How Much is Enough To Spend On Marketing?

Always a perennial question. How much is enough to spend on marketing? And the perennial answer is....it depends on what you are trying to accomplish. It's not unusual for firms in mature markets with high levels of repeat business to spend as little as 3-5% of net revenues on sales and marketing. For example, a MEP firm working exclusively with architects may spend less than 1%.

A firm on a growth path that is aggressively pursuing new markets, new geographies, adding new services, etc may spend 10-15% of net revenues during these early actions to penetrate new markets. For construction firms, the percentage is much less since their net revenue number is significantly higher. For this reason, construction companies would be better off calculating their percentage bases on net income before taxes and distributions.

Your marketing plan with it's specific goals, objectives and action plans will drive the cost side of the equation as it defines the levels of effort necessary to achieve your revenue objectives.

So, when a principal asks you what is the right amount for your firm to spend on marketing, and they frequently do, simply respond with another question..."What do you want to accomplish?" What are your revenue goals? Profit goals? Market penetration goals? That will start them down the road to defining the level of effort necessary to reach those objectives. When this is done, it's easy to put a "price tag" on marketing costs. This changes the focus from costs to RESULTS, which is where marketers want to be. I've never seen a marketing director criticized for going over budget when goals were exceeded.


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