How Much Should My Marketing Budget Be?

Feeling confused about how much you should invest in marketing your small business?

You’re not alone.

Setting a marketing budget can feel like an overwhelming process, especially if you’ve never done it before.

However, as daunting as it may be, it’s important to decide on your marketing budget before embarking on any marketing campaigns. The amount of money you designate will impact what you’ll be able to invest in and guide your overarching marketing strategy.

So, how much should you spend on marketing? While there is no set magic number or one size fits all solution, there are guidelines that can help you decide.

Below, we’ll look at how much most companies invest in their marketing, and help you decide the figure that’s right for your business.

How Much Should My Marketing Budget Be?

How Much Do Most Businesses Spend On Marketing?


The average marketing budget in NZ is between 5 and 10% of total revenue. And smaller companies spend more on marketing as a percentage of their total revenue.

The numbers are similar overseas. For example, the U.S. Small Business Association recommends allocating 7 to 8% of your gross revenue to marketing if you’re producing less than $5 million a year in sales and have a net profit margin of 10-12%.

It’s generally accepted that 5% of revenue is a good starting point for most businesses, but there are other factors to consider before settling on a number, such as…

Are You Aiming For Maintenance Or Growth?

The amount you invest in marketing is likely to fluctuate as your business grows or stabilises. When you are actively trying to grow your business, you will need to invest more than when you’re trying to maintain your current market visibility.

As a guideline, 5% of total revenue is suitable for maintenance, and 10% of total revenue will help you gain more market share for your business.

However, every business is unique, and what works for some may not be suitable for you. Smaller businesses may find it helpful to estimate what competitors are spending and set a similar budget.

Your Objectives Should Guide Your Marketing Budget

The best way to come up with a marketing budget is to work from your business objectives. A smart marketing budget is weaved into your overall marketing strategy. It can be helpful to work backwards: know who your customers are and the right channels to reach them, then use that information to develop a budget.

Consider what you want to achieve for your business in the next 12 months. Do you want to gain 100 new customers? Do you want to increase the amount each customer spends per sale, or do you want to gain more repeat customers?

Once you have these specific targets in mind, develop the plan of action you’ll take to achieve each one, then total the costs. Voila – you have created a pretty accurate marketing budget that’s highly relevant to your business strategy.

Monitor Your Results

We can’t discuss marketing budgets without talking about monitoring, measuring and reviewing. You should know exactly how effective your marketing efforts are, and work on tweaking them to make sure you get a significant ROI for every dollar invested.

One of the most effective ways to ensure you’re getting the right amount of bang for your marketing buck is to work out your Cost Per Acquisition (CPA). Drill down into the data from your various channels and determine how much it costs you to convert one customer over a specific period.

Once you have that level of insight into your marketing, you’ll be able to come up with a marketing budget to suit the needs of your business.

Make Sure You Have A Great Base

All the marketing dollars in the world are not going to help you grow your business unless you have a great home base to work with. Driving traffic to an ineffective website is not going to create the level of sales that you want!

So, make sure you have the basics nailed with a great eCommerce website that is easy for your customers to navigate. If you are concerned that your current website is not up to the task, then you will want to get that remedied before setting your marketing budget.

Here at Creative Web Designs, we specialise in creating high quality Shopify websites. Reach out to us today to find out how we can help you with your website.