Most advice on marketing budgets gives you a single percentage and moves on. The trouble is that the best-known figures come from surveys of very large companies, and a small business with different margins and growth plans can't just copy them. A better approach uses two methods and compares the answers.
How much should a small business spend on marketing?
There's no single right figure. Most businesses start from a share of revenue: Gartner's 2026 survey puts the average at 7.8% of company revenue, but it mostly covers companies earning over $1 billion. A small business should pick a percentage it can sustain, then check it against a second number: new customers wanted each month × what one new customer costs to win.
The U.S. Small Business Administration makes the same point in its guide to getting the most from your marketing budget: "There's no hard and fast answer to how much your marketing budget should be." It adds that many businesses use a percentage of revenue as a guide, and that startups can use projected revenue.
What percentage of revenue goes to marketing?
Gartner's 2026 CMO Spend Survey found marketing budgets average 7.8% of company revenue in 2026, up slightly from 7.7% in 2025. The survey covered 401 marketing leaders in North America, the UK and Europe, and most of their companies earn more than $1 billion a year.
That makes 7.8% a useful reference point, not a target. A few things push a small business's number up or down:
- Growth stage. A new business or a new product needs to be found. Spending more than the average while you build awareness is normal.
- Margins. A business with high margins can afford a bigger share of revenue, because each sale leaves more to pay for the marketing that won it.
- Word of mouth. If referrals already bring steady work, you may need less paid marketing to hit the same goals.
Here's what different percentages mean in dollars:
| Yearly revenue | 3% | 5% | 7.8% | 10% |
|---|---|---|---|---|
| $250,000 | $625/mo | $1,042/mo | $1,625/mo | $2,083/mo |
| $500,000 | $1,250/mo | $2,083/mo | $3,250/mo | $4,167/mo |
| $1,000,000 | $2,500/mo | $4,167/mo | $6,500/mo | $8,333/mo |
| $2,000,000 | $5,000/mo | $8,333/mo | $13,000/mo | $16,667/mo |
How do you set a marketing budget from a growth goal?
The second method starts from the customers you want:
Monthly budget = new customers wanted per month × customer acquisition cost (CAC)
CAC is what you spend on marketing to win one new customer: total marketing spend ÷ new customers over the same period. If you've been marketing for a while, work it out from last quarter's numbers.
If you haven't, you can estimate it from a cost per lead and a close rate:
CAC = cost per lead ÷ share of leads that become customers
At the 2026 Google search average of $66.69 per lead and an example close rate of 25%, CAC is $266.76, so 20 new customers a month would need about $5,335 a month. A business that wins customers for $250 each needs $5,000 a month, or $60,000 a year.
What if the two methods disagree?
They usually do, and the gap is the useful part. Take a business with $1,000,000 in yearly revenue and a $250 CAC:
| Goal | Budget the goal needs | As % of revenue | Budget at 7.8% of revenue |
|---|---|---|---|
| 20 new customers a month | $5,000/mo | 6.0% | $6,500/mo |
| 40 new customers a month | $10,000/mo | 12.0% | $6,500/mo |
At 20 customers a month, the goal fits comfortably inside a 7.8% budget. At 40, it needs 12% of revenue. There are three ways to close that gap: raise the budget, lower the goal, or bring the cost per customer down. The last one is often the cheapest. A landing page that converts twice as many visitors halves the cost of every lead, and so the cost of every customer.
Our marketing budget calculator runs both methods side by side and shows the gap.
How should you split a small marketing budget?
There's no standard split. Rather than copying one, think about what each channel is for:
- Search ads catch people already looking for what you sell. Easy to measure and quick to start. Google Ads averages $66.69 per lead in 2026.
- Social ads reach people who aren't searching yet. Usually a cheaper lead ($27.39 on Facebook in 2026) that can close at a different rate.
- Content and SEO build traffic that keeps coming after you stop paying. Slow to start, and it compounds.
- Email and everything else is usually the cheapest way to sell again to people who already know you.
As an example only, here's a 40 / 25 / 20 / 15 split of a $6,500 monthly budget:
| Channel | Share | Monthly |
|---|---|---|
| Search ads | 40% | $2,600 |
| Social ads | 25% | $1,625 |
| Content & SEO | 20% | $1,300 |
| Email, events & other | 15% | $975 |
Whatever split you start with, move money every month towards the channels with the lowest cost per customer, not the lowest cost per click.
Some channels also have minimums. TikTok, for example, requires a campaign daily budget above $50, which is about $1,520 a month. A small budget spread across too many channels gives each one too little to learn from.
How do you know the budget is working?
Track three numbers by channel, every month:
- Cost per lead: spend ÷ leads.
- Cost per customer: spend ÷ new customers.
- Return: profit from new customers ÷ spend.
If you sell online directly from ads, check each campaign's ROAS against your break-even ROAS as well. Our guide to a good ROAS shows how to find yours. And the cost per lead guide covers the most you can afford to pay per lead.
