The answer may surprise you in marketing budget!

Because there are two methods by which you can determine budget that you should spend on marketing.

The first method is the super easy and slow way and is to do something like take 10% of the revenue you made last year and set your marketing budget, so how much should you spend on marketing?

Now CAC stands for Cost of Customer Acquisition and a large portion of this post will focus on how to determine the maximum cost of customer acquisition.

and we’ll help you achieve that by asking you some questions and giving you a few things to think about.

There are three important questions that will help you in calculating your marketing budget.

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Question 1: How much time do you want to commit to?

This is an important question that you should ask yourself because if your time is limited, you will need to hire someone to do it for you, and hire someone who may be your first expense, as you can hire an employee with good experience part-time or full-time, and you can hire a digital marketing agency like us .

MERKAI outlined a few questions for you to determine the maximum CAC cost or customer acquisition cost.

LTV stands for lifetime value and it is simply the total amount of revenue (or value) that you receive from your customers over a lifetime.

This is crucial to knowing this because LTV will ultimately determine how you can expand your marketing budget, because the higher your LTV, the more you spend. And the speed of your growth has increased.

For example, if your maximum lifetime value is $ 100 and you want a profit of $ 20, your CAC maximum is $ 80.

Question two: What is the current or expected AOV rate?

Average order value or AOV is simply the average price that your customer pays for your service or product, so if you have one product at $ 100, your AOV is $ 100, but if you have multiple services and products, getting an AOV requires More work.

The best way to do this is to look at historical data, if you have in the company a list then collect some historical data that gives your total revenue divided by your total customers.

and if the company is new then try to forecast the most requested products / services and calculate the average based on that, you can Always adjust your expectations as you get more data.

Question 3: How often will my customer buy?

In other words, what is the expected use of your product / service?

Would it be a one-time purchase without additional sales like the stationary bike?

Is it a monthly service / product that will be repeated every month like internet marketing services?

Will this product have a high utilization rate and will need to be rearranged like food or toiletries?

The last thing to decide is how much cash you have and how many customers want to enjoy the services of your product, giving them more room to grow, and this will change expectations from 100 new customers to 200 new customers.

and that’s it! We hope this post helped you think about how much marketing to do this year, but if you want to get the most out of your marketing budget.

we have affordable, ideal digital marketing solutions for companies of all sizes, contact us today and our amazing team will be happy to assist you.