407-233-3387The usual answer is five to ten percent of revenue, which is useless if you are doing $200,000 a year and useless if you are doing $5 million. A better method works from what a customer is worth to you and what your market costs to compete in.
Here is the calculation, and what each budget actually buys.
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Start with one number: customer lifetime value
Take your average job value, multiply by how many times a typical customer buys from you over three years, and multiply by your gross margin. That is what a new customer is genuinely worth.
A pest control company at $95 per quarterly visit with a customer who stays two years is looking at roughly $760 in revenue. A roofer at $14,000 per job with almost no repeat business is looking at $14,000 once. Those two businesses should not spend the same amount.
Then work out how many customers you need
Divide your proposed monthly spend by your customer value, then divide by your close rate. That gives you the number of leads per month the campaign must produce to break even.
- Roofer: $2,000 spend, $14,000 customer, 25% close rate. Break-even is one lead every seven months. Almost any campaign clears that.
- Pest control: $2,000 spend, $760 customer, 40% close rate. Break-even is about seven leads a month. Harder, but achievable in most markets.
- Nail salon: $2,000 spend, $220 customer, 60% close rate. Break-even is roughly fifteen new customers a month. That is a stretch, and the budget is probably too high.
If the break-even number makes you wince, the budget is wrong for your business — not the channel.
Adjust for competition
The same service costs different amounts to rank depending on who else is fighting for it. Search your main keyword and look at who owns the top three organic spots and the map pack. If they are national brands, directories, or businesses with 400 reviews and a decade of content, add fifty to a hundred percent to whatever you were going to budget.
If the top three have thin websites and forty reviews, you are in a cheap market and a modest budget will move it.
What each band buys
- $300 to $600 — one Google Business Profile managed well. Posts, photos, reviews, citations, reporting. No meaningful content or link building.
- $800 to $1,500 — profile work plus two to four new pages a month and real link building. This is the band where most single-location service businesses belong.
- $2,000 to $3,500 — multi-location, or a single location in a competitive vertical. Digital PR, aggressive content, strategist involvement.
- $5,000 and up — regional or statewide ambitions, or verticals like injury law and cosmetic surgery where the top spots are worth six figures a year.
The ramp nobody plans for
Month one and two are heavier than the steady state because of audits, fixes, and initial builds. Budget for a slightly larger first quarter, or accept that the first two months buy foundations rather than rankings.
A simple rule if you want one
Spend what one additional customer per month is worth, and give it nine months. If your average customer is worth $1,200, a $1,200 monthly budget needs to produce one extra customer to pay for itself, and anything above that is profit. Most local campaigns that are run properly clear that bar well before month nine.
And if you cannot afford nine months at that number, spend less for longer rather than more for a quarter. SEO punishes stop-start spending harder than it punishes small budgets.
Keep reading
- See real numbers in the Orlando SEO pricing guide.
- Check the payback logic in is SEO worth it for a small business.
- Browse what we do on our SEO and web design services page.
- See recent builds in our project gallery.
- Ready to talk? Get in touch with Mamba Media.
Thinking of doing SEO?
We can help. Drop your info below and we’ll take a free look at your Google Business Profile and website, then tell you straight what’s holding your rankings back.
Prefer to talk it through? Call (407) 233-3387 or send us a message.