How to Determine the Perfect Marketing Budget for Your Business

So you have the best idea on the planet, but you don’t know how you’re going to present it in front of an audience. This is where marketing comes in.

While the marketing industry is full of strategies and ideas, it’s easy to get confused about all the things you “should” be doing to help your business grow. In the end, it all comes down to planning and budgeting. So let’s pull back the velvet curtain on what the prices really look like and what you can actually expect for your spending dollars.

Here are some tips for navigating that elusive marketing budget:

Marketing mathematics

The first question we ask a new client is: “Do you know what your budget is?” Usually, that’s when we see the customer’s eyes go as wide as saucers when they respond, “I have no idea!” That’s why I thought you were there.

Related: With your marketing plan in place, it’s time to talk tactics

Over the past five years, we’ve developed what we call “marketing calculations” to help clients define exactly what they should spend on marketing:

New companies: For businesses that have been in business for one to five years, we suggest using 12-20% of your gross revenue or projected revenue for marketing. (Businesses less than a year old usually need to grow before spending money on marketing.)

Established companies: For companies that have been in business for more than five years and have market share or brand equity, we suggest allocating between 6-12% of your gross revenue or revenue projected.

While that may seem like a lot, remember that new and emerging brands are looking to capture new market share and build brand recognition with an audience that has absolutely no idea who they are. That’s why it’s so expensive. Once the brand is established and part of the market is aware of the brand, this number drops significantly.

Marketing chicken and eggs

I need to grow my brand to make money, but I don’t have the money to do that. Sound familiar? We call it chicken and egg marketing. I’m here to tell you that to establish a brand, you have to break many, many eggs. This is why it is so important for startups and established brands to be well funded. It’s like building a house: it will almost always take longer and a lot more money than expected. If you’re not well funded, make sure your money is spent wisely and tied closely to specific deliverables. There’s nothing worse than spending every penny you have building something the wrong way and then starting over. So do it right the first time.

FOMO (Fear of missing something)

This term applies as much to marketing as it does to your Saturday night plans. There are some inalienable marketing rights of passage that you need to spend time and money on to not miss the brand boat:

• Branding
• Website
• Social Media
• Advertising
• Contents
• Events

Now, obviously, the combination and dollar spend for each will differ significantly depending on your product or service, but resign yourself to the fact that each will take up a significant chunk of your budget.

Related: 5 Ways to Optimize Your Digital Marketing Budget

How much should each of these channels? Fees may vary depending on the age and size of the business and national, local or global marketing objectives. But here are some basics:

Branding
Cheap: 99designs $400 and does not include additional collateral (business cards, letterheads, email templates, etc.).
Good: A small agency can charge between $4,000 and $5,000 and should include all the necessary guarantees.
Awesome: Over $10,000 and that’s if you go to a large agency that creates your entire brand book, story, and warranties, among other goodies.

Website
Cheap: Wix Where WordPress can be a DIY website and can be free.
Good: For a WordPress site designed to look like your brand, this will usually cost you around $3,500 and add another $2,000 or more if you need a shopping cart plugin.
Excellent: at least $15,000. Pricing will depend on functionality, automation, and design, among other components.

Social Media
Inexpensive: Hire an intern or student.
Good: Between $1,500 and $2,500 for a small agency.
Awesome: Over $4,000. Pricing is based on number of platforms, listening software, amount of real-time interaction, and PR integration.

Advertising
Inexpensive: Tell your friends and word of mouth
Good: Some social media marketing (between $300 and $500 per month) as well as targeted advertising on relevant websites, which is around $500 per month.
Awesome: Full social, outdoor, print, digital, pay-per-click will set you back at least $3,000.

Contents
Cheap: Hire an intern
Good: A freelance platform like Odesk.com, where you can name your own price
Awesome: Agency content typically costs $250 and $1,000 per item, depending on word count and graphics

Events
Inexpensive: Show up and network at events hosted by other people
Good: Cross-market with another brand with the same target audience
Awesome: Complete event strategy. For production teams, small events start at around $5,000 and can run into the millions.

There’s no magic formula to achieving your marketing goals, but there are steps you can take to ensure you’re building your brand in a measured and directed way, spending your money wisely.

Related: Don’t Neglect Print When Developing Your Startup Marketing Plan