Business owners often ask for the right amount to spend on marketing. The honest answer is that it depends on what you want and what a customer is worth to you. Here is a way to work it out for your own business in an afternoon.
Step 1: Decide what you want
Pick one main goal for the next three to six months. It could be more enquiries, more walk-ins, more online orders or more bookings. Write it as a number you can count, such as "20 new customers a month". Without that, any budget is a guess.
Step 2: Work out what a customer is worth
Look at the profit you make from an average customer, not the sale price. Include repeat purchases if your customers usually come back. This figure sets your ceiling: you should never spend more to win a customer than that customer is worth to you.
Step 3: Work backwards
Ask how many enquiries it takes to win one customer, and what an enquiry costs you today. Your own records, even a simple notebook or WhatsApp count, are better than any outside average.
Here is a worked example. The figures are made up and rounded, so replace them with yours.
- Profit from an average customer: ₹5,000.
- Goal: 20 new customers a month, which is ₹1,00,000 of profit.
- Out of every 10 enquiries, 2 become customers, so you need 100 enquiries.
- If one enquiry costs ₹300 in ads, ad spend would be about ₹30,000 a month.
- Add the agency fee on top. Together, that total should sit well below the ₹1,00,000 of profit it is meant to produce.
If the sums do not work, change something: improve how you handle enquiries, adjust the offer, or lower the goal. Do not simply spend more.
Step 4: Keep fees and ad spend apart
These are two different costs. The agency fee pays for people, planning, content and reporting. Ad spend is the money paid to platforms such as Meta to show your ads. Ask for both numbers separately and make sure the ad account is in your name, so you can see where every rupee goes.
Step 5: Start small and review monthly
You do not need to commit your full budget on day one. Start with an amount you can afford to lose while you learn, and give ads a fair run before judging them. Ad platforms need some time to learn, and constant edits can restart that process. Then sit down once a month and check three things:
- How many enquiries came in, and how many became customers?
- What did each customer cost you, compared with what they are worth?
- Which content or ads brought good customers, and which brought time-wasters?
If the numbers look healthy, raise spend gradually. If not, find out why before adding money.
Do not forget the free basics
A complete Google Business Profile, quick replies to messages and honest customer reviews cost little but help every rupee you spend elsewhere.