Most marketing budgets are set by habit, by a vendor's recommendation, or by whatever was left over last year. Budget planning replaces that with a number you can defend: what a new customer is worth to you, what you can afford to pay to win one, and how many you can actually serve.
What budget planning is
Budget planning is a short engagement that works out a sensible marketing spend from the economics of your business. It answers four questions in order:
- What is a new customer worth in gross profit over a realistic period?
- What share of that value are you willing to spend to acquire them?
- How many new customers can you serve each month without hurting quality?
- Given those limits, how should spend be split between agency fees, ad spend and tools?
The output is not a single figure. It's a range, a split, and a set of rules that tell you when to spend more and when to pull back.
Who it's for
Budget planning fits owners who are about to hire an agency and want to know what they should be paying before proposals arrive. It also fits companies whose spend has grown without a plan, and seasonal businesses that spend the same amount in their quiet months as in their peak.
If you already have a budget and want to know whether the current vendor is using it well, a vendor audit is the better starting point.
A worked example
Take a business whose average first sale is $2,400 with a 40% gross margin, so $960 of gross profit. Records show that about half of customers buy again within two years, adding an average of $480 of gross profit per customer. Expected gross profit per new customer is about $1,440.
The owner decides to spend no more than 30% of that to acquire a customer, so the target acquisition cost is about $430. If one in four qualified enquiries becomes a sale, the business can afford up to roughly $108 per qualified enquiry.
The crew can take on 25 new customers a month. At $430 each, the monthly ceiling for all marketing, fees included, is about $10,750. We would usually start below the ceiling, around 60 to 70% of it, and raise spend only when the tracked cost per customer stays under target for two consecutive months.
You can run the same calculation with our step-by-step budget guide.
What's included
- A one-page unit economics summary: customer value, target acquisition cost and capacity
- A monthly budget range with a starting point and a ceiling
- A split between agency or freelancer fees, ad spend and software
- A seasonal calendar showing where to concentrate spend
- Decision rules: the numbers that justify raising, holding or cutting the budget
- A list of tracking gaps to close so the rules can be applied honestly
Timeline and how results are measured
Most budget plans take two to three weeks, depending on how quickly sales data can be pulled together. We schedule one discovery call, one working session and one walk-through of the final plan.
Success is measured by whether the plan gets used. Within three months you should be able to state your actual cost per customer, compare it with the target, and make spending decisions from that comparison rather than from instinct. Owners who want help applying the rules each month often add ongoing oversight.
Mistakes to avoid when setting a budget
- Using revenue instead of gross profit. A $2,000 sale with a thin margin can't support the same acquisition cost as one with a wide margin.
- Ignoring capacity. Spending to generate more work than you can deliver erodes reviews and wastes money.
- Leaving out fees. Media spend alone understates what each customer costs.
- Flat spending through the year. Most businesses have clear peaks and troughs; your budget should follow them.
- Judging too early. Search and content channels often need a few months before cost per customer settles. Set the review date in advance.
Budget plans are usually priced as a fixed project; see the pricing page for ranges.
Frequently asked questions
Isn't there a standard percentage of revenue to spend on marketing?
Rules of thumb exist, but they ignore your margins, your capacity and how long your customers stay. A business with high repeat value can afford much more per new customer than one that sells once, so we build the number from your own figures instead.
What information do you need from me?
Roughly a year of sales by month, an average job or order value, an estimate of gross margin, how many enquiries turn into sales, and what you spend on marketing today. Approximate figures are fine to start.
Should agency fees count as part of the budget?
Yes. Owners often budget only for ad spend and treat the retainer separately, which hides the true cost of each customer. We always plan fees, media and tools together.
How often should the budget be revisited?
Quarterly is enough for most businesses, with a lighter monthly check against the targets. Seasonal businesses should also plan a pre-season and post-season review.