How Much Business Expense Should Be Spent on Advertising?

Proportionally, new businesses spend the most on advertising.

5 Percent of Revenue

Steve McKee of Business Week recommends that businesses spend 5 percent of their gross revenue on advertising---tweaking that number as needed based on their market, how much competitors spend and results.

10 to 30 Percent of Revenue

Pattie Simone of Entrepreneur.com recommends that business owners spend about 10 percent of anticipated revenue for the year on advertising. Young businesses should consider figures as high as 20 to 30 percent of projected revenue if they want to increase sales at an even faster pace.

Bottom Line

How much a business should spend on advertising depends in part on the age of the company, according to All Business. Established businesses should spend between 5 and 10 percent of projected revenue on advertising, while new businesses should spend 20 to 30 percent on advertising.

References

• Business Week: What Should You Spend on Advertising?
• Entrepreneur.com: How Much of My Profit should I Spend on Marketing?
• All Business: How Much Should You Spend on Advertising?