trade's software makers and trade press, not a formal study |
| Law firms | About 5% at firms that are not growing; about 16.5% at the fastest-growing | A 2024 study of 76 law firms (medians, salaries not included) |
| Med spas | About 7% on average | The med spa industry association's 2024 report |
| Everyone else | The general tiers: 5% floor, 7 to 8% standard, 10 to 15% to grow | U.S. Small Business Administration |

## The yearly plan sets the direction

Once a year, set the plan. It takes an afternoon, and you can start it in any month.

1.  **Start from what you actually bring in:** your revenue over the last 12 months, not the number you hope to hit. A goal is not money in the bank.
2.  **Pick your tier:** floor, standard, or growth.
3.  **Turn it into a monthly number** and treat it as fixed, like rent. As revenue grows, the number grows with it.
4.  **Fund the foundation first:** your website, SEO, and ads, then everything else.
5.  **Set a goal for each channel** in plain numbers: calls, booked jobs, and cost per lead.

## The quarterly check-in navigates

Every quarter, sit down with the numbers and ask one question per channel: keep it, stop it, start something, or shift money? The yearly plan is the direction. The quarter is where you steer.

Steer when one of these happens:

-   **Revenue drops or jumps a lot.** The budget is a share of revenue, so it moves with it.
-   **The market changes.** A competitor floods your ads, a new platform starts working, or a rule change hurts a channel.
-   **A channel's cost per lead climbs or falls.** Move money toward what is getting cheaper and better.

One rule for the slow quarter: keep the compounding engine funded if you possibly can. Stopping SEO gives up ground you already paid to build, and restarting it means waiting all over again. We are writing a full guide to running these reviews; it will live here when it is ready.

## The Marketing Budget Template

An annual plan with quarterly check-ins, the math built in. Enter your last 12 months of revenue and pick your tier; it fills in your monthly budget, funds the foundation first, checks your 70/20/10 split, and gives you four quarterly check-ins to track spend, leads, booked jobs, and cost per lead. Free: tell us where to send it and the link lands in your inbox, as a Google Sheet or an Excel file.

[See what's inside the template](https://www.mpowerglobal.ai/resources/marketing-budget-template/)

## What your budget buys

At agency rates, a standard budget for a business doing $1 to $2 million a year buys one or two services, not a full program. Our [digital marketing cost guide](https://www.mpowerglobal.ai/resources/digital-marketing-cost/) itemizes what each service costs, and [our pricing page](https://www.mpowerglobal.ai/pricing/) shows what we charge for the same work.

## Questions, answered.

### What percentage of revenue should go to marketing?

At least 5% of revenue, every month. For an established local business, 7 to 8% is the standard; it is what the U.S. Small Business Administration recommends for businesses under $5 million in revenue. When you are pushing to grow, plan on 10 to 15%.

### What is the 70/20/10 rule for a marketing budget?

It is a common rule of thumb for splitting a budget: about 70% on what is proven to bring in customers, 20% on what looks promising, and 10% on experiments. Coca-Cola's marketing team popularized it around 2011. Treat it as a guide, not a formula: most of your money funds what already works, and new ideas get a small, capped slice.

### Does the marketing budget include ad spend?

Yes. The set-aside covers everything that brings in customers: ad spend, SEO, your website, social, email, reviews, and whoever runs them, in house or agency.

### Should I cut marketing when sales are slow?

Cut last, not first. A slow quarter is when you need the phone to ring. Shift money away from what is not producing, keep the ads that bring in calls, and keep SEO funded if you possibly can: stopping it gives up ground you already paid to build.

### How much should a plumbing or HVAC company spend on marketing?

Growing plumbing, HVAC, electrical, and roofing companies commonly put about 7 to 10% of revenue into marketing, and 5% is generally treated as a maintenance level. Push toward 10% or more in a growth year.

### What is a marketing budget?

It is the money you set aside, on purpose, for everything that brings in customers: ads, SEO, your website, social, email, reviews, and the people or agency who run them. A good one is a fixed share of revenue, funded before anything else, and planned by the year and the quarter.

## Not sure where your money should go first?

The $97 Growth Audit grades your whole business in plain English and tells you what to fix first, including what not to buy. Or call us and ask. We answer fast.

[Get the $97 Growth Audit](https://www.mpowerglobal.ai/marketing-audit/) [Call 725-425-MY-AI](tel:+17254256924)

-   [Guide How much does digital marketing cost? Every service, itemized at agency rates, and where the $5,000 to $20,000+ a month range comes from.](https://www.mpowerglobal.ai/resources/digital-marketing-cost/)
-   [Download Marketing Budget Template An annual plan with quarterly check-ins and the math built in. Free, sent straight to your inbox.](https://www.mpowerglobal.ai/resources/marketing-budget-template/)

## How we built these numbers

The tiers rest on the U.S. Small Business Administration's guidance (7 to 8% of revenue for businesses under $5 million) and The CMO Survey from Duke University's Fuqua School of Business, cross-checked against independent industry studies of what growing and flat firms spend. Trade figures come from industry guidance and say so where no study exists. Checked November 2026; we update this guide in place when the numbers move.