How Much Should a Contractor Spend on Marketing? Setting Your Budget

Many contractors set their marketing budget by gut feel or by whatever's left over at the end of the month. The result is often too little marketing in slow seasons, too much spent on channels that don't work, and no clear idea what's paying off.

This guide shows three practical ways to set a contractor marketing budget, how to allocate it and how to adjust it over time.

The simplest approach is to spend a percentage of revenue.

• A long-cited guideline attributed to the U.S. Small Business Administration suggests small businesses with under $5 million in revenue spend about 7% to 8% of gross revenue on marketing and advertising.
• Gartner's 2025 CMO Spend Survey found marketing budgets averaged 7.7% of company revenue, though most respondents were large companies.

Example: a contractor with $1.5 million in revenue spending 7% would budget about $105,000 a year, or roughly $8,750 a month.

Pros: simple and scalable. Cons: doesn't account for your goals, margins or market.

Work backward from the jobs you need.

• 1. Revenue goal: how much new work do you need?
• 2. Average job value: what's a typical job worth?
• 3. Jobs needed: goal divided by average job value.
• 4. Close rate: what percentage of leads become jobs?
• 5. Leads needed: jobs divided by close rate.
• 6. Cost per lead by channel: what do leads cost?
• 7. Add management, tools and content.

Example:

• Goal: $600,000 in new work over six months ($100,000 a month).
• Average job: $20,000. You need 5 jobs a month.
• Close rate: 25%. You need 20 leads a month.
• Expected blended cost per lead: $100.
• Lead spend: $2,000 a month.
• Management, SEO and tools: $2,500 a month.
• Total: about $4,500 a month.

Marketing should be measured by cost per signed job compared with gross profit per job.

Use these as reference points when planning:

• Google search ads: LocaliQ's 2025 benchmarks put the Home & Home Improvement average at about $7.85 per click and $91 per lead. Costs vary sharply by trade.
• Facebook lead ads: WordStream's 2025 benchmarks put Home & Home Improvement at about $41 per lead.
• Local Services Ads: one February 2026 benchmark from SearchLight Digital, as reported by Enrich Labs, put blended home services cost per lead at about $53.
• SEO: Ahrefs' survey found local SEO retainers averaged about $1,557 per month.

By Business Stage

A Sample Allocation for a Growing Contractor

These percentages are illustrative:

• Paid search and Local Services Ads: 40% to 50%.
• SEO and content: 20% to 30%.
• Website and conversion improvements: 10%.
• Reviews, email and retention: 5% to 10%.
• Tools and tracking: 5%.
• Offline (signs, wraps, mailers): 5% to 10%.

Adjust based on which channels produce the lowest cost per signed job.

• Increase marketing before your busy season so your calendar fills early.
• Shift budget toward services that fit slow seasons.
• Keep long-term investments like SEO running year-round.

• Track every lead's source and outcome.
• Review cost per signed job monthly.
• Cut or fix channels that don't produce jobs.
• Don't spread a small budget across too many channels.

Every quarter:

• 1. Compare spending to leads and jobs by channel.
• 2. Shift budget toward the best performers.
• 3. Adjust for upcoming seasons and capacity.
• 4. Update your goals.

What percentage of revenue should a contractor spend on marketing?

Many small businesses use 7% to 8% as a reference point, but goal-based budgeting usually gives a more accurate number.

Should I cut marketing when I'm busy?

Usually not entirely. Cutting marketing during busy periods can create a slow period a few months later.

How do I know if my budget is too low?

If you're consistently short of leads for your capacity, or competitors dominate search results, your budget may be too low or poorly allocated.