What percentage of revenue should go to marketing?

The usual rules of thumb

• Established business, holding position: 5–8% of revenue
• Established business, growing: 8–12%
• New business under two years old: 12–20%
• Highly competitive category: add a few points

Why that is only a starting point

A percentage of revenue tells you what you can afford. It does not tell you what is worth spending. Those are different questions, and the second one matters more.

A better method

• Work out what a customer is worth in contribution, not revenue
• Estimate what an enquiry is worth from your close rate
• Find what an enquiry costs in your category
• If the second number comfortably exceeds the third, spending more is profitable — up to the limit of demand

The ceiling nobody mentions

Demand is finite. In a small local market you can reach a point where extra budget only buys worse traffic. A good agency tells you when you have hit it, rather than quietly accepting the increase.

Where it should go first

If your website loses people or your tracking is wrong, no split of the budget will save it. Fix the destination, then argue about percentages.