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One of the most vital decisions that a Small and Medium-size Business (SMB) has to make is how much money to allocate for the marketing budget. Prospects often ask, “How much should I spend on marketing?”
The answer: “It varies by industry and business size.” It’s also based on how much you want to grow, and how fast. Both the Counselors to America’s Small Business (SCORE) and the U.S. Small Business Administration (SBA) define the variable for a proper marketing budget to be between 2% and 10% of sales.
Most companies under spend on their marketing budgets, thinking that to not spend is to save. This quite simply isn’t true. You’ve heard it before, and it deserves repeating: You have to spend money to make money. The trick is to spend your money wisely on a customized marketing plan aimed at fulfilling your company’s goals. Keep in mind that your marketing efforts have a direct result on your return on investment (ROI).
Budget-setting guidelines
Two primary things should be considered when setting a marketing budget:
- The development of the brand and the channels used to promote the brand. These include logos, Web sites, blogs, sales presentations, brochures, ads, etc.
- The ongoing expense of promoting and advertising your brand to your customer base and your prospects through our Search Engine Optimization & Social Media Marketing plans.
For most SMBs, the percentarge of revenue dedicated to a marketing budget is determined by industry and size. But, in general terms, here is some information we have put together based on several creditable sources.
| Revenue | Marketing Budget |
|---|---|
| Less than $5 million | 7–8% |
| $5–10 million | 6–7% |
| $10–100 million | 5–6% |
| $100–300 million | 3–5% |
| More than $300 million | 3-4% |





