Every owner asks this eventually, usually right after an agency quotes a number that feels arbitrary. Here is how we think about it, and how we tell clients to sanity-check any proposal — including ours.
Start from revenue, not from what feels affordable
The common benchmark is 5–10% of gross revenue for an established business holding steady, and 10–20% when you are actively trying to grow or entering a new market. A business doing $600,000 a year that wants meaningful growth is looking at roughly $5,000–$10,000 a month across media, production, and management.
If that number makes you flinch, that is useful information. It usually means one of two things: the growth target is unrealistic for the current margin, or the business needs to fix pricing and conversion before it buys more traffic.
Split the budget into three buckets
- Media (40–60%). Money paid to platforms — Google, Meta, TikTok, local sponsorships. This is the volume dial.
- Production (20–30%). Creative, photo and video, landing pages, copy. Under-funding this is the most common reason ads underperform.
- Management and measurement (20–30%). Strategy, campaign management, tracking, and reporting. Without it you are spending blind.
Work backwards from a customer, not forwards from a budget
Take your average sale value and your gross margin. If a customer is worth $2,000 and your margin is 40%, you have $800 of gross profit to work with. Spending $200 to acquire that customer is excellent. Spending $700 is survivable but fragile. Spending $900 means you are buying revenue at a loss and calling it growth.
Once you know your maximum acceptable cost per customer, the budget question becomes simple arithmetic: how many customers do you want this quarter, multiplied by what you can afford to pay for each.
What to cut first when money gets tight
- Broad awareness campaigns with no measurable conversion action.
- Channels you added because a competitor was there.
- Production volume — fewer, better assets beat more, weaker ones.
What to protect: retargeting, Google Business Profile, email to your existing list, and tracking. Those are the cheapest revenue you have, and they are the first things panicked businesses tend to switch off.
A reasonable starting point
For most of the Philadelphia businesses we work with, a workable first budget is $1,500–$3,000 a month all-in for 90 days. That is enough to build proper tracking, test two or three real creative concepts, and generate enough data to make the next decision with evidence instead of instinct. Less than that and you are not testing — you are hoping.
If you want a specific number for your business, send us your revenue, average sale, and margin, and we will map it out with you.