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How much should a contractor spend on marketing?

Don’t start from a percent of revenue. Start from what one booked job is worth to you, decide the most you’ll pay to win it, and divide by how many leads it takes to book one. That gives you a ceiling per lead; multiply by the jobs you need and you have a monthly budget you can test, measure and grow.

By Eric Smith, founder of Outfitter AI and a former general contractor · Prices checked October 4, 2026

Outfitter AI wrote this and sells an AI receptionist and marketing services; the method works whether or not you use them.

What about the “spend X% of revenue” rule?

You’ll see percent-of-revenue rules everywhere. We looked for a credible one and didn’t find a rule written for home-service contractors.

The closest official source is a 2019 SBA blog post. It says there is no hard and fast answer to how big a marketing budget should be. It then passes along averages from other publishers: Small Business Trends reported that the average business spends 1.08% of revenue on advertising, and Web Strategies reported 2018 marketing spending averaging 7.9% of revenue, with business-to-consumer service companies at 11.8% [1]. Those are cross-industry averages from secondhand sources, several years old, and they mix in companies that look nothing like a ten-truck plumbing shop.

Percent rules also run backward for a small contractor. A shop doing $600,000 that needs to grow may need to spend more than a shop doing $3 million that runs mostly on repeat customers and referrals. Use a percentage only as a gut check after you’ve built the budget from your own job math, below. (For where each channel fits in the bigger plan, see the full contractor marketing guide.)

Work backward from one booked job

You need four numbers. Most owners can pull them from last year’s invoices in an hour.

  1. Average ticket. Total revenue from new customers divided by the number of new-customer jobs. Keep repair and replacement separate if your shop does both.
  2. Gross margin. What’s left after labor, materials and job costs, as a percent. Revenue is not the number to spend from; gross profit is.
  3. Most you’ll pay for a booked job. Pick a share of that gross profit you’re willing to give up to win a new customer. Shops with strong repeat business can afford a bigger share, because the first job isn’t the last.
  4. Booking rate. Out of every ten calls, forms or messages from a channel, how many turn into a sold job? Count it for at least a month.

Then the math is two lines:

Max cost per booked job = average ticket × gross margin × share you’ll spend

Max cost per lead = max cost per booked job × booking rate

Worked example (illustrative numbers, not a benchmark): a plumbing shop with a $600 average new-customer ticket and a 50% gross margin makes $300 of gross profit per job. If the owner will spend 40% of that, the ceiling is $120 per booked job. If half of its leads book, the shop can pay up to $60 per lead.

Now compare that ceiling to real lead costs. LocaliQ’s search ad data put plumbing at $129.02 per lead [3]. At a 50% booking rate, Google search ads would cost this shop about $258 per booked job, more than twice its ceiling. Its options are to raise the booking rate, raise the ticket, count repeat value, or put the money somewhere cheaper.

Example shopValue of a new customerGross marginGross profitShare you’ll spendMax per booked jobBooking rateMax per lead
Plumbing repair (example)$600 first job50%$30040%$12050%$60
Roof replacement (example)$12,000 project30%$3,60015%$54025%$135
Recurring cleaning (example)$1,800 first-year revenue40%$72025%$18040%$72

Notice the cleaning row uses first-year revenue rather than one visit. For any recurring service, valuing only the first visit makes every paid channel look too expensive.

What leads cost by channel

These published figures help you guess before you have your own data. They are averages across many advertisers, from vendors that sell advertising, so treat them as a starting point.

ChannelPublished figureSource
Google search ads, Home & Home Improvement$90.92 average cost per lead; $8.33 per clickWordStream, US campaigns Apr 2025–Mar 2026 [2]
Google search ads, cleaning and maid services$46.99 per leadLocaliQ, US campaigns Apr 2024–Mar 2025 [3]
Google search ads, electricians$93.69 per leadLocaliQ [3]
Google search ads, landscaping$117.92 per leadLocaliQ [3]
Google search ads, air conditioning$127.74 per leadLocaliQ [3]
Google search ads, general contractors$165.67 per leadLocaliQ [3]
Google search ads, roofing and gutters$228.15 per leadLocaliQ [3]
Facebook lead ads, Home & Home Improvement$42.95 per lead; $2.18 per clickLocaliQ 2026 [4]
Google Local Services AdsPay per valid lead such as a call or message, not per clickGoogle Ads Help [6]
Postcards, USPS EDDM Retail$0.26 postage per piece, plus printingUSPS [5]

Two cautions. A cheap lead isn’t a cheap job: someone who tapped a Facebook ad may book at a lower rate than someone who searched “furnace repair near me,” so compare channels on cost per booked job, never on cost per lead alone. And Google is moving Local Services Ads into Google Ads as Performance Max campaigns with pay-per-lead goals, starting with select US home-service advertisers in August 2026 [6], so expect your LSA reporting and budget settings to change. The Local Services Ads guide has the details, and our comparison of marketing options lists what each platform charges.

The cheapest budget increase: book more of the leads you already pay for

Every point of booking rate lowers your cost per job without spending a dollar more. In Invoca’s 2026 analysis of home-services calls, only 52% of callers spoke with a person, and 55% of home services businesses didn’t ask leads to buy or book the job [7]. That’s vendor research, but it points at the same leak most owners can find in their own call log.

Using the plumbing example above: at $60 per lead, a 50% booking rate means $120 per job. Raise booking to 65% and the same lead costs about $92 per job. Before you raise the budget, fix the phones. The guides on booking more jobs from phone calls and calling leads back fast walk through it.

How to split the budget across channels

Think in three layers. Fund them in this order.

1. Foundation (mostly time)

A complete Google Business Profile, a steady flow of reviews, a simple website, and a referral program. These cost little cash and make every paid channel work better, because people check your reviews before they call.

2. Proven paid channel (most of the money)

The one paid channel that already books jobs below your ceiling. For many service trades that’s Local Services Ads or search ads; for others it’s postcards around past jobs or Facebook ads in their neighborhoods.

3. Test channel (a small, fixed slice)

One new channel at a time, with a fixed amount and an end date. If it beats your ceiling, it moves up to layer two. If not, you stop and try the next one.

A reasonable starting split for a shop with one proven channel might be roughly 70% to the proven channel, 15% to one test, and the rest to referral rewards and postcards around jobs. That’s a suggestion to adjust, not a rule from any study.

Plan for seasons too. Spend more ahead of your busy months and on maintenance and past-customer offers ahead of your quiet ones; the slow season guide lays out the timing.

Test, then scale what works

  1. Set a test amount and length. Enough money to bring in at least 15 to 20 leads at the published cost per lead, run for four to eight weeks. A $200 test of a channel that averages $120 a lead tells you nothing.
  2. Track source on every lead. Ask “how did you hear about us?” on every call and form, and use a separate tracking number per channel if you can. The call tracking guide explains how.
  3. Count booked jobs and revenue, not clicks. At the end of the test, divide spend by booked jobs.
  4. Compare to your ceiling. Below it: raise the budget in steps of about 20% to 30% a month and watch whether cost per job holds. Near it: work on booking rate or the ad itself. Well above it: stop.
  5. Re-check every quarter. Lead costs, competition and your own capacity all change.

Monthly marketing budget worksheet

Copy these columns into a spreadsheet and fill them in every month. The rows below are a labeled example for a small plumbing shop spending $3,000 a month; the cost per lead figures are made up for illustration, not quotes or benchmarks.

Channel (example)SpendLeadsBooked jobsCost per booked jobRevenue at $600 a job
Local Services Ads (pay per lead)$1,5002012$125$7,200
Facebook and Instagram lead ads$600135$120$3,000
Postcards to 1,000 homes near past jobs (postage $260 plus printing $240)$50043$167$1,800
Referral rewards (4 × $50)$20054$50$2,400
Test channel$20021$200$600
Total$3,0004425$120$15,000

How to read the example: the shop’s overall cost per booked job is $3,000 ÷ 25 = $120, right at its ceiling. Referrals are the cheapest source, so the owner should push them harder. Postcards and the test channel are above the ceiling this month, so the postcards get another round with a better offer and the test gets one more month before it’s cut. Local Services Ads and Facebook are close to the line, so the next move there is a better booking rate, not more spend.

Marketing here equals 20% of new-customer revenue that month. That sounds high next to the averages above, but it ignores repeat jobs and referrals those 25 customers will bring later, which is why the job math matters more than the percentage.

Common questions

What percentage of revenue should a contractor spend on marketing?
There's no reliable rule for home-service contractors. A 2019 SBA blog post says there is no hard and fast answer and passes along cross-industry averages from other publishers, such as 1.08% of revenue on advertising and 7.9% on marketing overall. Build your budget from the most you'll pay per booked job instead, then use a percentage only as a gut check.
How much does a lead cost for a home service business?
Published averages vary by trade and channel. WordStream's 2026 data put Google search leads for Home and Home Improvement at $90.92 on average, LocaliQ's search data ranged from $46.99 for cleaning to $228.15 for roofing, and LocaliQ put Facebook lead ads for the category at $42.95. Your own costs will differ.
How do I calculate my maximum cost per lead?
Multiply your average ticket by your gross margin to get gross profit per job. Multiply that by the share you're willing to spend to win a customer to get your maximum cost per booked job. Then multiply by your booking rate. Example: $600 x 50% x 40% = $120 per job, and at a 50% booking rate that's $60 per lead.
How much should a small contractor spend on marketing per month?
Multiply the new jobs you want each month by your maximum cost per booked job. If you want 25 new jobs and can pay $120 each, that's about $3,000 a month. Start lower while you test channels, and never buy more jobs than your crew can handle.
Which marketing channel should a contractor start with?
Start with the low-cash foundation: a complete Google Business Profile, steady reviews and a referral program. Then put most of your paid budget into one channel that books jobs below your ceiling, and test one new channel at a time with a fixed amount.
How long should I test a marketing channel?
Long enough to get at least 15 to 20 leads, usually four to eight weeks for a small shop. Judge it on cost per booked job, not on clicks or leads.

If you’d rather not run the ads yourself

Outfitter runs Facebook and Instagram ads for you at ad spend plus 30%, with your first $10 of Facebook ads free, sends postcards to homes you choose for about 53¢ each delivered, and automates Google review requests and posts with Website Professional at $79 a month. You fund it all from one prepaid token balance (1 token is 1 cent), and there’s no contract, so it fits the test-then-scale approach above.

See how marketing works

Sources and how we compared

Lead costs come from WordStream and LocaliQ benchmark reports (vendor research), postage from USPS, Local Services Ads billing from Google Ads Help, call handling from Invoca’s 2026 report, and percent-of-revenue figures from the SBA blog, all opened October 4, 2026; every worked example is labeled and uses made-up numbers.

  1. SBA: How to get the most from your marketing budget — July 2019 blog post; figures quoted secondhand from Small Business Trends and Web Strategies
  2. WordStream: 2026 Google Ads benchmarks — 13,474 US search campaigns, April 2025–March 2026; vendor research
  3. LocaliQ: Search ad benchmarks for home services — 3,211 US campaigns, April 2024–March 2025; vendor research
  4. LocaliQ: Facebook advertising benchmarks for 2026 — Updated September 2026; vendor research
  5. USPS: Every Door Direct Mail — U.S. Postal Service
  6. Google Ads Help: Local Services Ads transition to Performance Max campaigns with pay-per-lead goals — Google help page
  7. Invoca: Home Services Lead Conversion Benchmarks Report 2026 — July 2026; 70 million+ calls; vendor research

Last updated October 4, 2026. Prices change; if something here is out of date, call or text (507) 628-0400 and we’ll fix it.