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How Much Should I Pay For Ads & Marketing?




TLDR, Marketing cost is very much proportional to the revenue earned.


Let me explain how


If you sell a product P1 or service S1 that is priced at ₹100 all-inclusive. Now there can be generally 2 situations,

  1. You operate a new business

  2. Your Brand or Business is well known

Logically new businesses need more budget & marketing to build brand awareness & trust around their business & then can hope from people to buy from them. Whereas an established business may have more options to strategically plan their budgets and spending.


New businesses need to work on a lot of things but one of them very important is to track and collect more data to optimize for.


Coming back to the price, if you sell a product P1 for ₹100, consider at least spending ₹20 - ₹30 (20% - 30%) in marketing if you are a new business while you might only spend ₹10 (10%) if you already have enough brand awareness, or traffic or user data for that matter.


It's that simple! Let's take another example now, suppose you have a product P2 or service S2 to sell for ₹50,000, now in this case if you spend ₹20 - ₹30 which you spent in P1 and expect this to sell in the same marketing cost as P1, this would be a disaster!


But instead of the amount, if you apply a percentage to calculate the cost, it may then get you better returns that you are looking for and start getting you sales for that product or service.


So to sell P2 which is priced at ₹50,000, suppose we assume we can spend up to 25% as a marketing cost for this product so that becomes ₹50,000 * 25% = ₹12,500.


Now to explain more about the breakup, this Marketing Cost of 25% may include,


- Website

- SEO

- PPC

- Other Costs Incurred To Sell The Product Or Service.


So now some may think it's difficult to plan for each product differently, nothing is easy my friend. The more planned you are, the more you can earn.


To help you a bit, try and set your revenue & marketing cost goals monthly, quarterly, or annually. For example,

Product / Service

Selling Price

Qty Sold in 1 Year

Total Revenue

Marketing Cost @25%

P1/S1

₹100

2,400

₹2,40,000

₹60,000

P2/S2

₹50,000

60

₹30,00,000

₹7,50,000

Total

₹32,40,000

₹8,10,000

As per the figures above, to earn 32.4 Lakhs you need to spend at least 8.1 Lakhs on Marketing overall. If we go by monthly budget so ₹8,10,000 / 12 = ₹67,500 Per Month.


Now you have a monthly figure to spend and you can plan to invest accordingly for different services like a website, SEO, PPC, or any other. Again this was just an example, real revenue targets look a lot bigger than what is mentioned here, so you might have more margins to play with too.


Still have confusion, let's clear that out. Book a free Marketing Strategy Consultation with me to get all the answers you need to know.



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