A good question! But a difficult question … how long is a piece of string?
Firstly I think it is much more important that you invest time in clarifying your marketing goals, and then spend time on doing marketing and selling to achieve these goals.
But money obviously does help … so what should your budget be? Here are 8 questions to determine the budget that is right for you:
How much can you afford?
Straight forward question – if your budgets are limited than you will not be able to spend as much obviously. But I would dare you to think about marketing not necessarily as a cost, but as an investment, which leads to the following:
What do you want the return on investment (ROI) to be?
You need to decide on the following:
What do you want to achieve?
How can you achieve that?
How much would each of those actions potentially cost you (min and max price)?
And lastly how much will each potentially bring in in revenue?
You then can decide which one will be the most ‘profitable’.
For example trade fairs are very expensive, but can generate great publicity and access to potential trade buyers. Spending £2,000 on the right trade show for you, can generate a couple of thousands £ of income (in the medium term).
So check what your goals are, what the most effective ways are to achieve them, make a list of the costings and predict how much income they will generate (short and medium term).
Talk to others to make sure that your predictions are realistic. For example many people invest heavily in a new website, but actually it is really difficult to generate enough traffic to come to your website, let alone that people buy from you. Often it is better to have a fairly simple website, and have an additional online presence through online shops and portfolio websites who already generate the kind of traffic and clients you are looking for.
How much did you spend last year?
Many people check how much they spend last year, and then spend more or less the same amount in this financial year.
Where do you live?
Some marketing related fees differ hugely, depending on where you live. Those in London and the South East will definitely spend more on PR, photography and printing costs. It might be really worthwhile to shop around and use somebody outside of the Capital.
How established are you?
It is normal that if you are a start up that you will need to spend much more time and money on marketing than if you are a more established business. When you start out you will often need basics such as a business card, post card, good photography, a website or other online presence.
On the other hand, if you are more established you might need to look in more detail what the competition is up to or what clients expect:
What does your competition spend?
This is not easy to specify in detail, but sometimes you will need to try to match your marketing effort with your direct competitors. How much are they spending? How glamorous is their brochure, website, packaging, private views, exhibition designs, canapees, … Have they got a PR agent, where do they advertise or which trade shows will they do?
What kind of market or clients are you aiming for?
The more luxurious your ideal clients the more likelihood it is too spend more on your marketing. Full colour brochures, gold lettered logos on black velvet packaging, flowers in your studio – they all create the atmosphere and brand you want, but it does cost money.
Last but not least: Percentage of turnover
If you have taken all of the above into account, then there is also a bit of a guidance from market research, which suggest that you should spend between 5 – 10% of your turnover on marketing. But note that if your turnover is low, this % should actually be higher.
Some tips to save money on your marketing budget:
- Shop around! Get at least 3 quotes, do speak to various people and get recommendations. Make sure you get the right adviser or professional to help you.
- Set your own budget, and then go with this maximum amount to various potential providers and see what they can deliver for that amount. This will make sure that you won’t go overboard or overspend.
- Don’t always go for the cheapest option, but see what they can potentially contribute to your business. Make sure you work with professionals, so that you don’t waste money or time unnecessary as you probably don’t have either.
- See if you can do a swap with somebody e.g. a photographer who wants a website can swap with a web designer.
How do you set your marketing budget? Feel free to share with comments below. If you liked this post, why don’t you share it with others?