Business owners regularly ask "how much should I spend on marketing?" hoping for a magic number. The real answer depends on your revenue, your growth goals, your competitive landscape, and which activities will produce the best return in your specific market. But there are frameworks that make the decision much clearer.
The Revenue-Based Starting Point
The most common rule of thumb: businesses should invest 5–10% of revenue in marketing to maintain their position, and 10–15% if they want to grow. This is a starting point, not a law — a brand-new business competing in a tough market may need to spend 20% in year one to establish visibility.
For a service business generating $300,000/year in revenue:
- Maintenance budget: $15,000–$30,000/year ($1,250–$2,500/month)
- Growth budget: $30,000–$45,000/year ($2,500–$3,750/month)
This covers a professional website, local SEO, and possibly some Google Ads.
The ROI-Based Alternative
Rather than percentage of revenue, think in terms of customer acquisition cost (CAC) and lifetime value (LTV):
If a new customer is worth $1,200 in lifetime revenue and you want 10 new customers per month, you can afford to spend up to $12,000/month acquiring them — as long as the CAC is lower than the LTV. A local SEO + website investment that produces those customers for $1,500/month is generating massive return.
Prioritizing Where to Spend
For most small businesses with limited budgets, the priority order is:
- A professional website ($3,000–$7,000 one-time): The foundation everything else depends on.
- Google Business Profile optimization ($0–$300/month): Highest-ROI local visibility with a free platform.
- Local SEO ($500–$1,200/month): Builds sustainable organic rankings over time.
- Google Ads ($500–$2,000+/month): Immediate leads while SEO builds, or for high-value seasonal pushes.
Spending money on social media ads, print advertising, or radio before having a solid website and local SEO foundation is often the wrong order of operations.
Get a Marketing Budget That Makes Sense for Your Business
Contact Linear Web Solutions for a custom recommendation — we'll look at your revenue, goals, and competition and tell you exactly where to spend to get the best return.