How much should contractors spend on marketing?

The 5–10% of revenue benchmark is the most commonly cited figure in home service marketing, and it's a reasonable starting point — but it needs context:

• 5% is a maintenance budget — appropriate for businesses with strong repeat customers, a full referral pipeline, and no growth targets. You're spending to hold market share, not gain it.
• 7–8% is a growth budget — appropriate for an established business that wants to add 15–25% revenue over the next year.
• 10%+ is an acquisition budget — appropriate for businesses in their first 3 years, entering a new service area, or adding a new trade to their revenue mix.

Apply the percentage to your revenue target, not last year's revenue. If you want to grow from $800K to $1M, your 8% budget is $80,000 — not $64,000 from last year's base.

A contractor in year one or two has almost no Google review history, no LSA ranking, no organic search presence, and no referral base. Every lead costs money. That changes the math significantly:

• New businesses usually need a heavier acquisition budget than mature businesses because they are buying demand while trust signals are still being built.
• The payoff: money spent building Google reviews, LSA ranking, local proof, and referral relationships in year one keeps compounding in years two through five.
• The mistake many new contractors make is underinvesting in the first 12 months and then wondering why growth stalls. Early marketing spend is infrastructure investment.

How you split the budget matters as much as how much you spend. A practical allocation framework by business stage:

New or growth-stage business:

1. Google LSA or Google Ads if eligible and profitable.
2. One lead or call source with a strict cap and clean tracking.
3. Google Business Profile, reviews, citations, and basic SEO setup.
4. Referral and review process after every completed job.

Established business:

1. Maintain the paid channels that already book profitable jobs.
2. Invest more into SEO, reviews, content, and reputation so future paid dependence drops.
3. Use pay-per-call or lead buying to fill capacity gaps or test new service areas.
4. Keep source reporting clean enough to compare gross margin by channel.

Do not run five channels simultaneously at half-attention. Two or three channels done well outperform five channels managed poorly.

These are widely-observed ranges for 2026. Your actual numbers will vary by market, conversion process, and channel mix:

• Plumbing — target cost per booked job: $80–$200 (service calls); $150–$350 (installation/replacement)
• HVAC — target cost per booked job: $100–$250 (service/repair); $200–$500 (replacement/installation)
• Electrical — target cost per booked job: $80–$180 (service calls); $150–$400 (panel upgrades, rewires)
• Roofing — target cost per booked job: $300–$800 (given high job values of $8K–$25K, even $600 CPJ is under 5% of revenue)

If your actual cost per booked job is above these ranges, work the channel mix before cutting total spend. The problem is usually close rate (speed-to-lead, call handling) or channel mix (too many shared leads), not total budget.

The cleanest way to think about your marketing budget is through return on each dollar spent:

• Calculate your average gross margin per job type (revenue minus labor and materials, before overhead).
• Divide gross margin by cost per booked job for that channel. A ratio of 4:1 or better (spend $1, generate $4 gross margin) is a healthy return in home services.
• Any channel producing 4:1 or better should get more budget until returns compress. Any channel below 2:1 should be audited or cut.

This math also tells you your maximum sustainable cost per booked job — the point where marketing spend equals gross margin. Most contractors should target staying at 50–60% of that maximum, leaving room for overhead and profit.

Simple rules for budget decisions:

• Increase budget when: you're turning away work, your close rate is above 35% on paid channels, you're adding capacity (new trucks, new techs), or you're entering a new service area.
• Decrease budget when: close rate drops below 20% consistently, cost per booked job exceeds your 50% target threshold for two consecutive months, or you have a backlog longer than 3 weeks.
• Don't cut marketing during slow season — this is when impression share is cheapest and competitors who pull back leave market share on the table. Reduce total spend but maintain channel presence.