How To Determine Your Advertising Budget

It's understood that no one really wants to spend money on advertising. In a perfect world we'd have lots of happy customers buying our products and services all the time without needing to find ways to draw them in.

Since we know that's not the case, here's an easy way to get a good estimate of what you can expect to invest in growing your business:

Rule of thumb:
- Advertising budgets vary from business to business, however we find that on average 2%-7% of total sales are dedicated to advertising.

Equation:
1. Average sale x frequency of sales* per day
2. Daily sales total x open for business timeframe (i.e. days per week)
3. Weekly sales total x appropriate percentages based on your business needs

*Sales can be actual dollar sales, patients, clients, students, etc. depending on your specific business

Examples:

Small Ticket -
1. $25 average sale x 100 average sales per day = $2,500 daily sales
2. $2,500 daily sales x 7 days/week open for business = $17,500 weekly sales
3. $17,500 weekly sales x 2% (low end of range) = $350 weekly advertising budget

Large Ticket -
1. $500 average sale x 10 average sales per day = $5,000 daily sales
2. $5,000 daily sales x 6 days/week open for business = $30,000 weekly sales
3. $30,000 weekly sales x 5% (middle of range) = $1,500 weekly advertising budget


The main point to remember is that all advertising budgets are different based on specific business needs. This formula obviously will not work for every business, however it's a great way to at least get an idea of what you need to be investing to get a solid return.


(courtesy of Diane Ciotta, Publisher of Kidsville News! of Middlesex County, NJ and Founder/President of Training Classics, the name under which she has been giving seminars on sales training and sales refinement for over 19 years)