How to set a small business marketing budget: how much of revenue to spend, what it should cover, and how to make a tight budget work harder.
Most small businesses spend between 5% and 10% of revenue on marketing, leaning toward the higher end when they're actively chasing growth. The exact figure matters less than spending it on a few things done well and tracking what each one brings back.
If money's tight, the goal isn't to spend more, it's to waste less. Here's how to set a budget that does that.
How much should a small business spend on marketing?
A common benchmark is 5% to 10% of revenue, with newer or fast-growing businesses often at the top of that range and established ones lower. On $1 million in revenue that's roughly $50,000 to $100,000 a year, though a leaner business chasing steady growth might sensibly start nearer 5%. Treat it as a starting point, not a rule, and adjust based on what your marketing actually returns.
Best practice: Treat the percentage as a first draft, then let what each channel actually returns pull the figure up or down over the year.
What should the budget actually cover?
Your budget needs to cover both the campaigns and the systems they run on, which is where a lot of owners get caught short. It's easy to fund the ads and forget that the website, hosting, email tools and analytics behind them cost money too. Budget for the full picture:
- The foundations: website, hosting, business email, analytics.
- Getting found: SEO, Google Ads, local listings. See our Google Ads guide.
- Staying in touch: email marketing, social, content.
- Measuring: the tracking that tells you what worked.
Why the technology side belongs in the marketing budget
The systems your marketing runs on are part of the cost of marketing, so leaving them out of the budget sets you up to underspend where it hurts. A campaign is only as good as the website it points to and the email system that delivers it. Fund the pretty campaign but skimp on the fast, secure site behind it, and you've capped your own return. This is the integrated view we cover in the integrated growth guide.
Note: A fast, secure website and a working email system are not overheads sitting apart from marketing; they are the very things that decide whether your spend turns into enquiries.
How to make a tight budget work harder
When money's tight, spend on fewer channels done properly rather than spreading thin across all of them. One well-run channel that you measure beats five you dabble in. Pick the one or two places your customers actually are, do them well, track the results, and only add a channel once the first is paying its way. A joined-up marketing strategy helps you choose that first channel with the whole picture in mind.
Tip: Give any new channel a fixed trial budget and a date to review it, so an underperformer gets cut before it quietly drains the year's spend.
A simple starting split
| Where it goes | Rough share | Why |
|---|---|---|
| Website and systems | 20-30% | The foundation everything else runs on |
| Getting found (SEO, ads) | 40-50% | Brings new enquiries in |
| Content and social | 15-25% | Builds trust and repeat business |
| Tools and tracking | 5-10% | Tells you what's working |
Adjust the shares to your business, but keep something for each row. You can start from a simple template like the one on business.gov.au.
The short version: aim for 5% to 10% of revenue, include the systems your marketing runs on, and put the money into a few channels you measure rather than many you don't.
Frequently asked questions
What percentage of revenue should go to marketing?
Between 5% and 10% of revenue is the usual range, with growing businesses at the higher end. Adjust based on what your marketing returns rather than treating the percentage as fixed.
Should technology costs come out of the marketing budget?
The systems your marketing runs on, like your website, hosting and email tools, should be budgeted alongside campaigns because they directly shape the results. Skimping there caps what the campaigns can achieve.
What if I can only afford one marketing channel?
Pick the single channel where your customers already are, run it properly, and measure it. One well-run channel beats several half-funded ones, and you can add more once the first pays for itself.
Want help deciding where your budget works hardest? Take the free business health check.