The most repeated rule about a small business marketing budget is a percentage: spend 7 to 8 percent of revenue, a figure often credited to the Small Business Administration. The SBA’s own blog post on the subject, written by Rieva Lesonsky in July 2019, takes a different line. “There’s no hard and fast answer to how much your marketing budget should be,” it says, and then cites two averages from two outside sources that sit about seven times apart: 1.08 percent of revenue spent on advertising, and 7.9 percent spent on marketing (SBA blog).
Both numbers can be true at once, because they count different things. That is the first lesson of budgeting: decide what you are counting before you compare yourself with anyone. The second lesson is that a percentage works better as a cross-check than as a starting point. This playbook builds the budget from the one number a small business actually controls, which is what a new customer is worth to you.
Where the percentage benchmarks come from
The best-known current benchmark is The CMO Survey, run by Duke University’s Fuqua School of Business with Deloitte and the American Marketing Association. Its 2026 edition was in the field from January 7 to 29 and drew 308 US marketing leaders, 97 percent of them at VP level or above (CMO Survey 2026 Topline Report). The 154 who answered the spending question reported marketing at a median of 5 percent of company revenue and a mean of 8.96 percent, with answers running from zero to 42.99 percent (CMO Survey 2026, page 39).
Now look at who answered. Only 13 percent of respondents worked at companies with under $10 million in revenue, while 19.9 percent worked at companies with 10,000 or more employees (CMO Survey 2026, pages 61 and 62). A benchmark built on that sample tells a plumber or a bookkeeper what companies with marketing departments spend. It cannot tell them what their own customer is worth.
Our view: the gap between the median and the mean is the most useful thing in that table. Half the respondents who answered spend 5 percent of revenue or less, and a smaller group spending heavily pulls the average toward 9 (CMO Survey 2026, page 39). An average is not a target, and a percentage drawn from a survey of large firms is a weak reason either to spend $20,000 or to hold back from spending it.
The four-line worksheet
Take a sheet of paper or a blank spreadsheet and fill in four lines. The example below is hypothetical, a lawn care company invented only to show the arithmetic. Replace every figure with your own.
- Gross profit per customer per year. What an average customer pays you in a year, minus the direct cost of serving them: materials, crew hours, fuel. In the example, $1,800 in yearly revenue at a 45 percent gross margin leaves $810.
- What you are willing to pay to win one. This line is a decision, not a statistic, and it belongs to the owner. The example uses one third of a year’s gross profit, which is $270. If your customers stay for years, you can afford more; if most buy once, you can afford less. Write your fraction down so you can hold every channel to it.
- How many new customers you need this year. Count the customers you expect to lose, then add the growth you want. In the example, 25 expected losses plus 15 net new is 40.
- Multiply lines 2 and 3. In the example, 40 customers at $270 each is $10,800 a year, or $900 a month.
Then run the cross-check. If the same hypothetical company brings in $400,000 a year, the CMO Survey median of 5 percent would point to $20,000. The worksheet says $10,800. Neither figure is automatically right, but only one of them came with a reason. When the two disagree by that much, look at lines 2 and 3 first: either you are undervaluing a customer, or you need fewer new customers than the benchmark assumes. If line 3 feels like guesswork, our guide to getting customers without starting over each month covers customer acquisition that leaves something behind.
Before you compare against anything, settle what the budget contains. The SBA post’s two averages differ partly because advertising is only one line inside marketing. Write your own list once: ad spend, marketing software, your website, printed materials, sponsorships, and any agency or freelancer fees. Keep the list the same every month, so this year’s figure means the same thing as next year’s.
Spend it as tests, not as a year
A budget worked out on paper is a guess about which channels will deliver customers at your line 2 price. Treat the first 90 days as a test of that guess. Split the monthly figure across no more than two or three channels, give each one a fixed amount, and judge each only on customers won, not on clicks, views or likes. A channel that wins customers under your line 2 price gets more of next quarter’s money; one that does not gets cut back, however busy it looks.
If one of those channels is Google Ads, know how its budget setting behaves. Google says a campaign can spend up to 2 times its average daily budget on a given day, but you will never be charged more than 30.4 times that daily budget in a billing period, so a $10 daily budget costs at most $304 in a month (Google Ads Help). Divide your monthly test amount by 30.4 to get the daily figure, and the monthly total holds. For what the newer option of paying for placement inside an AI assistant costs, see our breakdown of ChatGPT ads cost per click.
Know where each customer came from
Line 2 only works if you can divide each channel’s spend by the customers it produced, which means recording where every new customer came from. There are three levels of doing that.
- Free: ask every new customer “How did you hear about us?” on the intake form or during the first call, and log the answer in a spreadsheet next to the value of the job. It is imperfect, and it is far better than guessing.
- WhatConverts: the Call Tracking plan costs $30 a month and includes $30 of usage credit, with call recording, transcription and dynamic number insertion, which swaps the phone number on your website so each call is tied to the ad or page that produced it; there is a 14-day free trial (WhatConverts pricing).
- CallRail: the Lead Tracking plan costs $50 a month with 5 tracking numbers, 250 minutes and 25 text messages, also with a 14-day free trial (CallRail pricing).
Call tracking earns its fee when phone calls are how most of your customers reach you. If most arrive through a web form or walk in the door, start with the free version and a form field, and revisit the paid tools once the spreadsheet shows you which channel is worth measuring more closely.
Where AI helps, and where it stops
A general AI assistant is good at the tedious half of this job: turning a messy export of last year’s invoices into gross profit per customer, sorting “how did you hear about us” answers into channels, and drafting a 90-day test plan for you to edit. ChatGPT Plus costs $20 a month (OpenAI pricing), and Claude Pro costs $20 billed monthly or $17 a month billed annually (Anthropic pricing); both have free tiers that can handle a one-off spreadsheet. Remove customer names and contact details before you paste anything in. For the wider set of marketing tools, see our AI for small business marketing playbook.
What the assistant cannot do is choose line 2 for you. How much you are willing to risk to win a customer depends on how long your customers stay, how much cash you have and how much new work you want to take on, and those are the owner’s calls. The AI drafts; you decide. Our sister site BusinessPrompter publishes a Marketing Budget Allocator prompt built for this task, allocating spend across channels by return and priority. One caution: its “About This Prompt” panel currently describes a sales-team motivation problem rather than budgeting, so judge it by its title and its output. It sits in the Pro library at BusinessPrompter.com.
So the SBA post had it right: there is no hard and fast answer to how much a small business marketing budget should be. There is a hard and fast way to find yours, and it fits on four lines.
Frequently asked questions
How much should a small business spend on marketing?
There is no single correct percentage. The 2026 CMO Survey found a median of 5 percent of revenue and a mean of 8.96 percent among the marketing leaders who answered, and 87 percent of the survey’s respondents worked at companies with $10 million or more in revenue (CMO Survey 2026). A better starting point is to multiply the number of new customers you need by what you can afford to pay for each one, then use the percentage as a cross-check.
Is the 7 to 8 percent rule from the SBA?
The figure is widely credited to the SBA, but the SBA’s own 2019 blog post on marketing budgets says there is no hard and fast answer, and it cites outside averages of 1.08 percent of revenue spent on advertising and 7.9 percent spent on marketing (SBA blog).
What should a small business marketing budget include?
Anything you spend to win or keep customers: ad spend, marketing software, website costs, printed materials, sponsorships, and agency or freelancer fees. What matters most is using the same list every month, so your figures compare cleanly over time.
