How Much Should a Small Business Spend on Marketing in Australia?

A marketing budget should not be dictated by an agency or copied from a generic industry percentage. The business should establish what it can sustainably invest, explain its goals and ask the agency what can realistically be achieved within that boundary.

How much should a small business spend on marketing? It sounds like a straightforward question, but the usual answer – somewhere between 5% and 10% of revenue – does not tell the whole story.

A startup that has not made its first sale is in a very different position from an established business turning over $2 million a year. A local tradesperson targeting customers within 50 kilometres does not need the same strategy as an online retailer competing across Australia.

Your marketing budget should reflect your revenue, profit margins, customer value, competition, capacity and growth goals. Most importantly, it must be an amount the business can sustain long enough for the strategy to work.

This guide explains how to set a realistic small business marketing budget, what Australian marketing agencies may charge and when coaching or doing some of the work yourself may be a better option.

The short answer

Many established small businesses use 5% to 10% of gross revenue as an initial marketing benchmark. A business pursuing rapid growth or entering a competitive market may need to invest more, while an established business relying on repeat customers and direct sales may spend less.

These percentages are starting points – not rules.

The right marketing budget is one your business can comfortably maintain and justify through profitable results. It should account for agency fees, advertising, content creation, website costs, photography, software and the value of any time you spend doing the work yourself.

What counts as marketing spending?

One reason marketing budgets are confusing is that different businesses include different expenses in their calculations.

A complete marketing budget may include:

• Marketing agency fees
• Google Ads and Microsoft Ads spending
• Facebook, Instagram and LinkedIn advertising
• Search engine optimisation
• Website design, hosting and maintenance
• Graphic design and printed material
• Photography and video production
• Social media management
• Email marketing software
• Customer relationship management software
• Sponsorships, events and trade shows
• Signage, uniforms and vehicle graphics
• Market research
• Internal marketing wages
• The owner’s time spent producing and managing marketing

If an agency charges $1,500 per month to manage a Google Ads campaign and the business pays Google another $1,500 per month, the total marketing commitment is $3,000 – not $1,500.

Always clarify whether a quote includes advertising expenditure or whether media spending is paid separately.

What percentage of revenue should go to marketing?

The following ranges can be used as broad planning benchmarks:

Business situation	Indicative marketing budget
Established business maintaining its position	Approximately 3% to 5% of revenue
Small business seeking steady growth	Approximately 5% to 10% of revenue
New business building awareness	Approximately 10% to 20% of projected revenue
Business entering a new market or pursuing rapid growth	Potentially 10% to 20% or more

These figures become more useful when converted into dollars.

Annual revenue	5% budget	7% budget	10% budget
$250,000	$12,500	$17,500	$25,000
$500,000	$25,000	$35,000	$50,000
$1 million	$50,000	$70,000	$100,000
$2 million	$100,000	$140,000	$200,000

A percentage alone still does not determine whether the spending is sensible. A low-margin retailer may not be able to afford the same percentage as a professional service business with high margins and substantial customer lifetime value.

How to decide on a sustainable marketing budget

Before approaching a marketing agency, decide what your business can comfortably invest each month for at least six to twelve months. Give the agency that figure and ask what can realistically be achieved within it.

A good agency should provide advice and explain when a budget is unlikely to support the desired outcome. However, the agency should not pressure a business into accepting a monthly commitment it cannot sustain.

Consider the following questions:

• How much cash can the business invest without jeopardising essential expenses?
• How long can that level of spending be maintained?
• How much gross profit does an average customer produce?
• How often does an average customer purchase?
• How many new customers can the business service?
• Does the business want steady growth or rapid expansion?
• Which marketing activities have already produced results?
• How competitive is the target market?
• Does the business need immediate leads, long-term visibility or both?

A sustainable $750 monthly budget can be more valuable than spending $3,000 per month for a brief period and then stopping because the business can no longer afford it. Marketing benefits from consistency, measurement and gradual improvement.

The business should establish the financial boundary. The marketing professional should then recommend how to use that money effectively and explain what outcomes are realistic.

Work backwards from the value of a customer

Revenue percentages are useful for initial planning, but customer economics provide a stronger basis for decision-making.

Imagine a service business earns $2,000 in gross profit from an average new customer. If it spends $300 to acquire that customer, the marketing may be highly profitable. If it spends $2,500 to acquire the same customer, the strategy probably needs attention.

To evaluate your marketing, calculate:

• The number of leads generated
• The cost per lead
• The percentage of leads that become customers
• The cost to acquire each customer
• The average sale value
• The gross profit from each sale
• The customer’s likely lifetime value

A campaign should not be judged only by clicks, impressions, followers or website traffic. Those measurements can be useful, but profitable customers are what keep a business operating.

How much should a startup spend on marketing?

A startup that has not made a sale may struggle to spend thousands of dollars each month on a complex campaign with every available bell and whistle. At that stage, the owner may still be testing the product, pricing, audience and sales process.

Before committing to a large retainer, a startup may need:

• A clear explanation of the product or service
• A simple, professional website or landing page
• A Google Business Profile
• Basic branding and consistent contact information
• One or two carefully selected marketing channels
• A process for recording enquiries and sales
• A way to collect customer feedback

Spreading a limited startup budget across SEO, Google Ads, social media, email, video, print and several other channels may result in none of them receiving enough attention to work properly.

It is often better to select one or two channels, learn what attracts customers and expand after the business has proven demand.

When marketing coaching is better than an agency retainer

Some startup and microbusiness owners have more available time than money. They may benefit more from one-on-one marketing coaching than from handing everything to an agency.

For example, two or three hours of coaching at $65 per hour would cost $130 to $195 per month. During those sessions, a marketing professional could help the owner:

• Choose suitable marketing channels
• Plan content
• Improve a Google Business Profile
• Review website wording
• Understand basic SEO
• Set up a simple advertising campaign
• Interpret analytics and campaign results
• Create a practical list of actions for the next month

The business owner completes most of the work but receives professional direction and avoids many common mistakes.

This approach also gives the owner a better understanding of marketing. If the business later hires an agency, the owner will be better equipped to assess the work, ask informed questions and understand the value of professional services.

When should a business outsource its marketing?

Doing your own marketing can work well during the early stages, but it becomes less practical as the business grows.

It may be time to engage a marketing company when:

• The business has proven demand and predictable revenue
• The owner no longer has time to market consistently
• Marketing is repeatedly pushed aside for customer work
• The owner’s time is more valuable elsewhere
• Advertising campaigns have become too complex to manage casually
• The business is ready to expand into new locations or markets
• The website, content and advertising need to work together
• Marketing performance needs to be properly measured

By this stage, the business should have a clearer understanding of its customers, margins and capacity. That information allows an agency to develop a more focused and commercially realistic strategy.

What can different monthly marketing budgets achieve?

The following examples are indicative only. The result will depend on the industry, location, competition, advertising costs and amount of work the owner completes internally.

Less than $500 per month

This budget usually requires a largely do-it-yourself approach. It may cover coaching, basic software, occasional design work, local listings, website maintenance or a small advertising test.

Concentrate on one priority rather than dividing the money across numerous channels.

$500 to $1,500 per month

This may fund one professionally managed channel, such as a focused local SEO campaign, basic content support or management of a modest advertising account. Advertising expenditure may be additional.

$1,500 to $3,000 per month

This provides more room for ongoing professional support. Depending on the agency, it might include a combination of SEO, Google Ads management, website improvements, content and reporting.

$3,000 to $6,000 per month

A business can begin developing a coordinated multi-channel strategy with meaningful advertising, regular content, website conversion work and ongoing campaign optimisation.

More than $6,000 per month

Larger budgets may support broader geographic targeting, frequent content production, professional video, multiple advertising platforms, marketing automation and more detailed measurement.

More spending does not automatically guarantee better performance. Strategy, execution, tracking and the quality of the offer remain critical.

How much do marketing agencies charge in Australia?

Australian marketing agency fees vary considerably. A limited single-channel service may cost several hundred dollars per month, while a complex enterprise campaign can cost tens of thousands.

Many small businesses working with a boutique agency can expect to pay approximately $1,500 to $5,000 per month, depending on the work included. Advertising expenditure, photography, video, website development and specialist software may be separate.

Marketing service	Indicative Australian cost
Marketing consultation	Approximately $65 to $250+ per hour
Google Ads management	Approximately $500 to $2,500+ per month, excluding ad spend
Local SEO	Approximately $800 to $3,000+ per month
Competitive or national SEO	Approximately $1,500 to $5,000+ per month
Social media management	Approximately $1,000 to $4,000+ per month
Small-business website	Approximately $3,000 to $15,000+
Multi-channel agency retainer	Approximately $2,000 to $10,000+ per month

These ranges should be treated as general examples, not fixed prices. A local five-page website is not comparable with an ecommerce website containing thousands of products. Similarly, an advertising campaign targeting Chinchilla is not equivalent to a national campaign in a highly competitive industry.

Never compare agency quotes using the final monthly price alone. Compare the work, advertising expenditure, contract terms, experience, reporting and ownership arrangements included in each proposal.

For answers to other common questions, visit our digital marketing FAQ for small businesses.

Common marketing agency pricing models

Pricing model	How it works
Monthly retainer	The business pays a fixed recurring fee for an agreed scope of work.
Project fee	A fixed price is agreed for a website, campaign, branding project or audit.
Hourly rate	The client pays for the time spent on consulting, management or production.
Percentage of advertising spend	The management fee is calculated as a percentage of the media budget.
Performance pricing	Payment is tied to an agreed result, such as a qualified lead or sale.
Hybrid pricing	A base fee is combined with project, advertising or performance charges.

A percentage-of-ad-spend fee is not necessarily performance-based. The agency may earn more when the advertising budget increases, regardless of whether sales improve.

Performance agreements also require careful definitions. Both parties must agree on what constitutes a valid lead, how sales are attributed and who is responsible when enquiries are not answered or followed up.

What should an agency quote include?

Before accepting a proposal, confirm whether it includes:

• Strategy and campaign planning
• Agency management fees
• Google, Meta or other advertising expenditure
• Campaign setup
• Graphic design
• Copywriting
• Photography and video
• Landing pages and website changes
• SEO work and content
• Email or CRM software
• Conversion tracking
• Monthly reporting
• Meetings and account management
• Minimum contract periods
• Additional hourly charges
• Ownership of advertising accounts, websites and creative assets

A $3,000 monthly quote might include $1,000 in management and $2,000 in advertising. Another agency might charge $3,000 in management fees with all media expenditure billed separately. Without reading the scope, the two quotes cannot be meaningfully compared.

Should you let a marketing agency set your budget?

A marketing agency should help you understand the likely cost of reaching your goals, but the final financial decision belongs to your business.

Tell the agency what you can comfortably maintain and ask it to recommend priorities within that amount. If the budget is insufficient for the proposed goal, a trustworthy agency should explain why and suggest a smaller objective, a narrower market or a staged approach.

Be cautious if an agency immediately recommends an expensive package without first asking about:

• Your customers
• Your revenue and margins
• Your current capacity
• Your geographic market
• Your previous marketing
• Your goals
• Your ability to follow up leads

The objective is not to purchase the greatest number of marketing services. It is to select the activities most likely to produce a worthwhile commercial result.

Should you cut marketing when sales are slow?

When sales begin to fall, marketing is often one of the first expenses a business cuts. That can create a damaging cycle: fewer sales lead to less marketing, reduced marketing produces fewer enquiries, and fewer enquiries cause sales to fall further.

Think about driving on a country road and approaching a hill. Do you lift your foot off the accelerator, lose speed and make the climb harder – or apply enough power to maintain momentum?

Business can work in much the same way. When demand begins to weaken, immediately cutting effective marketing can accelerate the decline. Fewer people see the business, enquiries fall further and revenue continues to shrink.

That does not mean flooring the accelerator without looking at the road.

Before increasing expenditure, identify why sales have slowed. Possible causes include:

• Insufficient visibility
• Advertising reaching the wrong audience
• An uncompetitive offer or price
• A website that fails to convert visitors
• Poor lead follow-up
• Negative reviews or weak credibility
• Reduced customer spending across the market
• Seasonal demand

If a Google Ads campaign reliably generates $4 in gross profit for every $1 spent, cutting it to save money may make the sales problem worse. If the campaign produces clicks but no enquiries, increasing the budget is unlikely to help until the targeting, website or offer has been improved.

When sales slow, do not automatically cut marketing. Protect the activities producing profitable customers, remove waste and redirect available money towards the strongest opportunities.

How to tell whether your marketing budget is working

Marketing should be reviewed regularly using measurements connected to business performance.

Useful measurements include:

• Number of enquiries
• Cost per enquiry
• Quality of enquiries
• Sales conversion rate
• Customer acquisition cost
• Average sale value
• Gross profit from new customers
• Repeat purchases
• Customer lifetime value
• Revenue attributed to campaigns

Not every marketing activity produces an immediate sale. SEO, helpful content and brand awareness can create value over a longer period. Paid search can capture people who are ready to purchase now.

A balanced strategy may include both immediate demand capture and long-term assets. Our article explaining the fastest way to promote your business examines the difference between quick visibility and sustainable marketing growth.

Frequently asked questions

How much should a small business spend on marketing in Australia?

Many established small businesses use 5% to 10% of gross revenue as an initial benchmark. Startups and businesses pursuing aggressive growth may need to invest more. The final budget should reflect margins, customer value, competition, business capacity and the amount that can be sustained.

How much do marketing agencies charge in Australia?

Agency costs range from several hundred dollars per month for limited support to tens of thousands for enterprise campaigns. Many small businesses working with boutique agencies pay approximately $1,500 to $5,000 per month, depending on scope. Advertising expenditure and production costs may be additional.

Does an agency fee include advertising?

Not necessarily. Google, Meta and other media expenditure is often paid separately from the agency’s management fee. Always ask for the agency fee and advertising budget to be itemised.

Should a startup hire a marketing agency?

It depends on the startup’s available money, time and stage of development. A startup still testing its offer may benefit more from one-on-one coaching and a focused do-it-yourself approach. Full agency management becomes easier to justify after the business has proven demand and the owner no longer has time to manage marketing consistently.

Should I stop marketing when business is busy?

Stopping marketing completely can create an empty sales pipeline several months later. When the business reaches capacity, it may be appropriate to reduce campaigns, improve targeting or promote more profitable services rather than disappearing from the market.

Should I increase marketing when sales fall?

Possibly, but only after identifying why sales have declined. Protect marketing that produces profitable customers, correct underperforming campaigns and invest additional money where there is evidence it can generate results.

Is a cheaper marketing agency better value?

Not automatically. Compare the work included, advertising expenditure, experience, reporting, contract terms and commercial outcomes. A low-priced campaign that produces no customers is more expensive than a higher-priced campaign that generates profitable sales.

Final thoughts

There is no universal marketing budget suitable for every Australian small business.

Revenue percentages provide a useful starting point, but they must be considered alongside margins, customer value, competition, business capacity and growth goals. Your budget should be large enough to create momentum but sustainable enough to maintain.

Do not allow an agency to pressure you into buying a complicated package your business cannot afford. Establish a comfortable financial boundary, explain your goals and ask what can realistically be achieved within it.

If you are still building the business and have more time than money, a few hours of professional coaching may be the best place to begin. As revenue grows and your time becomes more valuable, you can move towards managed marketing with a much better understanding of what you are paying for.

DLM Marketing helps small and regional businesses develop practical marketing strategies suited to their budget, market and stage of growth. If you need help deciding where to begin, contact DLM Marketing to discuss an affordable starting point.