It is the end of the month and you are going through the card statement. There is the ads charge, the website hosting, the SEO company, the social media app you signed up for in the spring, and a directory listing you do not remember agreeing to. Added up, it is a real number. And when you try to work out what all of it brought in, you honestly cannot say.

Here is the honest answer. There is no correct number that fits every business, and anyone who gives you one without asking about your business is guessing. The right budget comes from four things you already know or can find out: what a new customer is worth to you, how many new customers you actually need, how much you can afford to pay to win one, and how much more work you can take on. Work those out and the budget almost sets itself.

1. Why rules of thumb do not help much

You have probably heard that a business "should" spend a certain share of its revenue on marketing. These rules get repeated a lot, but they ignore the things that matter most.

A roofer with a full calendar for the season does not need the same budget as a roofer who just opened. A dental clinic that keeps patients for years can afford to pay far more to win one than a food truck can to win a lunch. A business in a crowded city faces different costs from one in a small town. A single rule cannot account for any of that, so it is a poor place to start.

Start with your own numbers instead. They are more useful than anyone else's.

2. Work out what a new customer is worth

This is the most important number in your marketing, and most owners have never written it down.

Think about what a typical new customer brings in over the whole time they stay with you, not just the first sale. Then think about what you actually keep from that after paying for materials, staff and time. That is what a customer is worth to you.

A few examples of how different this can look:

  • Picture a hair salon. A first cut is modest, but a client who likes you may come back every six or eight weeks for years, and tell their friends. Over time that client is worth far more than the first appointment.
  • Say you run a roofing company. Most customers need a new roof once in a long while. The first job is large, but repeat work is rare, so the value is mostly in that one job, plus any referrals.
  • Picture a dental clinic. A new patient might come in for cleanings twice a year for many years, with the occasional bigger treatment. Their value builds slowly but steadily.
  • Say you sell online. Some customers buy once and never return; others reorder every month. Your past orders will show you which pattern is yours.

You do not need this to be perfect. A rough, honest figure is far better than none.

3. Decide how many new customers you need, and can handle

Next, work out how many new customers you want each month. Not "as many as possible", but a real number.

Start from capacity. How much more work can you take on without hiring, without letting quality slip, and without making existing customers wait? A salon with two empty chairs on Tuesdays has room for a certain number of new clients. A contractor with one crew can only run so many jobs at once.

Then think about the gap. How many customers do you lose in a normal month, through people moving away, finishing their project or drifting off? You need at least enough new ones to replace them, and more if you want to grow.

If you are already turning work away, you may not need to spend more on marketing at all right now. You may need to raise your prices or hire, and save your marketing money for your slow season.

4. Set a ceiling on what you will pay to win a customer

Now put the first two numbers together. Ask yourself: what is the most I would happily pay to win one new customer, and still be glad I did?

That ceiling has to be well under what the customer is worth, because marketing is not your only cost. Pick a figure you are comfortable with. For a business whose customers stay for years, it can be fairly generous. For a business with small, one-off sales, it has to be low.

Your monthly budget then falls out of a simple sum:

the number of new customers you need, multiplied by the most you will pay for each one.

That is the most you should be spending each month to win new customers. It is a ceiling, not a target. If you can win them for less, good.

For a new business, there is one more limit: what you can afford to lose while you find out what works. Early marketing is partly a test, and some of it will not pay off. Spend what you could lose without putting the business at risk. There is more on getting a new business noticed in how to market a new local business.

5. Separate what you spend on ads from what you pay people

This is where a lot of owners get confused, and where some agencies are not as clear as they should be.

Your marketing costs usually fall into two separate buckets:

  1. Media spend. The money that goes straight to Google, Meta or another platform to show your ads. You pay this whether you run the ads yourself or someone runs them for you.
  2. Fees for the work. What you pay a person or an agency to plan, set up, write, manage and report on your marketing. This might be a freelancer, an agency, or the hours of a staff member.

Always ask any agency to show these separately. If you are quoted one monthly number, ask how much of it actually reaches the ad platforms and how much is the fee. You should also own your own ad accounts, so you can see every dollar spent and keep the history if you ever change who helps you.

Also count the free or nearly free things that take time rather than money: your Google Business Profile, asking for reviews, emailing past customers, posting your own work on social media. These often pay off better than anything you buy, and it is worth doing them before you spend more. See how to get past customers to come back for one of the best of them.

For what we charge for the work itself, our pricing page lists it plainly, kept separate from any ad spend.

6. Check it every month, and adjust

A budget is a starting point, not a promise. Once a month, look at three things:

  • How many new customers came in, and from where. Ask every new customer how they found you, and write it down.
  • What each one cost you to win. Divide what you spent on each channel by the customers it brought in.
  • Whether that is under your ceiling. If it is, you can try spending a bit more on what works. If it is not, cut back or fix what is broken before spending more.

Picture a landscaper who finds that Google Ads brings customers in well under the ceiling, while a directory listing has brought nobody all year. The answer is obvious: cancel the directory and move that money to what works. Without counting, nobody would ever have known.

What to do first

  1. Write down what one new customer is worth to you over the time they stay.
  2. Decide how many new customers you need each month and can handle.
  3. Set the most you would pay to win one, multiply, and compare that with what you spend now.

If you want help turning those numbers into a plan, our website and marketing audit looks at everything you spend on now and tells you what is worth keeping. If you would rather hand the work over, our growth retainer runs search, ads, social and email for you, with ad spend kept separate from our fee.