The widely accepted benchmark for established small businesses is 5–10% of revenue on advertising. New businesses trying to grow quickly often spend 12–20% until they establish market position. A $500K revenue business following the 7% rule should budget $35,000/year ($2,916/month) across all paid channels — Google Ads, Meta, and any other paid media.
| Annual Revenue | 5% Budget | 10% Budget | Monthly Range |
|---|---|---|---|
| $100,000 | $5,000 | $10,000 | $416 – $833/mo |
| $250,000 | $12,500 | $25,000 | $1,042 – $2,083/mo |
| $500,000 | $25,000 | $50,000 | $2,083 – $4,167/mo |
| $1,000,000 | $50,000 | $100,000 | $4,167 – $8,333/mo |
| $2,000,000 | $100,000 | $200,000 | $8,333 – $16,667/mo |
A more precise method than the revenue percentage: work backwards from your revenue goal. If you want $50,000 in new revenue this year, and your average job value is $1,500, you need ~33 new customers. If you close 40% of leads, you need ~83 leads. If your cost per lead is $45, your ad budget is $3,735. This is more accurate than a percentage rule because it accounts for your actual economics.
New businesses should typically spend 15–20% in their first 1–2 years. They have no organic traffic, no referral network, and no word-of-mouth momentum. Advertising has to do the heavy lifting. Once organic traffic, referrals, and reputation are established, marketing spend as a percentage of revenue typically drops to 5–7%.
Also spend aggressively when you have a proven positive ROAS. If every $1 in Google Ads generates $6 in revenue, there's no reason to cap spend at 10% — scale until the economics change.
For most local service businesses: 60–70% to Google Ads (high-intent demand capture), 30–40% to Meta Ads (awareness and retargeting). Adjust based on your results — where you see the best cost per lead, put more budget. Don't rigidly hold these ratios if one channel is clearly outperforming the other.
Start with $500–$1,000/month in ad spend for Google Ads and $300–$500/month for Meta. This is the minimum to generate meaningful data. Below $500/month total, you're unlikely to see consistent lead volume, and you can't test effectively. Once you see a profitable cost per lead, scale up proportionally.
Tell us your revenue goal and current lead volume and we'll calculate the ad budget you need — by channel, by month — to hit your number.
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