How to Set Marketing Budget for a Startup

You have got a great product, but that alone is not enough to succeed…. You need effective and targeted marketing for more exposure, sales and revenues. As a fact of the matter, there are various not so good products that gained a mass audience just because of great marketing!

The biggest concern of young companies and startups is cost effective marketing that leads them to grow their brand. In other words, they all want to make money but have zero money.

Calculating startup marketing budget

Where the established brands may want to experiment with newer marketing, like content marketing or native ads etc., startups strive to determine low cost or no cost marketing options. Knowing the right marketing budget for your startup can help, as it gives you a clear idea of available options.

Well, there’s no definitive answer regarding the average amount a startup or a young company should spend on marketing and advertising. It mainly depends on your goals, projected sales and of course the disposable income.

Calculating startup marketing budget 2

  • According to Iowa State University recommendations, a new startup should devote between 20 and 30 percent of their total annual budget to advertising and marketing during the first and second years.
  • Once your business makes a successful entry in the market and your focus shifts to growth, 10 to 20 percent of the annual gross sales should account for marketing.
  • If you are purchasing an existing business which is well established 7 to 10 percent of the annual gross sales is good to go, however, if the business is not in stable position you may need to adjust it accordingly!


Related Readings:

While setting up the marketing budget for your startup, you must know that there are various factors which may affect the budget and so you need to make adjustment accordingly. Some of those factors may include new product/service launches, new market entries, and mergers and acquisitions.

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