How much should a small business spend on marketing per month?
Work back from one customer, not from a percentage. The U.S. Small Business Administration gives no percent-of-revenue rule. It says:
"Plan to compare your marketing and sales costs to the revenue it generates." (SBA: Marketing and sales)
- Write down the profit from one new customer, including repeat work.
- Decide the most you would pay to win that customer.
- Multiply by the new customers you can actually serve in a month. That is your ceiling.
- Start below it, and check every month which part brought paying customers.
The percentages you see quoted come from surveys of marketing executives. In the CMO Survey, 308 marketing leaders at U.S. for-profit companies, 97% of them VP-level or higher, put marketing at 9.0% of revenue in January 2026 (Duke Fuqua, 2026). That is their average, not a target for a five-person business.
What $500, $1,500 or $3,000 a month buys
Every budget splits into two parts: ad spend, paid to Google or Meta, and the fee, paid to whoever runs it. Google makes agencies show both:
"When sharing Google advertising cost data with customers, report the exact amount charged by Google, exclusive of any fees that you charge." (Google Ads policy)
Google sets a campaign's monthly cap at "30.4 times your average daily budget for most campaigns", and a single day can run to 2 times the daily budget (Google Ads Help). So:
| Monthly ad spend | Daily Google budget (÷ 30.4) |
|---|---|
| $500 | about $16 |
| $1,500 | about $49 |
| $3,000 | about $99 |
How many jobs that buys depends on your cost per booking, which depends on your trade, your area and your page. No one can tell you in advance: measure it in your first month, then divide. Money paid as a fee is money not spent on ads.
More budget doesn't buy proportionally more. For an accounting firm we run marketing for, doubling the Google daily budget from $180 to $360 bought 24% more clicks for 62% more spend, because its ads were losing searches on rank, not on budget.
Retainer, pay per lead or pay per booking
The pricing model decides who carries the risk when nothing comes in.
| Model | You pay for | Who carries the risk | Check |
|---|---|---|---|
| Retainer | The provider's time each month, plus ad spend | You | What work is included, minimum term |
| Pay per lead | Each call or message | Shared: you still pay for leads that never hire | What counts as a lead; how to dispute |
| Pay per booking | Each booked appointment | Mostly the provider | What counts as a booking; no-shows |
Google's Local Services Ads are the best-known pay-per-lead model: "With Local Services Ads, you pay for valid leads." Price isn't fixed: "Lead prices may vary depending on your location, the job type, the type of lead, or your bidding mode." (Local Services Ads Help). Booking leads there are available only in the U.S. and Canada (same page).
Is a booked call a customer?
No, and the gap can be the whole budget. Across Google, Meta and ChatGPT ads, an accounting firm we run marketing for spent about $6,100 from October 1 to November 4, 2026. Those ads brought about 13 booked calls and $0 in new-client revenue. Count paying customers before you raise any budget.
US and Canada
The method and Google's budget rules are the same in both countries. What changes is price: Local Services Ads lead prices vary by location, so the same budget buys a different number of leads in Toronto than in Dallas (Local Services Ads Help).
Example
A house cleaner with $500 a month
All $500 goes to Google ads at about $16 a day, no agency. After two months and $1,000: 3 booked cleanings, 2 regular clients at $150 a month each. If they stay, they repay the spend in under four months. Keep going, but no raise until month three confirms it.
An HVAC company with $3,000 a month
$2,000 to ads and $1,000 to the agency's fee. The invoice shows Google's exact charge separately. At $400 per booked call that is 5 booked calls; if 2 become $5,000 installs, $10,000 of work came from $3,000. If none do, look at what happens after the call before touching the budget.
Different for you?
- Trades with a busy and a slow season: HVAC, roofing and plumbing budget by season
- Budgeting for SEO instead of ads: How much SEO costs
- Paying for leads that were never customers: Local Services Ads lead disputes
- Buying leads from marketplaces: Are Angi and Thumbtack leads worth it?
- Knowing what the report should show each month: The monthly marketing report to ask for
- Want the ads run and the dead spend cut: Paid Ads