How Much Should a Marketing Budget Really Cost? A Practical Breakdown for Small and Mid-Sized Businesses

In today’s turbulent economic climate, marketing budgets at small and midsized companies (SMBs) are feeling the pressure. And while some companies might be shrinking their marketing budgets to protect other parts of their business, many are increasing marketing investment to combat inflation. In other words, there is no one-size-fits-all approach to setting a marketing budget in 2026. One thing remains true across the board, though: do more but do it smarter.

So what is a realistic marketing budget for a small business? A practical rule of thumb for businesses with revenue under $5 million is to allocate 7 to 10% of gross revenue to growth-focused plans and 5 to 7% if you’re looking to maintain market position. Mid-sized companies competing aggressively are generally advised to allocate 8 to 12% (or more, depending on their stage of growth and industry’s competitiveness).

Settling on the right number is far from arbitrary. You must assess your revenue targets, margins, and a measurable return on investment (ROI).

At GoEpps Digital Marketing, we work closely with our clients to devise a tailored, cost-effective plan that optimizes their visibility and customer engagement (a key hurdle right now), increases conversions, and leads to sustainable growth. We use data-driven strategies to ensure spend is allocated to the right channels for the highest ROI potential, and we monitor performance closely.

Why the Budget Data Out There Seems to Conflict

If you’ve been researching this topic, you’ve likely come across conflicting information. Some industry news reports SMBs are increasing budgets aggressively; others show a cautious reallocation of funds with a focus on performance and clearer returns.

Both are true.

The difference is in the approach. Some businesses are going all-in on automated tools (for marketing and other areas of business). Automation without insightful research and strategic oversight, however, can become an expensive experiment that requires more and more cash. And then there are AI platforms that optimize for what they’re given, which may not be what your business needs at its particular stage.

The size of a marketing budget for small businesses and mid-sized businesses needs to be goal-oriented and managed properly by people.

At GoEpps, we are a performance-based agency, one of the most advanced models you’ll find today. We don’t allocate thousands of dollars to a logo refresh or flavor-of-the-day digital channels. Instead, we focus on matching businesses to the right channels using data, competitive analysis, and conversion modeling to maximize potential returns. There’s no guessing. We strategize, customize, measure constantly, tweak as needed, and create compelling, engaging content that positions our clients as leaders in their field (the right recipe for SEO and GEO).

Budgeting Based on Revenue Goals

The smartest way to determine your business marketing budget is to work backward from your revenue goals. Start with these three variables:

• Target revenue growth.

• Average customer value (lifetime value or average order value).

• Expected conversion rates.

This is a “bottom-up” calculation that determines how much to spend to achieve data-driven goals rather than relying on abstract percentages.

Marketing budget guidelines for mid-sized businesses and small businesses have average benchmarks, but these guidelines should never be interpreted as set-in-stone rules. Practical benchmarks as percentages of revenue for SMBs are generally grouped as follows:

• Growth-based small businesses under $5 million: 7 - 10%

• Maintenance-focused small businesses: 5 – 7%

• Mid-sized competitive businesses: 8 – 12%

Other factors will influence this allocation, especially the competitiveness of your industry. The biggest mistake we see is companies spending without measuring performance. Just like your marketing objectives should follow the SMART Goals formula (Specific, Measurable, Achievable, Relevant, Time-bound), so too should your budgeting framework. This approach moves beyond percentages alone and prioritizes actionable, data-driven spending that ensures funds are allocated to high-ROI strategies.

Where Your Budget Goes

Digital channels dominate marketing spend today because they’re more affordable than traditional advertising, highly targeted, and measurable. As an experienced team, we will advise you on where to focus your budget. We assess where your target audience lives online, which channels align with your sales cycle and goals, what your margin structure can support, and where oversaturation either precludes investment or calls for a doubling down. You don’t need to be everywhere all the time. This will spread your budget too thinly so that, like a peep in a windstorm, your message will go unnoticed.

Email marketing, for example, continues to offer a strong ROI. Search advertising (PPC/SEM) can capture high-intent demand (though costs here are rising for both Google and Meta Ads). Content marketing generates leads at a lower cost than outbound tactics that most consumers ignore. These activities are widely considered the core trifecta of digital marketing, addressing different stages of the customer journey. They work together to build, nurture, and convert audiences on platforms we control (web, blog, email). Social media marketing serves as the engagement catalyst (a fourth pillar, if you will), providing reach, real-time engagement with in-market audiences, and serving as the primary channel for distributing content.

The Cost of Underinvestment

One of the most dangerous budget traps is underinvestment. Combine this with unrealistic expectations, and companies run the risk of wasting a hefty chunk of change. When budgets are cut below the recommended 5–12% of revenue, you can face a dangerous cycle of dwindling visibility, reduced customer acquisition, and shrinking market share. A study conducted by the Ehrenberg-Bass Institute for Marketing Science found that brands that stopped or cut their advertising saw sales decline an average of 16% after one year, 25% after two years, and up to 36% after three years.

Reducing spend also increases the cost to acquire new customers. Without sufficient, consistent, and optimized campaigns, conversion rates drop, making each new customer more expensive to gain.

Marketing momentum compounds over time, and it can go both ways. Meanwhile, competitors who maintain or increase spending capture the attention and loyalty you relinquish through cutbacks or underinvestment. At GoEpps, we strike the right balance (we call it the Goldilocks zone) where your budget is not too hot, not too cold, but just right.

Disciplined, sustained investment in the right digital marketing channels and strategies, aligned with your revenue targets and measured against clear performance metrics, prevents you from fading into obscurity.

What Your Marketing Budget Should Really Cost

The right budget is one that loosely aligns with average percentages of gross revenue and depends on whether you’re seeking a boost in visibility, rapid expansion, or increased conversions. A disciplined small business marketing budget is tied to your revenue goals, measured against performance benchmarks, and strategically allocated across channels that generate returns. Ideally, marketing should act as a scalable growth engine that drives demand, customer acquisition, and long-term market share expansion.