NASE Blog Posts

How much should I spend on marketing?

Monday, November 17, 2014
This varies according to industry.  Industry associations may provide marketing expenditures as a percentage of revenue. Public companies in your industry may give a figure for their marketing spending in their financial statements (found in their annual reports).

With a simple calculation, you can determine what percentage of their overall revenue that represents. A significant difference is businesses that are volume driven versus margin driven.  For instance, WalMart is volume driven thus spend .04% on advertising.  A more upscale store that is less volume driven like Macys may spend 5%.  Service oriented businesses generally start at 5%, although 15% for a start-up building their brand, is not uncommon.  Ultimately, over time with a good direct marketing plan in place, you will learn your cost per sale and be able to spend only what you need in order to generate number of sales you’ve targeted.

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