“How much should I be spending on marketing?” is one of the first questions contractors ask us. Most have either never set a number, or they copied one from someone else and have no idea if it’s working.
Here’s the honest answer. A budget is a guess. Cost per booked job is the truth. This post gives you a sensible starting number, then shows you how to check it against what actually matters.
The starting point: a percent of revenue
A widely cited guideline, often attributed to the U.S. Small Business Administration, says a profitable small business doing under $5 million a year should spend about 7% to 8% of gross revenue on marketing and advertising.
Here’s what that looks like:
| Annual revenue | 5% | 7.5% | 10% |
|---|---|---|---|
| $250,000 | $12,500/yr ($1,040/mo) | $18,750/yr ($1,560/mo) | $25,000/yr ($2,080/mo) |
| $500,000 | $25,000/yr ($2,080/mo) | $37,500/yr ($3,125/mo) | $50,000/yr ($4,170/mo) |
| $1,000,000 | $50,000/yr ($4,170/mo) | $75,000/yr ($6,250/mo) | $100,000/yr ($8,330/mo) |
| $2,000,000 | $100,000/yr ($8,330/mo) | $150,000/yr ($12,500/mo) | $200,000/yr ($16,670/mo) |
When to go lower: you’re booked out months ahead, most of your work comes from referrals, or your margins are thin and you need to fix pricing first.
When to go higher: you’re new, you’re entering a new service area, you’re trying to grow fast, or you’re in a crowded market like roofing or HVAC replacement.
The number that matters more: cost per booked job
A percent of revenue tells you how much to spend. It doesn’t tell you if the money is working. For that you need one number:
Cost per booked job = Marketing spend ÷ Jobs booked
Example: You spend $3,000 in a month and book 12 jobs from marketing. Your cost per booked job is $250.
Now compare it to your average job. A practical rule of thumb from our CAC guide: what you spend to win a job should usually land around 10% to 20% of what the job is worth. For a $2,000 average job, that’s $200 to $400. At $250, you’re in good shape and can probably spend more.
The calculator in this post runs the math for you.
Fix the leaks before you spend more
Most contractors who say “marketing doesn’t work” don’t have a lead problem. They have a leak problem. Don’t pour more leads into a bucket with holes in it.
- Missed calls. If one in five calls goes to voicemail and nobody calls back fast, you’re paying for leads that never get answered. Missed-call text-back plugs this.
- Slow replies. Leads cool off in minutes, not days. Read why the first five minutes matter.
- No follow-up on estimates. Many jobs are lost to silence, not competitors. Here’s how to follow up after an estimate.
- Past customers you never contact. They’re the cheapest jobs you’ll ever book.
Fixing these often lowers your cost per job more than any new ad campaign.
Where the money should go, in order
Spend in the order that makes every dollar after it work harder.
- Get found. A complete Google Business Profile and a website built to convert. These keep working every month.
- Build trust. A steady flow of Google reviews. Use our review request templates.
- Answer and book fast. Missed-call text-back, instant replies to forms, and a simple booking process.
- Follow up. Every estimate, every lead, and your past customers.
- Then turn up paid ads. Google Ads, Facebook ads, mailers or paid lead sites. They’ll convert better because steps 1-4 are in place. If you’re considering paid lead sites, read are Angi leads worth it? first.
How to set your budget in 15 minutes
- Write down last year’s gross revenue
- Multiply by 5%, 7.5% and 10% to see your range
- Pick a monthly number you can commit to for at least six months
- List every channel you pay for now and what each costs
- Count the jobs each channel booked in the last 90 days
- Calculate cost per booked job for each channel
- Cut or fix any channel that costs more than 20% of your average job
- Put the savings into fixing leaks first, then your best channel
The bottom line
Start with a percent of revenue so you have a number. Then judge every channel by cost per booked job, fix the leaks before you buy more leads, and spend in order. The Booked Solid System is built around that order, so the money you spend on getting found turns into booked jobs instead of voicemails.