Marketing budget: how much should you spend?

Short answer

Work backwards from your revenue target. Divide the target by your average deal size to get the number of new customers you need, apply your win rate to get the number of opportunities, apply your inquiry-to-opportunity rate to get the number of inquiries, then multiply by cost per inquiry. The calculation needs three numbers: average deal size, win rate and cost per inquiry. All three already sit in your CRM or ERP.

What is a marketing budget?

A marketing budget is the total spend you set aside in a period to create new inquiries and new customers. It covers advertising, content, trade shows and events, agencies, software subscriptions and the marketing team's own cost.

In most companies these items get approved separately and nobody sees the total. As long as the total is invisible, "what did this money earn us" has no answer.

There is a practical reason to put every item in one table: it converts spend into a single unit, the customers it produced. That is the only unit in which a trade show and an ad campaign can be compared.

What percentage of revenue should a marketing budget be?

There is no fixed percentage, and the approach only helps once you check it against your own sales math. Two companies in the same industry can differ threefold in average deal size and twofold in win rate. When those numbers differ, the same percentage produces very different outcomes.

Use the percentage as a check, not as a plan. If your calculation lands far away from your usual share of revenue, either the target is unrealistic or your conversion rates are being measured wrong.

How do you calculate a marketing budget from a revenue target?

The calculation has four steps, and every number comes out of your CRM:

How many new customers do you need? Divide the new business target by your average deal size.
How many opportunities do you need? Divide the customer count by your win rate.
How many inquiries do you need? Divide the opportunity count by your inquiry-to-opportunity rate.
How large is the budget? Multiply the inquiry count by your cost per inquiry.

For the target-to-opportunity step in detail, see how many opportunities you need to hit a sales target.

Worked example: from target to budget

The numbers below are an example. Replace them with your own CRM data:

New business target: $1,200,000
Average deal size: $40,000 → 30 new customers
Win rate: 20% → 150 opportunities
Inquiry-to-opportunity rate: 40% → 375 inquiries
Cost per inquiry: $150 → $56,250 marketing budget

One correction is still needed: not all customers come from marketing. If half of your closed deals come from the sales team's own contacts, marketing has to produce 15 customers, not 30, which halves the budget. Read that share off the source field on won opportunities instead of estimating it.

Why does an incomplete CRM produce the wrong budget?

Because three of the four numbers come from CRM records, and those fields are usually empty. An opportunity with no source cannot be credited to any channel.

Three failures show up again and again:

Zombie records. A zombie record is an open opportunity in your CRM that nobody has touched for more than 90 days. Because they never close, they make your win rate look lower than it is and inflate the budget.
Empty source fields. Cost per channel cannot be calculated, so the budget gets split the way it was split last year.
Missing loss reasons. Nobody knows whether the inquiries were poor or the price was wrong, so marketing spends more money in the wrong place.

We covered reading acquisition cost alongside its payback period in how to calculate customer acquisition cost.

How do you split the budget across channels?

Split it by won deals per channel, not by clicks or form fills. A channel with many inquiries and no customers is expensive, not cheap.

A practical checklist:

Per channel: inquiries, inquiries that became opportunities, deals won, total revenue.
Cost per customer per channel = channel spend ÷ customers that channel won.
Weight proven channels; reserve a small slice for testing new ones.
If your sales cycle is three months, do not judge a channel in one month.

The most common mistake here is marketing reading its numbers from its own tool while sales reads them from the CRM. The two tables disagree, so the meeting becomes an argument about whose numbers are right instead of which channel performs. With the CRM as the single source, every won deal has a source and channel cost comes from that record.

How often should you revisit the budget?

Review it quarterly, but wait at least one sales cycle before making channel decisions. Monthly, the only thing worth checking is whether spend is tracking the plan.

The frame is simple: what you have (your target and current conversion rates), what you give up (spend and team time), and what you get back (customers and revenue). If you cannot see all three in one table, the budget discussion closes on instinct again this year.

FAQ

What percentage of revenue should marketing be?

There is no fixed ratio. Calculate backwards from your target, express the result as a share of revenue, and use it only as a sanity check.

How does a new company run this calculation?

With no conversion history, start with a three-month learning budget. The goal is measuring your average deal size and win rate, not revenue. From month four the calculation runs on your own data.

Does the marketing budget include team cost?

Include it if you want an honest cost per customer. Companies that look only at ad spend underestimate what a customer costs them.

How do you increase inquiries without increasing the budget?

Rescue the inquiries you already have. An inquiry nobody follows up on is budget bought and never used, and lifting the win rate by a point is usually cheaper than buying more ads.

What if we cannot afford the budget the calculation produces?

Change the target or raise your average deal size. Cutting the budget while keeping the target is a gap you discover halfway through the year.

Every step of this calculation rests on one thing: the right data reaching your CRM from your sales conversations. Closync AI is an AI layer that turns sales conversations into high-quality CRM/ERP data and that data into sales decisions. When source, loss reason and decision-maker fields fill themselves, the budget stops being a matter of instinct and becomes arithmetic.

Last updated: 31 October 2026