Attempting to set an average monthly budget for service marketing can be a tricky feat, especially for new service businesses. Moreover, most businesses choose from 4 different marketing budget methods so that they achieve their yearly marketing goals. In this article, we will explain each method to help you get started right away!
Explaining the Monthly Budget for Service Marketing
An average monthly budget for service marketing is used as a tool to keep your goals aligned in favor of your marketing service campaign. Marketing for the service industry can be quite costly, and requires that you create a solid budget and adhere to it consistently. Most importantly, you will need to consider the cost of several methods of marketing which include public relations, advertising, and promotion.
Furthermore, depending on several key factors of your business, marketing budgets can range from 1% to 50% of sales. Usually, the marketing tactics that many business use are:
- Website Development
- Public Relations
- Design and printing costs for newsletters, press releases, brochures, and direct mail cost.
- Trade Shows
- Other Special Events
4 Ways to Create an Average Monthly Budget
If you are considering creating a service marketing budget that shows average monthly expectations, you should first begin with the total amount allocated to your marketing budget. Then, you can divvy up the cost among the above aforementioned categories. Moreover, when preparing your marketing budget, consider which marketing method strategies will work best for your business.
1. Flat Dollar Amount
Businesses that use this method assign a flat dollar amount to their marketing budget. Usually this is based on the company’s marketing affordability. This method is generally used by small businesses and is calculated based on an estimated cost factor. The flat dollar amount is used when planning for specific future events, such as: trade shows, public relations events, and specialty events.
2. Percentage of Total Sales
This method is most popular when developing a marketing budget. Businesses will allot a certain percentage of sales, usually between 9% to 12% of their annual budget. The basic theory is that the marketing budget is based on fluctuations of sales that are dependent on income that is substantial enough to afford various marketing strategies.
3. Marketing Plan Objective
This method is said to be the most effective. It considers the objectives of the business plan to determine the marketing budget. Specifically, this method estimates the expenditures needed to achieve the desired goals. The only challenge with this goal is that it is dependent on the needs of the company, however, money may not be available to achieve such objectives. Many businesses still use this method as they attest to the fact that it is a more logical approach to setting a marketing budget.
4. Matching Competitors
This method requires that management has a firm grasp on their industry. Meaning, this approach relies heavily on emulating the budget of their competitors. The theory behind this method is that competing companies can obtain marketing success by mimicking the marketing efforts of similar businesses. This method is incredibly risky in that you are assuming that your competitor has a sound marketing budget that will work - not only for their business - but for yours too.
When creating your average monthly budget for service marketing, make sure you consider the size of your business, product or service, and the overall industry. With all factors taken into account, you can have a successful marketing campaign that is second to none.