How much should you spend on marketing? Every business owner asks it, and the usual answer is a percentage of revenue. Spend five percent, or ten, or whatever number a blog post confidently states. It’s a comfortable answer because it’s simple, and it’s mostly useless, because it treats marketing spend as a fixed cost like rent rather than what it actually is: an investment that should pay for itself.
The better way to think about it is that marketing isn’t a bill you pay, it’s money you put in to get more money out. Once you frame it that way, the question stops being “what percentage should I spend” and becomes “how much can I profitably spend,” which is a completely different and far more useful question. The answer depends on your goals and, above all, on what a customer is worth to you.
So this guide skips the tidy percentage. It covers why that rule is lazy, how to start from goals instead, why customer value is the number that actually decides your budget, how new and established businesses differ, and how to set a budget you can defend.
What’s in this guide
- Why “a percentage of revenue” is a lazy answer
- Start from goals, not a number
- The number that actually decides it
- New businesses vs established ones
- Where the money should go
- Signs you’re spending wrong
- Doing it yourself vs paying someone
- How to set a budget you can defend
- The stuff worth remembering
Why “a percentage of revenue” is a lazy answer
The “spend X percent of revenue” rule is everywhere because it’s easy, and easy is not the same as right. It has a couple of deep problems that make it a poor guide for most businesses.
The first is that it ignores whether the marketing actually works. Two businesses spending the same percentage can get wildly different results, because one has marketing that pays back several times over and the other is pouring money into things that do nothing. A percentage tells you how much to spend but nothing about whether spending it is a good idea, which is the only thing that matters.
The second problem is that it gets the logic backwards. It treats revenue as the thing that determines marketing spend, when for most businesses it’s the other way round: marketing spend should drive revenue. If your marketing is profitable, spending more makes you more, and a rule that caps you at a percentage of last year’s revenue is holding you back from growth you could afford. If your marketing isn’t profitable, no percentage is safe, because you’re losing money on every dirham. The percentage rule answers the wrong question either way.
Start from goals, not a number
A better starting point is what you’re actually trying to achieve, because the right budget for “grow aggressively” is very different from the right budget for “stay steady and profitable.” Your goal shapes your spend, not the other way round.
If you want to grow fast, marketing is your engine, and you spend as much as you can profitably, often reinvesting most of what you make back into more marketing. Growth costs money, and businesses that grow quickly usually spend heavily on marketing to do it. If your goal is instead to maintain a steady, profitable business without chasing rapid growth, you spend enough to keep customers coming in at the rate you want and no more, because extra spend beyond your goal is just extra cost.
Neither goal is more correct. They’re just different, and they call for different budgets. The mistake is setting a budget without deciding the goal first, because then you have no way to tell whether you’re spending too much, too little, or the right amount. Decide what you want marketing to do, and the question of how much to spend becomes answerable, because you can measure your spend against whether it’s delivering the goal.
The number that actually decides it
Here’s the number that should drive your whole marketing budget: what a customer is worth to you. Not one purchase, but everything a typical customer spends with you over the time they stay a customer. Once you know that, the budget question gets much clearer, because you can work out how much you can afford to spend to get one.
The logic is simple. If a customer is worth, say, a thousand dirhams to you over time, and it costs you two hundred to acquire one through marketing, that’s a great deal, and you should acquire as many as you can at that price. If it costs you nine hundred to acquire a thousand-dirham customer, that’s a thin, risky margin. If it costs you eleven hundred, you’re losing money on every customer and should stop. The customer’s value sets the ceiling on what you can sensibly pay to get one.
This is why customer value is the real answer to “how much should I spend.” It turns the budget from a guess into a calculation. You can spend a lot in total, as long as each customer costs less to acquire than they’re worth. A business that knows these two numbers can spend confidently and scale, because it knows every dirham of marketing is making money. A business that doesn’t is flying blind, which is how the percentage rule survives: it’s a substitute for the numbers people never worked out.
New businesses vs established ones
How much you spend, and how you think about it, changes a lot depending on where your business is, because a startup and an established business face different realities.
A new business usually has to spend proportionally more, and often has to spend before it knows its numbers. You don’t yet know exactly what a customer is worth or what they cost to acquire, so early marketing is partly an investment in finding that out. Expect the early spend to feel inefficient, because you’re learning what works, and budget for that learning rather than expecting profit from day one. New businesses also have to spend just to become known, which established ones have already paid for.
An established business has advantages that let it spend more efficiently. It knows its customer value and acquisition cost, so it can spend with confidence rather than guesswork. It has existing customers to sell to again, which is cheap. And it has a reputation doing some of the work for free. So an established business can often get more from the same spend, and can make sharper decisions about how much to spend, because it has the numbers a new business is still gathering. The right budget shifts as you move from figuring it out to knowing it.
Where the money should go
How much to spend is only half the question. Where it goes matters just as much, because the same budget can be transformative or wasted depending on where you put it.
The principle is to put money where it pays back best, which you only know by measuring. Some channels will produce customers cheaply for your business, others expensively, and the mix is different for everyone. So rather than spreading budget evenly or copying competitors, find out which channels actually bring you profitable customers and weight your spend toward those, trimming the ones that don’t pay.
It’s also worth splitting your budget between what works now and testing what might work next. Put most of your money into the proven channels that reliably bring customers, and reserve a smaller portion for trying new things, because relying entirely on channels that work today leaves you exposed if they change. And don’t forget the cheap, high-return basics, keeping existing customers and encouraging repeat business, which often deliver more per dirham than chasing new customers and are the first place an efficient budget looks. The goal is not just to decide a number but to make sure every part of that number is earning its place.
Signs you’re spending wrong
You can spend too much or too little, and both have recognisable signs. Watching for them tells you when to adjust.
Signs you’re spending too little: you have profitable marketing that you’re not scaling, so you’re leaving growth on the table. Competitors are consistently more visible than you. You have room to acquire more customers profitably but aren’t, purely because you capped the budget at some arbitrary figure. If your marketing makes money and you could do more of it but aren’t, you’re under-spending, and that’s a real cost even though it doesn’t show up as one.
Signs you’re spending too much: your cost to acquire a customer is creeping close to or above what a customer is worth, so the marketing is barely profitable or losing money. You’re spending on channels you can’t tie to any results. Or you’re spending heavily out of fear or habit rather than because the numbers justify it. The tell in both directions is the relationship between what a customer costs and what they’re worth. Keep that gap healthy and your spend is roughly right. Let it close or invert, and you’re over-spending no matter how small the total looks.
Doing it yourself vs paying someone
One part of the spending question people often miss: your budget isn’t only the money you put into ads and tools, it’s also the cost of who actually does the work. That cost is real whether you pay a freelancer, hire staff, use an agency, or do it yourself, and pretending your own time is free is how a lot of budgets quietly lie to their owners.
Doing it yourself feels cheapest because no money changes hands, but your time has a value, and hours spent wrestling with marketing are hours not spent running the business or serving customers. For a very small operation that’s often the right trade early on, but as you grow, the time cost usually outweighs the cash you’re saving, and it caps how good the marketing can get. Paying someone costs money up front but buys back your time and, ideally, buys expertise that makes the actual ad spend work harder.
The honest way to decide is to weigh the total cost, cash plus your time, against the results, the same way you’d judge any other spend. Sometimes a modest fee to someone who knows what they’re doing pays for itself several times over by making the rest of the budget more effective. Sometimes, early on, doing it yourself is fine. Just count your time as part of the budget rather than pretending it costs nothing, because that hidden cost is often the biggest line of all.
How to set a budget you can defend
Putting it together, here’s how to arrive at a marketing budget that’s based on something real rather than a percentage someone made up:
- Decide your goal first. Grow fast, or stay steady and profitable? This shapes everything that follows.
- Work out, even roughly, what a customer is worth to you over time and what it currently costs to acquire one. These two numbers are the foundation.
- If acquiring a customer costs comfortably less than they’re worth, you can afford to spend more to get more, so scale toward your goal. If it doesn’t, fix that before spending more.
- Put the money where it pays back, weighting toward proven channels and reserving a little for testing, and don’t neglect the cheap returns from existing customers.
- Watch the gap between customer cost and customer value over time, and adjust up or down as it moves.
This gives you a budget you can actually explain and defend, because it’s tied to real numbers and a real goal rather than a rule of thumb. It also means your budget can grow as your marketing proves itself, which is exactly what you want: spend that expands because it’s working, not spend capped by an arbitrary fraction of last year’s takings.
The stuff worth remembering
Marketing isn’t a fixed bill, it’s an investment that should pay for itself, so “spend a percentage of revenue” is the wrong frame. The real question is how much you can spend profitably, and that depends on your goal and, above all, on what a customer is worth to you against what they cost to acquire.
Start from what you’re trying to achieve, work out your customer value and acquisition cost, and spend as much as you can while keeping a healthy gap between the two. New businesses spend more and partly to learn; established ones can spend more efficiently because they know their numbers. Put the money where it demonstrably pays back, keep a little for testing, and watch for the signs of over- or under-spending in the gap between cost and value.
Do that and your marketing budget becomes a lever for growth you can pull with confidence. Rely on a made-up percentage instead, and you’ll either starve marketing that was working or keep feeding marketing that wasn’t.
Setting a budget works best with the numbers to back it: your conversion rate, a habit of reading your analytics, and a clear view of your lead generation.
Growth Tech helps businesses across the UAE set marketing budgets based on real numbers, what a customer is worth and what they cost, so every dirham is working toward growth rather than guesswork. If you’re not sure how much to spend, get in touch.