How much should a contracting company spend on marketing
Most contracting companies land somewhere between five and ten percent of revenue, which is also the range quoted most often for small businesses generally. Treat that as a sanity check rather than a budget. The more useful way to set the number is to decide what you can afford to pay for one booked job, multiply it by the jobs you need, and compare the total to revenue afterward.
What the percentage rule hides
Two companies at the same revenue can need very different numbers. One that is booked out past Thanksgiving on a referral base built over fifteen years is buying insurance against a quiet spring. One that opened in a new city last month is buying strangers, and strangers cost more than neighbors.
Margin matters more than revenue here. A company doing labor heavy work at a healthy gross margin has more room in every dollar of revenue than one running material heavy jobs at a thin one, and a percentage of revenue ignores that difference entirely. Percentage of gross profit is the better frame, even though almost nobody quotes it that way.
What belongs in the number
Most contractors undercount the spend, then conclude that marketing does not work. Count all of it.
- Paid ads, plus whatever you pay someone to manage them.
- The website: hosting, upkeep, and anyone writing for it.
- Lead marketplace fees, including per lead charges and Local Services Ads.
- Photography of finished work, and the time it takes to get it.
- Vehicle lettering, yard signs, door hangers, mailers, and sponsorships, spread across the months they cover.
- The software that holds the leads and sends the follow up.
The two arguable items are the person who answers the phone and the hours the owner spends driving to estimates. We leave both out of the marketing number and track them separately, because folding labor in makes the figure impossible to compare against anything, including last year.
Work backward from a booked job
Run this with your own figures. Take the gross profit on an average job, decide what share of it you are willing to hand over to win one, and that is your ceiling per booked job. If you need twenty more jobs next year, the ceiling times twenty is the budget. Everything after that is a question about which channels come in under the ceiling and which do not.
Most contractors cannot answer that question, because nobody writes down where the lead came from. Ask every caller, record it on the job, and after one season you can see what each channel actually costs per signed job. Without that record you are guessing, which is how an ad account quietly stops paying for itself. We went through the common versions of that in why your Google Ads spend disappears.
When to spend more, and when to stop
Spend more when you have crew capacity you are not filling and your close rate is holding steady. That is the one situation where more leads reliably turn into more work.
Hold or cut when you are booked out further than customers are willing to wait, when the crew cannot absorb another job without quality slipping, or when the close rate is falling. A falling close rate is usually a pricing or a response problem, and buying more leads makes it more expensive instead of fixing it. That is a different job, covered in how to price for margin instead of guessing.
Timing matters as much as the amount. Money spent ahead of a season shows up as work during it, while money spent in the middle of the season is competing with everyone else spending at the same time.
What we do in our own companies
We run painting and flooring companies in Bellingham along with the licensed Washington general contractor they operate under. The budget gets set once a year and looked at monthly, and the monthly review is short: spend by channel on one side, booked gross profit traced back to that channel on the other. Anything over the ceiling for two months running gets cut or changed rather than argued about.
The part that makes the review possible is unglamorous. Every lead has a source recorded at first contact, and the source rides along with the job through the estimate and into the invoice, so the numbers are already there at the end of the month instead of being reconstructed from memory. Setting that up is ordinary workflow work, and it is the same thing we build for other contractors.
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