The typical range — and its limits
As a general reference point, established contractors commonly invest a mid-single-digit percentage of revenue in marketing. Newer companies, companies entering a new market, or companies pushing into a new service line often invest more for a defined season. Companies with a deep, active referral base can sometimes invest less, because a channel with a near-zero cost is doing real work in their pipeline.
Treat this range as a sanity check, not a target. A number pulled from an industry average doesn't know your average job value, your close rate, or your growth goal — and those three things should actually set your budget.
The calculation that actually sets your number
Work out three figures: what a typical customer is worth to you (average job value, and lifetime value if you get meaningful repeat or referral business from past customers); what you can afford to pay to acquire one and still hit your margin targets; and how many new customers your revenue goal requires. Multiply the number of customers needed by what you can afford to pay per acquisition, and you have a defensible budget — one you can explain in a sentence instead of justifying with an industry average.
This calculation also tells you when a channel is working: if a channel's real cost per booked job is below what you calculated you can afford, it's earning its place regardless of what percentage of revenue it represents.
Budgeting for new markets or new service lines
Entering a new city, county, or service line means starting without the reviews, reputation, and referral relationships that make your existing markets efficient. Expect to spend more per acquired customer during that ramp — often noticeably more than your established average — and plan for it explicitly rather than being surprised when early campaigns look less efficient than your core market.
Set a defined ramp period (commonly two to four quarters) with a specific goal for reviews, visibility, and lead flow, rather than an open-ended elevated budget with no clear endpoint.
Budgeting through slow and busy seasons
The most common budgeting mistake in the trades is spending when work is slow and pulling back when work is busy — which guarantees the next slow season looks the same as the last one. Visibility built during a busy season, when it's tempting to cut marketing entirely, is what fills the slow one that follows.
Plan the year, not the month. A steady baseline budget with a modest seasonal adjustment beats a budget that swings from zero to maximum based on how the phone is ringing this week.
Two common budgeting mistakes
The first is setting a budget from a percentage without ever calculating what a customer is actually worth — leading to spend that's either too conservative to produce meaningful growth or aggressive enough to lose money per job without anyone noticing for months. The second is treating budget as fixed regardless of performance: a channel producing jobs well below your acceptable cost deserves more budget; a channel producing them above it deserves less, immediately, not at the next annual review.
If you'd rather talk it through, that's what Karen does: a focused conversation about your goals and constraints, and a clear read on what to fix first.