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Find a realistic monthly marketing budget for your revenue and growth goal, then check it against what a customer is actually worth to you.
The range uses a common rule of thumb of 5 to 10 percent of revenue, rising to 12 percent when the goal is 30 percent or more. It is a starting point for planning, not financial advice. Your best number depends on your margins, your market and how fast you want to grow.
A common rule of thumb is 5 to 10 percent of revenue, and fast-growth or new businesses often spend more. The right number depends on your margins, how much a customer is worth and how quickly you want to grow, which is why this calculator checks the budget against your break-even cost per customer.
It is the average sale value multiplied by your profit margin. If winning a customer costs more than that on the first sale, you lose money unless the customer buys again.
A budget set by guesswork gets cut in the first slow month. A budget tied to revenue and customer value gets protected.
The U.S. Small Business Administration notes that many businesses use a percentage of revenue as a guide and that there is a wide range in what percentage they choose. There is no single right number, which is why your goal and your customer value matter more than a rule of thumb.
Marketing is easiest to defend when you can say what a customer is worth. If one customer is worth more than it costs to win one, the budget pays for itself.
The calculator starts from your yearly revenue and growth goal, suggests a monthly range, then checks it against customer value.
Treat the output as a range to test for 90 days. Raise it when cost per customer is healthy, hold it when you are unsure, and never judge it on a single month.
Sources: SBA: How to Get the Most From Your Marketing Budget.
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