Strategy · 6 min read

How much should you actually spend on marketing?

The "spend X% of revenue" rule tells you nothing about whether the money is working.

By the markmetAI Team · October 1, 2026

Ask five founders how much to spend on marketing and you'll get five percentages: 5% of revenue, 10%, "whatever the agency quotes." The number feels concrete, but it's answering the wrong question. A budget isn't right or wrong in isolation; it's right or wrong relative to what it's buying back.

The percent-of-revenue rule breaks on two edges

At one edge, a company with strong margins and a long customer lifetime is underspending at 5% of revenue: it could put more in and still come out ahead. At the other edge, a company with thin margins and no repeat purchases is overspending at 5%: every dollar in is a dollar it may never get back. Revenue tells you what you have; it doesn't tell you what a customer is worth or how long it takes to find out.

Start from payback period, not revenue

The number that actually matters is: how many months does it take a new customer to pay back what it cost to acquire them? If that's 2 months, an aggressive budget is low-risk: the cash comes back fast enough to reinvest. If it's 14 months, the same budget can quietly starve the business of cash even while customer count is climbing. Work out customer acquisition cost and average gross profit per customer first; the marketing budget is what those two numbers can responsibly support, not a fixed slice of top-line revenue.

New vs. established businesses need different budgets

A pre-revenue or early-stage business is really buying data, not customers: the budget should be sized to reach statistical confidence on what channel and message work, then stop. An established business with a proven funnel is buying growth at a known cost: the budget should scale until the marginal customer stops being profitable, not before. Applying the early-stage logic to an established business leaves growth on the table; applying the established-business logic to a new one burns cash on an unproven funnel.

What this looks like in practice

Instead of picking a percentage and defending it in a board meeting, work backward: what's the gross profit per customer, how many months of payback are you comfortable carrying, and how many customers can the current funnel actually convert per month at a given spend level. The budget that falls out of those three numbers is usually a very different figure than the "10% of revenue" rule of thumb, sometimes higher, sometimes lower, but always tied to something the business can actually defend.

If funnel economics are still unclear further upstream, our piece on why volume isn't a strategy covers the step before budget: getting audience, offer and funnel right. Our performance marketing services page breaks down how we build campaigns around payback period rather than a fixed percentage.