How do I set a marketing budget?


How much does marketing cost? How do I set a marketing budget? How do you price your services?

These are among the most common questions that we hear from clients and potential clients, but they can be difficult to answer. Answering the question “How do I set a marketing budget?” is similar to answering the question “How much does a house cost?” There are a lot of factors that affect home pricing like location and size, so we can't just throw out a number. We wait to talk about pricing until we have completed a custom analysis and developed a quote tailored to the client’s needs.

We are Tailors, Not Walmart

There's nothing wrong with Walmart for light bulbs or flip flops, but you wouldn't go there to get a fitted suit, right? For bespoke tailoring, you would visit a business like Kirpalani’s Hong Kong Tailors in Homewood (by the way...I rarely wear a suit, but Kirpalani’s has fixed some things for me in the past, and it is literally the best customer service I have ever received anywhere).

We believe that a marketing package should be tailored based on the business’ needs, so our approach is more similar to Hong Kong Tailors’ than Walmart’s. The good news is that because we focus on the most strategic services for each situation, the custom approach is not necessarily more expensive than the “Walmart Approach”.

We can't answer your marketing questions until we ask a few of our own. Based on our experience, no two businesses need exactly the same services. A dentist won't give you a price for fixing your teeth without taking x-rays (and if he will, RUN!). We perform custom analysis and provide a quote that will achieve your profit goals.

Time for Clarity

Businesses deserve direct answers. As we have worked on our transparency pledge, we started feeling a little funny about being vague on pricing early in our conversations with potential clients. We have determined that true transparency must include clear communication about how we price our services.

Spoiler Alert: This post includes sample pricing, and the numbers are real.

Whether you work with us or someone else, we want to equip you with the knowledge to make an informed decision on marketing for your business.

Projects vs. Retainers

Marketing work can be quoted as a project or as a part of a monthly retainer. The word “campaign” is often used to describe a set of strategies that are coordinated around a specific goal. Campaigns can be projects or they can be managed under a retainer.

Retainers allow us to balance short-term and long-term goals, so this is the setup for most of our clients. Our retainers are flexible, so they can expand or contract as your needs change. We can also quote supplemental projects to build on the retainer as needed.

Hourly Rate, Time Tracking, and Deliverables

Agencies assign value to their services in a variety of ways. Here are a few examples of how this is done

  • Assign value based on time: Track time spent on a project and bill an hourly rate

  • Assign value based on services: Determine the value of each service and bill accordingly

  • Assign value based on the ROI: Determine the value of the benefits the client receives from the services provided

Electromagnetic Marketing tends to fall in the middle category. We know how much it costs us to produce a blog post or manage an email campaign, so we plan each month based on the impact that the services provided have on the available budget.

When we provide services based on time, our hourly rate in most cases is $150.

3rd Party Cost

We use a variety of 3rd party pro tools on the work that we provide for our clients. Some of these tools have a flat fee no matter how many clients benefit from the service, while there are other services that we have to pay for on a client-by-client basis.

Here are some examples of services that we pay for on a client-by-client basis. These are services that would affect the amount that an agency might charge you.

  • Email Marketing

  • Marketing Automation

  • Enhanced Analytics

  • Call Tracking and Recording

  • Answering Services

  • Transcription Services

  • Directory Optimization Tools

  • Website Hosting

Most of these services have variable pricing. For example, email tools base their pricing on the number of contacts in your account and transcription services base their pricing on the number of minutes transcribed.

Some agencies pad the fees that they charge for these 3rd party services.

We do not.

In accordance with the Electromagnetic Marketing Transparency Pledge, if we bill you more than we end up paying for a 3rd party service, we apply the surplus to your account.

Contractors and Partnerships

Electromagnetic Marketing employees perform the vast majority of the work that we do for our clients, but there are times when we bring in someone with a particular skill or expertise. We leverage relationships with a variety of designers and developers whenever they are beneficial for our clients. We price these services according to the value delivered, just as we would if we did the work.


Advertising budgets (also called advertising spend) can vary more than any other part of a marketing budget. Setting advertising spend requires a lot of thought and planning. Some forms of advertising like retargeting and social media advertising are generally beneficial whether you spend $5 or $5,000. This isn’t necessarily the case with Pay Per Click (PPC) search advertising. In most cases, we don’t recommend PPC ad budgets lower than $1,000 per month because:

  • PPC requires tweaking and optimization to reach peak performance.

  • Lower budgets rarely generate enough data to make informed decisions about keyword and ad performance.

Our management fee is based on a percentage of your total advertising budget. This percentage decreases as the monthly ad budget increases because the size of the budget isn’t the only factor that determines the amount of time required to manage a campaign to peak performance. Here is a list of the percentages that we usually charge for campaign management at different budgets.

  • $1,000- $2,999: 25% of ad spend

  • $3,000- $9,999: 20% of ad spend

  • $10,000+: 15% of ad spend

So if your company set a $10,000 monthly advertising budget, $8,500 would go directly to placing your ads and $1,500 would go to Electromagnetic for managing the campaign.

Some ad campaigns are highly customized and targeted based on current and historical location data for the people that you are trying to reach with those ads. These campaigns can cost more upfront when we purchase data to help us target the ads, but the ad spend can be very low if we are targeting a relatively small group of people. In these cases, we assign a value to the total value of services involved in developing the campaign and the required ad spend rather than taking a percentage of ad spend.

So...How do I Set a Marketing Budget?

Your company’s marketing budget should account for time in addition to money. You can save money working with a marketing agency if you have someone on staff who can write well, but this will take time from their other responsibilities. Businesses have to walk a line in balancing time and cash expenditures, and a good marketing plan can help you do that.

Setting a marketing budget is like pressing the accelerator when you are driving a car. You can drive any speed you like, but some speeds are a lot more efficient than others, and nothing wastes more fuel than a lot of stops and starts. When we offer a proposal, we usually offer 3 different options. We don’t propose a program that is too small or too large to be efficient, but there is usually a range where the business can determine how aggressive they want to be.

3 Real-World Options

Here are 3 real-world packages that show how we quote our services. We provide custom quotes, so the pricing for each package can vary based on deliverables.

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We never want clients to struggle with doubt or insecurity when it comes to pricing and agency billings. I would love to chat if you have any questions. I’ll do all that I can to share any additional information that might help you set a marketing budget for your business, and I promise to do that without a high-pressure sales pitch.

Contact us or schedule a conversation today to find out more about setting a marketing budget for your company.