How Much Should I Invest in Marketing?

Fledgling businesses in particular need to establish their customer base and let potential customers know they exist. Providing great products or services often just isn’t enough to have a diverse customer base, even if you have returning customers and referrals. Having a strategic marketing plan and budget for advertising is key to spending the right amount of money in the right places.

While spending on any particular expense is often subjective, considering what similar sized businesses in the same industry are spending may be a starting point. A simple calculation using the industry advertising-to-sales ratio will provide you with a realistic comparison of what others do in the field.

Alternatively you may begin with 2 to 5% adjusting your budget for advertising up on down based on your capacity for extra work, the type of media you choose, and the size of your market.

Businesses who rely on a large volume of transactions to increase their profits may spend significantly less than 5% as their relatively higher revenues make a smaller percentage add up to quite a significant budget, whereas other business whose rely on margins may have room in their margins to increase their percentage.

Once you have calculated your marketing budget you can plan your spend in your marketing strategy.



by Carol Allan

Carol is a Senior Accountant at Insight Accounting advice. She is a registered tax agent, has a Bachelor of Commerce and Advanced Diploma in Accounting. Carol’s areas of expertise include tax and property advice.


The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.