How to Price Your Marketing as a Percentage of Revenue (Without Guessing)

You know roughly what you spend on trucks, materials, and payroll. But when it comes to marketing, most trades business owners are either guessing at a number or copying whatever a friend in another trade told them once at a Chamber mixer. Neither is a real plan. There’s a simple way to think about it that a lot of small businesses across industries use as a starting point — and it starts with a question most owners never ask out loud: are you trying to grow right now, or just trying to hold what you’ve got?

The “percentage of revenue” idea, explained simply

Here’s the general idea, and it’s worth saying up front that this is a commonly cited general guideline you’ll see repeated across the small-business marketing world — not a formula MCM invented, and not a number that applies the same way to every business. The idea is that instead of picking a marketing budget out of thin air, you tie it to a percentage of your revenue. As your revenue goes up, your marketing budget goes up with it. As revenue dips, so does the budget — at least in theory.

The reasoning is simple. Revenue is a number you already track. Tying your marketing spend to it means the budget scales with the size of your business instead of staying frozen at whatever number felt comfortable five years ago. It also gives you a way to check yourself: if you’re spending way above or way below what similar businesses in growth mode tend to spend, that’s worth a second look.

The commonly cited ranges you’ll see thrown around vary quite a bit depending on the source, the industry, and whether the business is trying to grow or just maintain. That range is wide on purpose — it’s not a target, it’s a starting point for a conversation about your own numbers.

Why the same percentage doesn’t fit every business

A percentage-of-revenue rule of thumb only works if you also ask what mode your business is in. A landscaping company trying to add a second crew and expand into a new town needs marketing to do more work than a plumbing company that’s been steady at capacity for six years and just wants to keep the phone ringing at the same pace. Treating those two situations the same way is where a lot of owners go wrong.

Think about it in three buckets:

• Growth mode. You want more jobs, more revenue, or you’re opening in a new service area. You need marketing to generate new demand, not just protect what you already have — so the industry guideline you’ll see cited here tends to sit toward the higher end of the range.
• Maintenance mode. You’re at a comfortable, steady volume and mostly want to keep your current customers coming back and stay visible to the people already searching for you. This is typically where the lower end of the commonly cited range shows up.
• Recovery mode. You had a slow season — winter hit construction hard, a big customer left, a competitor opened up the street — and you need to rebuild momentum. This is closer to growth mode in spend, but the money usually needs to move faster toward things with a quick payback, like getting back in front of past customers.

How to figure out your own starting number

Skip the national averages for a second and start with your own business. A few questions get you most of the way there:

1. What’s your actual revenue base? Use last year’s total, or a trailing 12 months if this year has been unusual. Guessing high or low here throws off everything downstream.
2. What’s your growth goal, in dollars? “I want to grow” isn’t a number. “I want to add $150,000 in annual revenue” is. That gap between where you are and where you want to be tells you how hard marketing needs to work.
3. What’s your capacity? If you can’t staff more jobs right now, pouring money into lead generation just creates a backlog and frustrated callers. Sometimes the honest answer is that your bottleneck is hiring, not marketing.
4. What’s already working? If most of your business already comes from repeat customers and referrals, you may need less new-customer marketing spend and more spend on staying visible to the people who already know you.

Once you have those answers, you can hold your current spend up against the general guideline and see if it’s roughly in the right neighborhood for the mode you’re in — not as a pass/fail test, but as a sanity check.

What counts as “marketing spend” in the first place

This trips people up more than the percentage itself. When you’re doing this math, marketing spend generally includes things like your website, local search visibility, review generation and follow-up, ad spend, and any tools or services that help you win and keep customers. It does not usually include the cost of doing the job itself — materials, labor, fuel, equipment.

It’s also worth separating “marketing” from “sales infrastructure” in your head, even though the line blurs. Something like an AI receptionist that answers calls after hours isn’t advertising — it’s making sure the leads your marketing already generates don’t slip away. Same with follow-up and review requests after a job. Those aren’t optional extras bolted onto a marketing budget; they’re often what determines whether the rest of the spend actually pays off.

Where the budget should actually go

Once you’ve got a rough number in mind, the next question is where it goes. This is where a lot of owners overspend on the wrong thing — usually paid ads — while underspending on the boring stuff that keeps leads from leaking out the bottom.

A reasonable starting split for most trades businesses looks like this:

• A website that actually converts. If your website is slow, outdated, or doesn’t make it obvious how to call or book, every dollar you spend driving traffic to it is partly wasted.
• Local visibility. Showing up when someone nearby searches “HVAC repair near me” or “flooring contractor Manitowoc” — this is local SEO — tends to have the longest payoff for the money, because it keeps working after the initial spend.
• Review and follow-up systems. Turning finished jobs into reviews and repeat business is usually cheaper than winning a brand-new customer from scratch.
• Paid ads, in moderation. Useful for filling gaps or a slow season, but ads stop the moment you stop paying for them — they’re a faucet, not a foundation.

If you’d rather not build this split yourself, this is exactly what an online marketing plan is for — a way to see where your current spend is going and whether it matches the mode your business is actually in.

Adjusting the number as your situation changes

Your marketing budget shouldn’t be a number you set once and forget. Revisit it when something real changes — a slow winter, a new service area, a competitor moving in down the street, or a stretch where the phone just isn’t ringing like it used to. Businesses coming out of a slow season often need to lean back into the higher end of the guideline range for a few months to rebuild momentum, then can ease back down once volume stabilizes.

The honest truth is that no percentage-of-revenue guideline replaces looking at your actual numbers — what a lead costs you, what a closed job is worth, and how many of your customers come back. If you’re spending money and can’t answer those three things, the percentage doesn’t matter yet. Fix the tracking first.

Before you settle on a number, it is worth knowing whether the problem is the budget at all. The free Positioning and Messaging course shows why closing the leak, rather than raising spend, is usually what unlocks the next level.

Common Questions

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

There’s no single right answer, but a commonly cited general guideline across the small-business marketing world is that businesses in growth mode budget toward the higher end of a broad range, while businesses in maintenance mode budget toward the lower end. The actual right number depends on your growth goals, your capacity to take on more jobs, and how much of your business already comes from repeat customers and referrals.

Should marketing spend include my website and software tools, or just advertising?

Most percentage-of-revenue guidelines count your website, local search visibility, review and follow-up systems, and ad spend as marketing. They typically exclude the cost of doing the job itself, like materials and labor. If you’re only counting ad spend and leaving out your website or follow-up tools, your real marketing investment is probably higher than you think.

How much should a business spend on marketing when trying to grow versus stay steady?

Growth-mode budgets tend to sit toward the higher end of the commonly cited industry range because marketing has to generate new demand, not just maintain visibility with existing customers. Maintenance-mode budgets tend to sit lower because the goal is staying top-of-mind with people who already know the business, which generally costs less than winning brand-new customers.

Is it normal to increase marketing spend after a slow season?

Yes. Many businesses temporarily increase spend after a slow stretch to rebuild momentum, similar to how growth-mode budgets skew higher, then ease back down once volume stabilizes. The priority during a recovery period is usually re-engaging past customers and rebuilding local visibility quickly, since those tend to have a faster payback than brand-new customer acquisition.

What’s the risk of spending too little on marketing?

Spending too little usually shows up slowly, not all at once — your visibility in local search fades, competitors fill the gap, and your lead volume quietly declines over months rather than crashing overnight. By the time it’s obvious, you’re often paying more to catch back up than you would have paid to stay consistent in the first place.

What’s the risk of spending too much on marketing?

Overspending usually happens when a business pours money into advertising without the capacity to handle the extra leads, or without a website and follow-up system that can actually convert them. The result is wasted spend and a backlog of unanswered calls, not more revenue. Capacity and conversion should be checked before increasing spend, not after.

Does a percentage-of-revenue budget work the same for every trade?

Not exactly. A business with a longer sales cycle and higher job value, like a construction remodel, may budget differently than a business with frequent, smaller jobs, like plumbing repair. The percentage-of-revenue guideline is a starting point across industries, but the mix of where that money goes — ads, local search, follow-up — should reflect how that specific trade actually wins and keeps customers.

Should marketing budget be based on last year’s revenue or projected revenue?

Most owners start with a trailing 12 months of actual revenue, since it’s a real number rather than a guess. If you’re specifically budgeting to hit a growth target, it can also make sense to calculate the percentage against your goal revenue rather than last year’s number, since that’s closer to what you’re trying to fund.

What should a business do first if it doesn’t know its current marketing spend?

Add up everything going toward the website, ads, local search, review and follow-up tools, and any marketing services over the last 12 months, then compare that total to revenue. Many trades owners are surprised to find they’re either spending far less than they assumed, or spending steadily on tools that aren’t tracked as “marketing” in their bookkeeping at all.

If you’re not sure whether your current spend matches the mode your business is actually in — growing, holding steady, or recovering from a slow stretch — book your free audit and we’ll walk through where your budget is going and where it should be going instead.