Most contractors set their marketing budget one of two ways: whatever the last agency asked for, or whatever's left over after payroll. Neither has anything to do with how many jobs you want. Here's a better way to think about it, with the arithmetic.
Start with the rule of thumb, then throw it away
The usual advice is 5 to 10 percent of revenue for an established business, more if you're trying to grow aggressively or you're new. A $1.5M roofing company would land somewhere around $75,000 to $150,000 a year. That's a sanity check, nothing more. It tells you whether a number is absurd. It doesn't tell you what you should actually spend, because it ignores the only thing that matters: what a job is worth to you and what it costs to get one.
Work backward from the jobs you want
Three questions:
- How many more jobs a month do you want? Not leads. Jobs. Say 8.
- What's your average job worth, and what's the gross profit on it? Say $6,000 revenue, $2,400 gross profit.
- What are you willing to pay to acquire one job? If a job makes $2,400 in gross profit, paying $400 to $600 to get it is an easy yes. Paying $1,500 is still profitable but tight. Paying $2,400 is break-even.
At a target cost per job of $500, eight extra jobs a month means a marketing budget around $4,000 a month, roughly $48,000 a year. Now you have a number that's connected to a result instead of a percentage pulled from the air. Our calculator runs this with your own figures.
Cost per job is the only number that matters
Agencies report impressions, clicks, cost per lead. None of those pay a crew. The number to track is total marketing spend divided by jobs that came from marketing, by channel. If Google Ads produced 6 jobs for $3,000, that's $500 a job. If Facebook produced 2 jobs for $2,000, that's $1,000 a job. Now you know where the next dollar goes. Tracking this requires call tracking and a simple habit of asking "how did you hear about us" and writing it down, which is less than most businesses do and more than enough.
Where the money should go, in order
This is the sequence we run for every client, and it's a budget sequence as much as a marketing one:
- Foundation first. A website that converts and a Google Business Profile that ranks. This is mostly a one-time cost plus upkeep, and it makes every later dollar cheaper, because ad clicks convert better and organic calls arrive free. Skipping it is why so many contractors conclude ads don't work.
- Demand second. Google Ads and Local Services Ads for the searches happening right now; Facebook for the planned, higher-ticket jobs. This is where most of the monthly budget lives in the first year.
- Follow-up always. Whatever it costs to answer every call and call back every lead in minutes is the highest-return spend in the business. It raises the yield on everything above it.
- SEO throughout. It's the slow lever, so it starts on day one and compounds. Over a year or two, organic calls let you lower ad spend without lowering job count. That's the goal.
How to avoid the two classic mistakes
Spending too little to learn anything. $300 a month on Google Ads in a competitive metro buys a handful of clicks and no data. You'll conclude it failed when it never had a chance. Budget enough for 60 days of real traffic, then judge.
Spending on channels before the foundation. Ads on top of a slow site and a 9-review profile is paying full price for leads that don't convert. Fix the foundation, then turn on demand. In that order, every time.
A worked example
A plumbing company doing $1.2M wants to add 6 jobs a month at an average of $1,800. Gross profit per job is about $800, so they set a target cost per job of $250. Budget: roughly $1,500 a month in ad spend plus the cost of someone answering the phone. They rebuild the site and profile first, run Local Services Ads and Search ads for 60 days, and track every call. Month three shows 7 jobs at $230 a job. Now the conversation isn't "is marketing worth it," it's "how much more can we buy at this price." That's the conversation you want to be having, and it's what the strategy call is built to get you to.