How to Estimate Your Marketing Costs

If you want to run a business successfully, you have to manage your marketing costs efficiently. There are many ways to prepare a marketing budget. You can take help from the given steps in order to estimate your marketing costs.

Instructions

  • 1

    You can estimate your marketing costs as a percentage of your revenues. It is the most common method and is widely used by mercantile business. Generally, the costs are estimated around 5-10% of the total revenues of big businesses. On the other hand, the small businesses have to assign around 20% of their total revenues as marketing costs. Even though, most of the businesses (regardless of their size) follow this method. However, it is not an accurate method to assign the marketing costs as sometimes the revenue is too low and a specific percentage on it is not enough.

  • 2

    Marketing costs can also be estimated as a percentage of net sales. This is the second most commonly used methods for estimating marketing budget. It is more precise than the first method as it exclude expenses from the calculations. But, it is not an accurate method to assign marketing budget.

  • 3

    Sometimes you have to spend more to market your product or services for which you can prepare a separate budget which is free from any kind of percentage assignment. Usually, this method is more popular for the new entrants in the markets as they don’t have any prior sales or revenues to look for. Therefore, they have to estimate according to their marketing research. However, it is very important for you to assign your marketing costs prudently. You should not spend too much or too low in order to get best results.

  • 4

    You can also estimate your marketing costs according to the budgets of your competitors. Though, it is extremely hard to know the exact figure of your competitors’ budget, but you can make a good estimate by following their advertisement campaigns. If you are operating your business in a competitive environment, it is extremely important for you to estimate your marketing costs well in accordance with the budgets of your rivals so as to increase your customer bases and to achieve your goals and objectives.

  • 5

    You must keep on increasing your marketing budget with the expansion of your business and with the increase in your customer base in order to remain a good player in the market.

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