Contractor Marketing Budget Calculator: Set Your Number
A free marketing budget calculator for contractors. It works backward from the jobs you want to leads and dollars, checks the plan against your gross profit and spreads it across your busy months.
| Month | Lead money | Fixed | Total | Leads |
|---|
Most marketing budget calculators ask for your revenue, multiply it by a percent and hand you a number. That number has no idea what a lead costs in your trade, or how many leads it takes to get one paid job.
This marketing budget calculator starts from the other end: the jobs you want. It works backward to leads, then to dollars, and then checks whether the jobs make enough gross profit to pay for it all. It also gives you a month-by-month plan for your busy season.
The short answer: divide the new revenue you want by your average job to get jobs. Divide jobs by the share of leads that become paid jobs to get leads. Multiply leads by your cost per lead and add your fixed costs. Then check that total against the gross profit those jobs bring in. Our working rule: marketing should take no more than 60% of it.
Key takeaways
- Budget = leads you need x cost per lead + fixed costs, and leads come from the jobs you want. How the calculator works
- Our example plumber spends 7.8% of revenue and still loses $8,663 on the new work, because each lead costs more than it’s worth to him. The roofer and plumber examples
- The SBA doesn’t recommend 7 to 8 percent. The SBA blog’s budget article says there’s no hard and fast answer. Gartner’s 7.8% comes mostly from companies over $1 billion. Percent of revenue
- Split lead money from fixed costs, or fees can quietly eat the money meant to buy leads. What goes in the budget
- By our working rule, busy months get 1.5 times the lead money of slow months. Spreading it across the year
- Our working rule: raise spend in 10 to 20% steps, and cut a channel only after three months of cost per job above 60% of one job’s gross profit. When to raise or cut
How this marketing budget calculator works
The calculator does five steps, in the order you’d do them on a napkin. The inputs come from your P&L, your ad bills and your call log checked against your invoices, or from the presets until you have those.
- Paid jobs you need = new revenue you want ÷ average job value.
- Leads you need = paid jobs ÷ the share of leads that turn into paid jobs.
- Lead money = leads x your cost per lead (CPL), meaning what each lead costs in ad spend or lead fees.
- Fixed costs = your monthly fees and tools x 12. Think agency fees, SEO, your website care plan and call tracking.
- Budget = lead money + fixed costs.
Then it checks the budget against gross profit. It takes the gross profit those new jobs bring in (new revenue x margin) and shows how much of it the marketing eats. If the budget is bigger than that gross profit, the plan loses money before you pay a single bill for the shop. If marketing takes more than 60% of that gross profit, the calculator warns you. That cutoff is our working rule, because the rest has to cover trucks, office and profit.
It also shows your break-even cost per lead: job value x margin x the paid-job rate. That’s the most one lead is worth to you. If your all-in cost per lead sits above it, buying more leads only digs the hole deeper.
When you pick a trade, the cost per lead box fills in with the median from LocaliQ’s 2025 home services search ad benchmarks. That’s Google search ads only, ad spend only, from 3,211 US campaigns LocaliQ ran between April 2024 and March 2025. It’s a 2025 report, so your own recent number beats it. Local Services Ads, lead sites and SEO aren’t in it.
LocaliQ’s figure is ad cost per conversion, meaning whatever calls and forms those campaigns counted. So count your paid-job rate from every call and form, junk included, or your rate will look better than the preset deserves. If you know your own cost per lead, type it over the preset. Yours is better.
The paid-job rate is the box people guess on most. Count it from your own leads: out of every 100 calls and forms about a job, how many ended in a paid invoice? Count the calls you missed, too. A service plumber can land far higher than a roofer, because most of his callers already need the work done. A roofer selling replacements lands lower, because many inspections never turn into a signed roof.
One more input to get right: if you pay sales commission, take it out of your gross margin before you type it in.
Two worked examples: a roofer and a plumber
Two made-up contractors show how the same method gives very different answers. These are example inputs, not client numbers. The roofer’s plan works. The plumber’s plan loses money, and no percent of revenue rule would have warned him.
The roofer: $600,000 of new work
Say a roofer did $900,000 last year. He wants $600,000 more from new customers. His average replacement is $12,000 at a 30% gross margin, and about 15 of every 100 leads end in a paid roof, since plenty of callers only want a price or a second opinion on a repair. His leads cost $228.15 each, the LocaliQ median for roofing and gutters. He pays $1,000 a month for management and tools.
- Paid jobs: $600,000 ÷ $12,000 = 50 roofs
- Leads: 50 ÷ 15% = about 333, or 28 a month
- Lead money: 333.3 x $228.15 = $76,050
- Budget: $76,050 + $12,000 fixed = $88,050 a year, about $7,338 a month
- Gross profit from the 50 roofs: $180,000. Marketing eats 48.9% of it, which leaves $91,950 before overhead.
That budget is 9.8% of last year’s revenue. A “spend 5%” rule would have handed him $45,000 and left him with fewer than half the roofs he planned on. Take out his $12,000 in fixed costs and the $33,000 left buys about 145 leads and roughly 22 roofs, not 50.
The plumber: $240,000 of new work
Now a plumber at $1.5 million who wants $240,000 more from new customers. His average ticket is $650 at a 45% margin, and 45 of every 100 leads become paid jobs. The other 55 are wrong numbers, price shoppers and calls nobody picked up. His leads cost $129.02, the LocaliQ plumbing median, and he pays $900 a month in fixed costs.
He needs about 369 jobs and 821 leads. Lead money is $105,863, plus $10,800 fixed, for $116,663. That’s 7.8% of his revenue, right inside the 7 to 8 percent people credit to the SBA. By a percent rule, he’s done.
But those 369 jobs only bring in $108,000 of gross profit. The plan loses $8,663 before he pays rent. Each lead is worth $131.63 to him, and he’s paying $142.18 all in.
| Example | Roofer | Plumber | Plumber, 55% paid-job rate |
|---|---|---|---|
| Yearly budget | $88,050 | $116,663 | $97,415 |
| Budget as % of last year’s revenue | 9.8% | 7.8% | 6.5% |
| Share of new jobs’ gross profit | 48.9% | 108% | 90.2% |
| Profit after marketing, before overhead | $91,950 | -$8,663 | $10,585 |
Our advice to this plumber: don’t spend $116,000 on ads to find out. Fix the phone first.
If his office books 55 of every 100 leads instead of 45, the plan turns a $10,585 profit (last column). That’s still 90% of the new jobs’ gross profit, way past our 60% line. So the next step is cheaper leads: calls from his Google Business Profile, review requests and past customers.
And remember the $650 is one visit. A plumber’s new customer often calls again, and this calculator only counts the first job. If your records show new customers average two paid visits in their first year, try $1,300 as the job value and see how the answer changes. Just don’t plan on repeat work you haven’t tracked.
What percent of revenue should a contractor spend on marketing?
You’ve probably heard 7 to 8 percent, and that the SBA says so. The SBA blog’s post on marketing budgets, a 2019 guest post by Rieva Lesonsky, doesn’t say it. It says: “There’s no hard and fast answer to how much your marketing budget should be.”
It notes that many businesses use a percent of revenue as a guide and tells you to ask your trade association. It does quote one outside figure close to it: Web Strategies’ average of 7.9% of revenue for 2018, next to Small Business Trends’ 1.08% on advertising. Neither one is a recommendation, and we couldn’t find a 7 to 8 percent rule anywhere on sba.gov.
The numbers you see quoted most come from surveys of company marketing leaders, not trade shops:
- Gartner’s 2026 CMO Spend Survey puts marketing at 7.8% of company revenue. It surveyed 401 marketing leaders, and most of their companies bring in over $1 billion a year.
- The CMO Survey’s 2026 report found a mean of 8.96% of revenue, but the median answer was 5%, from 154 senior marketers (topline report, page 40). A few heavy spenders pull the average up.
Neither one is about a 6-truck HVAC shop. And a percent of revenue has a bigger problem for contractors: it ignores your margin. Marketing gets paid out of what’s left after materials, crew pay and subs. That’s your gross profit, and it swings a lot by trade.
Remodelers are a good case. In NAHB’s latest remodeler cost study, covering 2024, the average gross profit margin was 29.9% and the average net profit margin was 6.3%. Gross margin had been 24.9% in 2021. When only about 6 cents of each dollar is left over, every extra point of marketing has to bring in jobs, or it comes straight out of those 6 cents.
Here’s the same 5% budget at two margins, using made-up numbers for a $1.5 million shop:
| Example: $1.5M revenue, 5% budget | 25% gross margin | 45% gross margin |
|---|---|---|
| Marketing budget | $75,000 | $75,000 |
| Gross profit for the year | $375,000 | $675,000 |
| Marketing as a share of gross profit | 20% | 11.1% |
Same 5%, but at a 25% margin marketing takes 20 cents of every gross profit dollar instead of 11. So use a percent of revenue as a sanity check, not as the plan. The calculator’s second tab does that. Type in the percent someone told you to spend, and it shows how many leads and jobs that money buys at your cost per lead. At 5%, our example plumber’s $75,000 buys about 498 leads and 224 jobs, and still runs $9,504 short before overhead.
If you want to see what a budget buys in practice, we walk through what we’d do first at $1,500, $5,000 and $15,000 a month.
What goes in a contractor marketing budget
If you only count ad spend, the agency bill and the call tracking show up as surprises every month. Put every cost that exists to bring in new customers in it, split into two kinds.
Lead money goes up and down with the number of leads you want. It goes in the cost per lead box:
- Google Ads and Meta ad spend, as billed
- Local Services Ads lead charges, after credits for leads you disputed
- Lead site fees, the per-lead charges plus any monthly fee spread over the leads
- Direct mail and door hangers, if you track the calls they bring
Using more than one channel? Add up the last three months of lead spend across all of them and divide by the total leads they brought. That blended number goes in the box.
Fixed costs stay about the same whether you get 20 leads or 60. They go in the fixed costs box:
- Agency or management fees
- An SEO retainer or content work
- Website hosting and care plan
- Call tracking, review software, a social posting tool
- Truck wraps, yard signs and shirts, spread over the months you’ll use them
- Your own hours on marketing, at what you’d pay someone else
What we’d leave out: a new website build. It’s a one-time project that serves every channel for years, so budget it on its own line. Loaded into one year, it makes the marketing look far worse than it was.
Why split it at all? Lead money buys leads. Fees don’t, no matter how much you spend on them, and a budget that’s mostly fees leaves almost nothing for the part that actually rings the phone.
Say a small shop has a $1,500 budget and $1,200 of it goes to fees. Only $300 is left to buy leads. At LocaliQ’s $90.92 median for all home services, that’s about three leads a month. At a 15% paid-job rate, that’s about one job every two months. That’s how a small budget “doesn’t work.” The calculator shows lead money and fixed costs on separate lines for this reason.
Spread the budget across your busy months
Most trades get more calls in some months than others. Put more money behind those months and less behind the quiet ones.
Tick your busy months in the calculator. With the default setting, each busy month gets 1.5 times the lead money of a slow month. That’s our working rule, not an industry standard. Your ads keep running in the slow months, just not at peak-season spend for calls that aren’t coming.
For our roofer, busy season is April through October. His $88,050 year splits into about $8,360 in each busy month and $5,906 in each slow one. That’s $7,360 of lead money plus his $1,000 fixed in a busy month, and $4,906 plus $1,000 in a slow one. The table uses the same cost per lead every month. Clicks often cost more in peak season, so expect a few fewer leads in your busy months than it shows.
Your busy months depend on your trade and your weather, so use your own call log, not ours. A few patterns we plan around:
- HVAC often has two peaks, the first hot weeks and the first cold snap, with quiet shoulder months between.
- Roofing follows weather and storms. After a hail storm, demand can jump in a week, so keep some budget you can turn on fast.
- Plumbing and electrical are steadier, with spikes like frozen pipes. Many shops do fine with an even spread.
- Remodeling leads often start months before the work. Spend when people are planning, not when crews are busy.
SEO doesn’t follow this split. A page you publish in February needs time to rank, so pay for that work early and steadily, and let ads handle the peaks.
Budgeting for a new contractor business
A new shop has no call log, no repeat customers and no referral base yet. So it guesses at more inputs. It also buys more of its work with ads. The SBA article says the same thing: “You’ll also need to budget more for marketing when your business is just starting out.”
Here’s how we’d fill in the calculator in year one:
- For revenue, type what you plan to bill this year. The SBA blog post suggests using projected revenue if you’re a startup.
- Use the trade preset for cost per lead until you have two or three months of your own numbers.
- Be careful with the paid-job rate. Without reviews or a track record, fewer callers will pick you. Start a few points below what you hope for.
- Keep fixed costs small. A Google Business Profile, a simple site and reviews come first. Our guide to SEO for contractors covers that groundwork.
Then replace every guess with a real number as fast as you can. Ask every caller how they found you and write it down. The SBA article makes the same point: tracking can be as simple as asking new customers where they learned about your business.
When to raise or cut your marketing budget
Treat the first number as a guess you’ll correct in 30 days. Check it every month against what actually happened, and move money in steps.
Raise it when a channel’s cost per paid job stays under 60% of one job’s gross profit (job value x margin), our working rule, and you have crew time to fill. Then, also by our working rule, add 10 to 20% to the channel that’s working, wait a few weeks, and check the cost of the extra jobs, not the average. Ads get pricier as you push them, so the next $1,000 can buy fewer leads than the last one did.
Count a channel’s cost per paid job as its spend plus any fee tied to it, divided by the paid jobs it brought.
Cut a channel, not the whole budget, when its cost per paid job runs over 60% of one job’s gross profit for three months in a row. That’s our working rule. Over 100% means every job it brings loses money before overhead. That’s the same as its cost per lead running over your break-even cost per lead, if you use that channel’s own paid-job rate, not your overall one. One bad month can just be a slow month.
Check the phone before you cut anything. If a third of your calls go to voicemail, the ads aren’t the problem. Run our missed call revenue calculator first. A higher paid-job rate lowers the budget you need, as the plumber example showed.
Watch the timing, too. A drain call is paid the same week. An insurance job can take months to pay. Restoration owners feel this most. Across the 30+ SERVPRO franchises we’ve worked with, ad money goes out this month and the insurance check can land months later. Plan cash for that gap before you raise spend.
LocaliQ has no restoration category, so pull your cost per lead from your own Local Services Ads and search ad reports, and use the average paid claim as your job value, not the estimate.
What to do this week
You can set a real budget in about an hour. Here’s the order we’d go in:
- Pull your average job value and gross margin from your last 10 to 20 jobs and your P&L.
- Count leads from the last three months that are old enough to have closed, and how many became paid jobs. That’s your paid-job rate.
- Run the calculator from your revenue goal. Write down the yearly and monthly numbers.
- Switch to the percent tab and try the percent you’ve been told to spend. If the two answers are far apart, trust the one built from your jobs.
- Copy the month-by-month plan and set next month’s spend from it.
If the numbers say you need more leads than you can afford to buy, look at the low-cost ones first. Our guide to lead generation for contractors covers where cheaper leads come from. Want to know if your site is ready for that? Our free local SEO audit checks 23 local SEO factors in about 30 seconds.
Marketing budget FAQ
How much should a contractor spend on marketing?
Enough to buy the leads behind the jobs you want, and no more than those jobs can pay for. Work it out from your job value, margin, paid-job rate and cost per lead. In our examples, that came to 9.8% of revenue for a roofer and 7.8% for a plumber, and the plumber’s plan still lost money. Run your own numbers in the calculator above. It takes about two minutes.
Is 7 to 8 percent of revenue the right marketing budget?
It’s a common rule of thumb that often gets credited to the SBA. But the SBA blog’s own budget article says there’s no hard and fast answer, and we couldn’t find a 7 to 8 percent rule on sba.gov. Gartner’s 2026 survey found 7.8%, mostly from companies over $1 billion in revenue. Use a percent as a sanity check. Then run the goal math to see if your margin can carry it.
Should my marketing budget include agency fees?
Yes. Agency and management fees, SEO, your website care plan and tools like call tracking all belong in it. Put them in the fixed costs box, apart from ad spend and lead fees. Leave out a one-time website build and budget it on its own line.
How do I set a marketing budget for a new contracting business?
Use the revenue you plan to bill this year, the trade preset for cost per lead and a careful paid-job rate, since new shops have fewer reviews. Keep fixed costs small and put your Google Business Profile and reviews first. Then swap in your own numbers after two or three months.
How often should I change my marketing budget?
Look at it every month and change it in steps. By our working rule, add 10 to 20% to a channel while its cost per paid job stays under 60% of one job’s gross profit. Cut a channel after three months above that line, not after one bad month. Check for missed calls before you cut anything.