On this page
The most common answer to "how much should I spend on marketing?" is a percentage of revenue. It's easy to remember and nearly useless on its own. A referral-heavy company with a waiting list and a fast-growing company entering a new territory need very different budgets — even at the same revenue. A better approach starts with your goal and works backward.
Why percentage rules fall short
Percentage-of-revenue rules ignore:
- Your margins. High-margin trades can afford more acquisition cost per job.
- Your sources. Referral-driven companies spend little; companies that sell mostly through paid channels spend much more.
- Your goals. Holding steady and doubling require different budgets.
- Your capacity. Marketing beyond what your crews can install produces backlog and stress, not profit.
Use percentages only as a sanity check after you've built the budget from the bottom up.
The goal-based method
1. Set the revenue goal
Pick the new-sales target for the period — not total revenue, which includes jobs already sold.
2. Translate it into sales
Sales needed = new-sales goal ÷ average job size.
3. Translate sales into appointments
Sits needed = sales needed ÷ close rate. Appointments needed = sits needed ÷ show rate. Our appointments-per-week guide walks through this step.
4. Subtract what you'll get without paying
Estimate appointments from referrals, repeat customers, and organic search based on your history.
5. Price the gap
Multiply the remaining appointments by the cost per appointment of the sources you'll use — using their real cost per sit, not their sticker price.
6. Check against what you can afford
Compare the result with your customer acquisition cost target and gross profit per job. If the budget implies spending more per job than you can afford, the goal or the conversion rates have to change.
A worked example
Illustrative contractor:
| Step | Number |
|---|---|
| New-sales goal for the quarter | $600,000 |
| Average job | $15,000 |
| Sales needed | 40 |
| Close rate on sits | 30% → 134 sits |
| Show rate | 80% → about 167 appointments |
| Expected from referrals and organic | 60 appointments |
| Appointments to buy or generate | about 107 |
| Blended cost per appointment | $250 |
| Paid acquisition budget | about $26,750 |
That's roughly 4.5% of the new-sales goal in direct acquisition spend, before sales labor. The percentage is an output, not an input.
Budget for capacity, too
If the plan requires more appointments than your reps can run, the budget must include a hire — or the goal has to come down. And if installs are booked out for months, more marketing may simply lengthen the backlog. Plan production and sales together.
Seasonality
Spread the budget by month according to demand and capacity. Many contractors spend more in the run-up to busy seasons and lean on controllable channels to fill slow months — see the slow season playbook.
Protect the budget from waste
- Test new sources with defined success metrics before scaling — see how to test a lead vendor.
- Review cost per sale by source monthly.
- Fix response time and follow-up before increasing spend; extra leads won't help if current leads wait hours.
- Know your ceiling per source with the break-even cost per lead method.
Pay-for-performance options can reduce budget risk while you learn what works. Our pricing page explains how commission-only terms work with RunsForYou.
Frequently asked questions
What percentage of revenue should a contractor spend on marketing?
There's no universal right percentage. It depends on margins, how much business comes from referrals, growth goals, and capacity. Build the budget from your sales goal and conversion rates, then use a percentage only as a sanity check.
How do I create a marketing budget for my contracting business?
Start with a new-sales goal, divide by average job size to get sales needed, divide by close and show rates to get appointments needed, subtract expected referral and organic appointments, and price the remaining gap using real cost per appointment.
Should I spend more on marketing in the slow season?
Often yes, on controllable channels like outbound calling and database reactivation, because inbound demand drops while your capacity is available.
What's the biggest marketing budget mistake contractors make?
Increasing spend before fixing response time, follow-up, and close rate. Extra leads can't fix a process that wastes the leads you already have.
RunsForYou Team
Written by the team that runs outbound calling, homeowner qualification, and appointment booking for home service contractors at RunsForYou (Runs For You LLC).
Related services