How much should I spend on Marketing? Here's your budget

The most common founder question I get isn't "what should our ad copy be?" or "are we bidding too high?". It's "how much should we be spending on marketing?"

The honest answer is "it depends" — but that's not useful. Founders need a framework. So here's the one I actually use when advising on marketing budgets: percentages of revenue by business stage, with the caveats and adjustments that make those percentages meaningful for your specific situation.

There is no universal "spend 15% of revenue on marketing" rule. There are different right answers for different stages, models, and growth ambitions. Here's how to think about it properly.

The framework: marketing spend as % of revenue

• Pre-PMF (Product-Market Fit): Don't spend on paid marketing. You're spending to learn, not to scale. $0-5k/month informal testing maximum.
• Early growth ($500k-£$M revenue): 20-40% of revenue on marketing. You're buying growth aggressively because compounding starts here.
• Growth stage ($3M-$20M): 12-25% of revenue. You've validated the channels; now scale them.
• Scale stage ($20M-$100M): 8-15% of revenue. Diminishing returns on paid; brand and operational efficiency matter more.
• Mature stage ($100M+): 5-10% of revenue. You're defending share; growth requires expansion into new categories or geographies.

These are rough bands. Your specific numbers will depend on the variables below.

What changes the % you should spend

Gross margin

High-margin businesses can spend more on marketing because each customer is worth more.

• A SaaS company with 80% gross margin can spend 30%+ of revenue on marketing in growth stage and still be sustainable.
• An e-commerce business with 30% gross margin should spend much less — typically 8-15% even in growth stage — because each customer's contribution to profit is lower.

The rule of thumb: marketing as % of revenue should be a fraction of your gross margin. Spending more than your gross margin on marketing means you're losing money on every customer.

Payback period

Investor-funded businesses with cash runway can sustain longer payback periods.

• VC-backed growth-stage business: comfortable with 12-18 month payback periods. Can spend aggressively.
• Bootstrap business: needs sub-6-month payback. Must spend conservatively.
• Profitable mature business: 3-6 month payback is the comfort zone. Spend matches the constraint.

A 20% of revenue spend with a 6-month payback is unsustainable for a bootstrap business. The same spend with a 12-month payback is fine for a VC-funded one.

Growth ambition

The point of marketing spend is to drive growth. The growth target determines how much you should spend.

A simple back-of-envelope:

Required Marketing Spend = (Revenue Growth Target × (1 / LTV multiplier)) / Conversion-to-Revenue Lag Factor

Or in plain English: if you want to grow revenue by $1M next year, and your blended ROAS is 4x, you need $250k in marketing spend to get there. Adjust for the lag between marketing investment and revenue realisation.

Competitive dynamics

In categories with intense paid competition (legal, finance, B2B SaaS), marketing % needs to be higher to win impression share. In low-competition categories, you can spend less and still grow.

The early-stage trap: spending too little because it "feels right"

I see this constantly with bootstrap founders. They have $200k in annual revenue. They spend $500/month on Google Ads "to test." Revenue isn't growing. They conclude marketing doesn't work.

The math is the problem. $500/month is $6k/year. That's 3% of revenue. Even if every penny converted at 10x ROAS (impossibly good), it would produce £60k in extra revenue. That's not a growth lever. That's noise.

For early-stage businesses to actually grow through marketing, the spend needs to be material relative to revenue. A real test budget for a $200k revenue business should be $40k-$80k annually (20-40% of revenue). Anything less is not testing — it's gesturing.

"We're testing if marketing works" with a $500/month budget is like testing if you can swim by dipping a toe in the pool. You're not testing anything. You're just hesitating.

The growth-stage trap: spending too much chasing growth at any cost

Opposite problem at the $3M-$10M revenue stage. Founders see the SaaS Twitter posts about companies spending 80% of revenue on customer acquisition and assume that's what they need to do.

It works for some businesses, almost always venture-backed with very specific economics: high gross margin, very long expected LTV, network effects, or platform dynamics. For most growth-stage businesses, that level of spend destroys cash without producing equivalent growth.

The "burn rate to grow" approach is appropriate when:

• You have VC funding with explicit growth-over-profit mandate.
• You have proven channels with predictable CAC.
• You're in a winner-take-most market where speed to dominance matters.
• Your LTV economics are validated (not projected, validated).

For everything else, spending 50%+ of revenue on marketing is recklessness pretending to be ambition.

The mature-stage trap: spending too little because growth is "harder"

Established businesses often plateau in marketing investment as % of revenue. The argument: "growth is harder at scale, so we'll spend the same as last year and accept slower growth."

This is how market share gets lost. Marketing isn't just about acquiring new customers. It's about defending position against younger, hungrier competitors who are spending aggressively. A mature business that stops growing its marketing spend in absolute terms while competitors are scaling up is slowly ceding share.

The right mature-stage move: maintain marketing as a stable % of revenue (8-15%) but make sure the absolute spend keeps growing. And shift more of it toward brand investment, which compounds over time.

How to allocate the budget across channels

Once you've set the total marketing budget, the next question is split. A starting framework:

Early-growth businesses ($500k-$3M)

• 80%+ paid acquisition (Google Ads, Meta, channel that drives direct response).
• 10-15% creative production (the asset library you'll need).
• 5-10% measurement and analytics (without this, you can't scale).
• 0% brand spend. Too early. Focus on direct response.

Growth-stage businesses ($3M-$20M)

• 60-70% paid acquisition.
• 15-20% brand and content (compounding investments).
• 5-10% retention marketing.
• 5-10% measurement, tools, talent.

Scale-stage businesses ($20M-$100M)

• 40-50% paid acquisition.
• 20-25% brand.
• 10-15% retention and lifecycle marketing.
• 10-15% organic, content, SEO.
• 5-10% experimentation and new channels.

Mature-stage businesses ($100M+)

• 30-40% paid acquisition.
• 30-40% brand.
• 10-15% retention and CRM.
• 10-15% organic and content.
• 5-10% innovation budget for new channels and markets.

The pattern: as the business matures, paid acquisition's share decreases and brand/retention/organic grow.

Use case: a $4M ARR B2B SaaS company stuck at 12% growth

A composite based on patterns I've seen.

A B2B SaaS founder was running at $4M ARR with 12% year-on-year growth. He felt the growth was anaemic. His marketing budget was $40k/month — about 12% of revenue.

We pulled apart the math:

• Gross margin: 76% (typical for SaaS).
• Average payback period: 9 months.
• Effective LTV:CAC: 4.2:1 (after correcting for gross profit, not revenue).
• Growth target: 30% YoY (from 12%).

To hit 30% growth, he needed to acquire ~$1.2M of new ARR vs the previous year's ~$480k. At his current CAC, that meant ~150% more new customers, which required ~150% more marketing spend.

His current 12% was sustaining 12% growth. Aiming for 30% growth at the same percentage was structurally impossible.

We made three changes:

• Raised marketing budget to $85k/month (25% of revenue, in line with growth-stage benchmarks for healthy LTV:CAC businesses).
• Reallocated: 65% paid acquisition, 20% content/SEO, 10% retention, 5% experimentation.
• Set a 4-month "validate the spend works" window before committing to the new run rate fully.

Results over 6 months:

• New ARR added per month went from $40k to $92k.
• CAC rose 12% (some inefficiency in scaling channels) but LTV:CAC stayed above 3.5:1.
• Year-on-year growth crossed 28% within the period.
• Cash position remained healthy because payback period held at 10 months.

Same business. Same product. Same gross margin. Different marketing investment. The growth rate was determined by the spend.

Common mistakes founders make on marketing budgets

• Benchmarking against the wrong stage. A mature company's 8% is suicide for an early-growth company.
• Treating last year's % as the target. Last year was a different business stage. Budgets should evolve.
• Cutting marketing in a downturn. The textbook wrong move. Reduce inefficient marketing. Don't reduce all marketing. Competitors who keep spending in downturns gain disproportionate share.
• Ignoring brand investment until it's too late. Brand compounds. Starting brand investment at £50M revenue is later than ideal.
• Confusing marketing budget with ad budget. Marketing includes salaries, tools, content, creative — not just paid media.
• Setting budgets annually then never adjusting. Marketing efficiency changes monthly. Budgets should adjust quarterly at minimum.

Bottom line

There is no universal "right" marketing budget. There's only a right marketing budget for your business stage, gross margin, payback period, and growth ambition.

• Early growth: 20-40% of revenue. Spending less is hesitation, not strategy.
• Growth stage: 12-25%. Validated channels scaled aggressively.
• Scale stage: 8-15%. Diversified channels, growing brand investment.
• Mature stage: 5-10%. Defending share, slow growth, brand-heavy.

Adjust within these bands based on gross margin, payback period, and competitive dynamics.

The biggest single mistake I see is founders benchmarking against a different stage than the one they're in. A $2M revenue business shouldn't be spending 8% of revenue on marketing. A $200M business shouldn't be spending 35%. Match the spend to the stage.

The second biggest mistake is treating the budget as fixed. It isn't. Revisit it every quarter. Move it based on what you've learned.

Marketing spend is the lever that determines growth rate. The right lever, pulled with the right force, is the difference between 12% growth and 30% growth. Choose the right force for the stage you're in.

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Sources and further reading:

• Marketing spend benchmarks by stage (Gartner CMO Spend Survey)
• SaaS marketing budget benchmarks (OpenView Partners)
• B2B marketing budget benchmarks (HubSpot research)
• About measuring marketing ROI (Google for Business)