"How much should we spend on marketing?" is the question every small business owner asks and few get a straight answer to. There is no single number, but there is a sensible way to arrive at yours. Here is the framework we use with Indian SMBs.
The percentage-of-revenue rule
The standard starting point is a share of your revenue. An established business with steady demand typically spends 7 to 10 percent. A younger business trying to grow spends more, often 12 to 20 percent, because it has to buy awareness it does not yet have. If you turn over 20 lakh a year and you are established, that is roughly 1.4 to 2 lakh a year, or 12,000 to 17,000 rupees a month, to work with.
What moves your number up or down
The percentage is a starting point, not a law. Push it up if you are new, in a competitive category, or chasing fast growth. Keep it lower if you have healthy word-of-mouth, thin margins, or a long sales cycle where relationships matter more than reach. Your margins matter too: a high-margin service can afford to spend more to win a customer than a thin-margin retailer.
How to split the money
Once you have a number, divide it by job:
- Roughly half to paid channels that bring leads now, mainly Google and Meta ads. Our guide to a Google Ads budget for a small business gives realistic figures.
- About a third to owned assets that compound: your website, SEO and content. This is the part that keeps paying after you stop.
- The rest to brand and tools, creative, a CRM, analytics.
Not sure where your rupees will work hardest?
Arinon builds lean, ROI-first marketing plans for Indian small businesses. We start with your numbers, not a template, and put the budget where it returns.
Plan your marketing budgetDo not forget the cost of doing it
Your budget is not only ad spend. It includes the cost of the work: an agency retainer, a freelancer, or your own time. If you are weighing those options, our comparison of an agency vs an in-house team lays out the real cost of each, and our guide to what digital marketing costs in India gives current benchmarks.
Spend against a goal, then measure
A budget without a target is just spending. Decide what each rupee is for, leads, bookings, sales, and track it. If you cannot yet see what is working, fix measurement first; our guide on measuring social media ROI is a good starting point. The businesses that win are not the ones that spend the most, but the ones that know which spending pays.
FAQs
What percentage of revenue should a small business spend on marketing?
A common rule is 7 to 10 percent of revenue for an established business, and higher, sometimes 12 to 20 percent, for a young business trying to grow. In India, many small businesses start lower and scale up as they see returns. The right number depends on your margins and growth goals.
How much should a new business spend on marketing?
New businesses usually need to spend a larger share because they have no brand awareness yet. If you can afford it, budget more aggressively in the first year to build recognition, then settle toward the 7 to 10 percent range once you have steady demand.
How should I split my marketing budget?
A simple starting split is roughly half to paid channels that drive immediate leads (Google and Meta ads), a third to owned assets that compound (website, SEO, content), and the rest to brand and tools. Adjust based on what your data shows is working.
Is it better to spend on ads or SEO?
Ads give fast, controllable leads but stop the moment you stop paying. SEO is slower but compounds and keeps working. Most small businesses need a mix: ads for immediate pipeline while SEO builds. See our SEO vs Google Ads comparison for the trade-off.