How Much Should a Trades Business Spend on Marketing?

The standard answer is 5 to 10 percent of revenue. It is easy to remember and it is a poor way to run a trades business.

It ignores the two things that actually determine the right number: what a job is worth to you, and whether you have anybody free to do it.

Here is a better way to work it out.

Start with what a job is worth

Not the invoice total. The gross profit, which is what is left after materials and the labour to do the work.

Say your average service call invoices at $600 and costs you $350 in parts and labour. Gross profit is $250. That is the money available to pay for acquiring the job and to keep the lights on.

Then add the part most owners leave out: what that customer is worth over time. A plumbing customer who calls once and never returns is worth $250. One who calls twice a year for four years, and who eventually replaces a water heater with you, is worth several thousand.

For most trades the honest number sits well above the single job value. If you have any kind of maintenance agreement, it sits far above it.

Write down two numbers before going further. Average gross profit per job. Rough gross profit per customer over three years.

Then work out what a job currently costs you

Take last month. Add up everything you spent on getting the phone to ring. Ads, any retainer, directory subscriptions, the truck wrap amortized, whatever it is. Divide by the number of jobs that came from those sources.

Most trades businesses have never calculated this, and the reason is that nobody asks where a call came from. Which is fixable this week: have whoever answers the phone ask, and write it down. Two weeks of that is more useful than any report.

Now you can answer the actual question. If a job produces $250 of gross profit and costs you $60 to acquire, that is a good trade and you should want more of it. If it costs $310, you are paying to work.

What the ratio should be

A reasonable target for most trades is acquiring a job for somewhere between 10 and 20 percent of its gross profit, and lower for repeat-heavy work where the first job leads to more.

If you are comfortably inside that, the budget is not the constraint and you should spend more until either the ratio worsens or you run out of capacity.

That second limit is the real one and it is worth saying plainly: the correct marketing budget for a business with no spare capacity is close to zero. If you are booked three weeks out and turning work away, more leads produce longer waits, more no-shows and worse reviews. The money is better spent on hiring, or on raising prices, which is the fastest way to increase profit without any marketing at all.

What the money should go to, in order

Sequence matters more than amount, especially under $2,000 a month.

First, the free foundations. A complete Google Business Profile, consistent details everywhere, steady reviews. These cost time rather than money and they outperform paid work for most trades businesses under about $500,000 in revenue. Skipping them and buying ads is the most common way money gets wasted in this industry.

Second, plug the leaks. Before buying more calls, make sure you are answering the ones you get. Unanswered calls during the workday are the norm in trades, because everybody is on a job. An automatic text back on a missed call costs very little and recovers work you already paid to generate.

Third, the website, if it is genuinely holding you back. Slow, broken on phones, or no page for your main services. Fix those. A redesign because it looks dated is not the same thing and rarely pays.

Fourth, paid acquisition. Now it makes sense, because there is something worth sending traffic to and somebody to answer it.

A rough shape by size

To make it concrete, roughly what I would expect at each stage.

Under $250,000 revenue. Near zero cash, high time. Profile, reviews, asking every customer for one. The main lever is your own effort.

$250,000 to $750,000. Perhaps $500 to $1,500 a month. A decent website, missed-call capture and modest paid spend on your highest-margin service.

$750,000 to $2 million. Perhaps $1,500 to $4,000 a month. Real ongoing work across search and reviews, and paid acquisition with tracking that ties back to booked jobs.

Above $2 million. Percentages start being useful again, and the question shifts from how much to which channels and whether to bring some of it in-house.

These are shapes rather than rules. A business with high job values and spare capacity can justify far more than the band suggests, and one that is fully booked can justify far less.

The number that tells you it is working

One thing to track, and it is not traffic.

Cost per booked job, by source. Not leads, not clicks, not impressions. Booked jobs. If a channel produces cheap leads that never book, it is an expensive channel with a flattering report.

If your provider cannot tell you cost per booked job, ask why. It is usually possible with a dedicated phone number per channel and the discipline of asking callers where they found you.

Common questions