How to determine your marketing budget How to determine your marketing budget Small business owners, whether in ecommerce or brick and mortar, should never overlook the importance of marketing. No matter how good your products or services are, people need to hear about them first - and marketing is the best way to spread the word and increase sales. Yet many online business owners believe that marketing begins and ends with their social media feeds. But in reality, building a customer base requires some more upfront investment.
Well, I wasn't the first one to think that. See hereherehereand here. So instead of writing about the answer to the question of how much to spend, I'm going to write about the top 9 answers from myself and all the others who have written on the topicalong with pros and cons of each method.
From there, you should have a good starting point for creating your budget. Without further ado, here are the top 9 ways to figure out how much to spend on marketing.
Percentage of revenues This is by far the most talked about method of determining your budget. Picking the percentage that works best for you will probably take some trial and error. It makes for great cocktail party and networking event rumors. Oh yea, and it will vary wildly depending on your profit margins.
Percentage of net sales Similar to taking a percentage of revenues, this determines your marketing budget as a fraction of your net sales. This method is a little bit less aggressive than the last method, since you exclude expenses from your calculations.
As with the first method, this method will take a lot of trial and error to find the percentage that works well for your company. Everything you can afford In the realm of fast-growing small business, this is definitely one of the most popular answers.
The idea is to set aside the money you need to keep your business alive presumably your family tooand throw everything else at building popularity.
Some Venture Capitalists like this plan because it means getting big fast. Most small businesses should not even think about this type of marketing budget unless they have a significant amount of backup. A hair more than the competition This method is simple in principle: The reality of doing this is a lot more difficult than it seems, since it can be very hard to find out exactly how much your competitors are spending.
If you do manage to find out that information, this method can be a great way to figure out how much to spend marketing. It can also save you some calculations, assuming you can actually get good information on your competitors.
Desired customer growth This is a great way to determine your budget if you have a specific number of new customers as your goal.
First, you have to figure out how much it costs to get a new customer.
Then, you multiply that cost by the number of new customers you want to acquire. This method depends on having accurate data to begin with. It also ignores the immeasurable benefits of branding and image marketing.
The best way to get these numbers is to find an association or organization that represents your industry and ask them for some averages. Once you have the averages, you can refine the actual costs based on your own situation and experience.
Time is money, money is time. Desired market share This is another quick calculation that can give a relatively accurate budget, so long as you have good data to start with.
The projection is based on a goal of attaining a certain percentage of your market.Desired customer growth This is a great way to determine your budget if you have a specific number of new customers as your goal.
It does, however, take a lot of information to implement properly. First, you have to figure out how much it . 9 Ways to Determining Advertising Budget 9 Popular Ways to Determine Your Marketing Budget 1.
Percentage of revenues This is by far the most talked about method of determining your budget.
The Expectations With The Forecast Budget For Year 9 Words | 7 Pages. A1. Concerns There are several concerns with the forecast budget for year 9. This first concern is in Advertising.
Competition Bikes has annually budgeted 2% of gross profit. 9 Ways to Determining Advertising Budget This is by far the most talked about method of determining your budget.
This method works by taking a fixed percentage of your revenues (that’s every penny your company brings in) and allocating that amount for .
Jun 07, · Without a solid budget, you can accidentally overspend on marketing costs.
Here are three steps to help you organize current finances, determine where to spend marketing . 9 Ways to Set Your Marketing Budget 1.
9 Ways To Set Your Marketing Budget 2. Determining the Right Amount There are many ways to set a marketing budget. 3. Determining the Right Amount There are many ways to set a marketing budget.