How to Setup Marketing Budget for Your Startup

How to Setup Marketing Budget for Your Startup

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The term Startup is a combination of two words. “Start” indicates the beginning of something new, while “up” is for growth and advancement. So, a Startup can be defined as a new business starting its journey with fresh ideas and an aim to succeed. These new ventures bring products and services, either unique to the market or improved versions of those already there. Uniqueness always brings along a touch of uncertainty with it. And that is what makes a startup’s concept exciting and inspiring. The key for every startup is to manage the underlying uncertainty constructively.

Despite all the efforts that go into the product and market research during the formation of a young enterprise, the founders have to put in a lot more effort to prepare themselves for the risks ahead. Each startup’s journey is unique, and its challenges can vary based on the industry, market, and circumstances. With all the risks, challenges, and uncertainty involved, a Startup company should approach every step with resilience, creativity, and strategic planning. It is apparent that with limited availability, all the resources must be managed with utmost care.

Regarding “Marketing,” a startup constantly struggles to figure out the proper budget. Too little marketing might not give the desired results and hamper early growth, and too much of it may shake up the whole balance.

Setting up the Right Marketing Budget

A startup might be tight on funds after all the pre-seed and seeding stage expenses. Thus, utilizing every resource to maximize the returns it can produce is extremely important.

One of the first steps in assessing the marketing budget for a startup is to close down on its estimated revenue figure. In the early stages of a startup, the sales revenue figures are based on estimations and assumptions. At this stage, the marketing budget should be 12-20 % of the estimated gross revenue, which may sound like a lot.

But to gain early momentum, it is essential to make your presence felt in the market. Without coming to know about your product or service, nobody would come to buy it. And if nobody buys your product, there won’t be any revenue to pay your other expenses. Moreover, budgeting is a continuous process, so once you start gaining recognition and a foothold in the market, you can adjust it accordingly.

What are the Factors that Influence Your Marketing Budget?

There are a lot of factors that can have a say in your Marketing budget allocation. Let’s go through these factors, which every startup must consider to set up its marketing budget right.

1. Define your Marketing Goals

Start by deciding what you want to achieve with your marketing. Do you want more people to know about your brand, get more visitors to your website, or make more sales? HubSpot’s research highlights that 70% of companies with clearly defined and documented goals have higher revenue than those without. Your goals will help you decide where to spend your money to promote your business.

2. Research Industry Benchmarks

Looking at how other businesses in your field allocate their marketing funds can be really helpful. For instance, in 2020, companies in the Software sector typically spent around 11.4% of their earnings on marketing, as shown by Statista. And, in the last one year, SaaS companies like Hubspot and SEMrush have spent around 45% of their revenue on sales and marketing, as per the report by Meritech Capital. While these numbers give you a good idea, remember to adjust them to fit your startup’s unique situation.

3. Consider Customer Acquisition Cost (CAC)

Taking into account the Customer Acquisition Cost (CAC) is a strategic move in shaping your budget. CAC is the expense incurred for acquiring each new customer. The calculation is straightforward: divide your overall marketing expenditure by the number of customers gained. On average, CAC is about $702 for SaaS companies, $536 for B2B companies, and $70 for e-commerce businesses across different industries. Knowing your CAC helps you wisely manage your budget, ensuring you use your resources effectively to attract customers without overspending.

4. Segment Your Budget

Divide your marketing budget across different segments, such as digital advertising, content creation, social media, events, and PR. Consider the nature of your business – a tech startup might emphasize digital efforts, while a consumer product startup might allocate more to social media and influencer collaborations.

5. Use Digital Marketing

Digital marketing is a cost-effective way to reach a wider audience. The Content Marketing Institute states that content marketing costs 62% less than traditional marketing and generates three times as many leads. Communicating with your audience through platforms like Instagram and Facebook doesn’t cost you a fortune, but it certainly gives you an invaluable reach.

6. Keep an Eye on ROI

Try out different ways of marketing to spend your budget. Do not keep all your eggs in one basket. Just as an investor allocates his funds into various investment channels and monitors the returns each source generates, you must follow this strategy and keep shuffling your marketing expenses. The Harvard Business Review found that marketing this way can increase your revenue by 15-20%.

7. Keep up With Trends

Consider the times of the year when your industry gets busier or quieter – this is called seasonality. You can use tools like Google Trends to see when people are most interested in what you offer. During these busy times, spending more money on marketing is a good idea that can help you get better results and make the most of these high-demand periods.

In today’s social media trends, engaging content may go viral and spread like wildfire in no time. Cashing in on such trends can surely help you in making your presence felt. You can set aside a small portion of your marketing budget to utilize such short-lived but impactful trends.

8. Factor in Branding and PR

Investing in branding and public relations can yield long-term benefits. Forbes reports that consistent branding across all channels increases revenue by 23%. Also, by running PR campaigns that capture people’s attention, your startup becomes more known, which can lead to partnerships and being featured in the media. Branding can potentially close the seemingly huge gap between an established business and a startup.

As David Ogilvy said, “There isn’t any significant difference between the various brands of whiskey, or cigarettes or beer. They are all about the same. And so are the cake mixes, the detergents, and the margarine. The manufacturer who dedicates his advertising to building the most sharply defined personality for his brand will get the largest share of the market at the highest profit.

9. Use Analytical Tools

Setting a marketing budget is more than just a one-and-done task. Regularly monitor your campaigns’ performance and adjust allocations based on real-time data. Utilize tools like Google Analytics to track website traffic, conversion rates, and engagement metrics. Data analysis can help you stay up-to-date with emerging trends, changing customer preferences, and changes in market norms. 80% of the world’s leading companies use marketing automation technologies.

10. Consider Hiring a Marketing Professional

Bringing a skilled marketing professional on board can make a substantial impact. When budgeting for a marketing professional’s role, consider factors like salary, benefits, and training. According to the research, hiring a marketing professional can boost your chances of success with an ROI of 2-5 times the cost.

Inspiring Startup Stories

Let’s have a look at some of the startups that made it big through Marketing:

Dollar Shave Club

Dollar Shave Club, a subscription-based razor and personal grooming products company gained fame through a witty marketing video that went viral. The company spent around $4,500 on video production and $1,500 on YouTube ads. The video garnered over 23 million views within a few months, driving substantial brand awareness and customer acquisition. In 2016, Unilever acquired Dollar Shave Club for a reported $1 billion.


In its early days, Airbnb used clever guerrilla marketing tactics to gain traction. In 2008, the founders created custom cereal boxes for the Democratic National Convention with the slogan “Obama O’s” and “Cap’n McCain’s,” using the proceeds to fund their startup. This unique approach helped them raise around $30,000 and generate media coverage, setting the stage for Airbnb’s remarkable growth.


Casper, a mattress startup, employed a combination of content marketing and influencer partnerships to build brand awareness. In 2014, their well-researched blog posts on sleep-related topics attracted attention, while partnerships with famous bloggers and influencers amplified their message. Just one month after launch, Casper sold $1 million worth of mattresses.


Canva, a graphic design platform, relied on freemium marketing to attract users. They enticed individuals and businesses to try their platform by offering a free version of their software. Canva’s accessible interface and word-of-mouth marketing led to rapid adoption, with a valuation of over $25 billion as of 2022.


Dropbox used a referral program to boost its user base. For every user referred, both the referrer and the new user received additional free storage space. This strategy helped Dropbox acquire over 2.8 million users in just 30 days. The referral program was estimated to contribute to a 60% increase in signups, propelling Dropbox’s rapid growth.

All these success stories clearly show that Marketing only sometimes involves enormous spending. You have to hit the right chord to strike the perfect balance between your startup’s goals and the resources you allocate for effective marketing.


With all the given factors in mind, you can plan your budget harmoniously with your overall goals, product type, and resources. Whenever there’s a need for proper allocation, be it any expense or even time budgeting, you should always prepare a list and arrange the tasks according to their priority. To further signify the importance of marketing, I would like to quote Henry Ford: “Stopping advertising to save money is like stopping your watch to save time.” Keep your marketing budget balanced, and give your startup the marketing superfood to help your business grow faster than your peers. Good luck..!!

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FAQs on Marketing Budget for A Startup

What is a good marketing budget for a startup?

For Startups in their early stages, 15-20% of the gross revenue is a good marketing budget that can cover their brand-building and initial lead-generation costs.

What’s the difference between fixed and variable marketing expenses?

Salaries, rentals, and, software subscriptions remain consistent over a period, and, hence termed fixed expenses. While variable expenses like ad campaigns, content creation, discounts & coupons, and, promotional materials change based on your marketing activities.

How do I determine the right marketing budget for my startup?

You should consider your business goals as to how far and how fast you want to go, then you should keep in mind the industry benchmarks, and, of course, you should be aware of the limit to your available resources. Accordingly, allocate a percentage of projected revenue or a fixed amount based on your business needs.

How to control marketing expenses to stay within budget?

To keep things under control, you must regularly review and adjust your budget based on performance. For that, you can monitor ROI, track metrics, and cut underperforming initiatives.

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