How to calculate your marketing expenses
The best way to get started on figuring your marketing expenses is with a template. Enter line items of money spent on various items related to your business, then ask yourself if those things have anything to do with advertising and outreach. If they don’t, remove them from your list.
Budget costs for the basics of ‘keeping the lights on’ are mainstays that are immovable from a business expense. Items such as purchasing of online advertising space, or stock photography for use in promotional materials are valid marketing expenses.
A key metric for creating a budget is calculating something called the Customer Acquisition Cost (CAC). This differs from the commonly used Cost Per Acquisition (CPA) in that a CAC is a measurement of attaining an actual paying customer.
A great calculation to measure CAC:
CAC = Total Marketing + Sales Expenses / # of New Customers Acquired
Calculating the CAC metric will help you track the effectiveness of your marketing strategy over time and allow to you make informed decisions on adjustments and alterations to the plan.
Geckoboard offers a great visualization of this equation.
Marketing budget calculators
Take the guesswork out of your marketing budget with some well-established online calculators. By entering your information on expenses, paid advertising, and overhead, you can easily figure out the best place to spend your money.
Here are some handy online calculators can help you get started:
SaaS offers an easy CAC calculator which helps you analyze your Customer Acquisition Cost and recovery time. This is a valuable tool to have as you implement your marketing strategy.
Nickelled’s CAC calculator is similar to SaaS’s calculator but with a different interface that is easier for beginners to grasp in understanding the customer lifetime value.
Marketing budget templates
After using the calculators to figure out the numbers, take a look at various budget templates online. They will organize your spending and break it down into categories where advertising costs belong. Here are templates that offer budgeting assistance:
HubSpot’s budget template is compatible with Microsoft Excel and Google Spreadsheets, HubSpot offers eight different marketing budget templates to help you keep track your spending and share the information with your marketing team.
Invisia offers a free marketing budget template to get a basic overview. With a free trial of their PlanBold paid version, you can drill down deeper to get recommendations and further support into your strategic goals.
Using these templates will take the mystery work out of creating an accurate marketing budget as they guide you through the steps and line items to include.