One of the first questions contractors ask isn’t about SEO, Google Ads, or websites.

It’s much simpler.

“How much should I actually spend on marketing?”

Unfortunately, the internet is full of vague answers.

Some people say you should spend 5 percent of your revenue.

Others recommend 10 percent.

You’ll even find contractors claiming they spend nothing because referrals keep them busy.

None of those answers help you build a predictable, scalable business.

The truth is that your marketing budget depends on where your company is today and where you want it to be tomorrow.

At Builders of Authority, we work exclusively with contractors and home service businesses across the country. We’ve also built and operated our own home service companies, so these recommendations come from real businesses, real marketing budgets, and real results.

In this guide, we’ll show you exactly how much contractors should spend on marketing, where that money should go, and which marketing investments consistently generate the highest return.

Why Most Contractors Spend Too Much or Too Little

Most contractors fall into one of two categories.

The first group spends thousands of dollars every month without knowing whether their marketing is actually producing profitable jobs.

They know the phone rings, but they can’t tell which campaigns are generating revenue.

The second group spends almost nothing.

Maybe they pay a few hundred dollars each month for a cheap website or low-cost SEO package, then wonder why referrals have become their only source of new business.

Both approaches create the same problem.

Neither is based on data.

Successful marketing isn’t about spending the least amount possible.

It’s about investing the right amount in the right channels.

What Does the SBA Recommend?

The U.S. Small Business Administration has long recommended that established businesses allocate approximately 7 to 8 percent of gross revenue toward marketing when growth is a priority.

While that serves as a helpful benchmark, contractors operate differently than many other industries.

Sales cycles are longer.

Customer acquisition costs vary by service.

Competition changes dramatically from one market to another.

Because of that, contractors should adjust their marketing investment based on both revenue and growth goals.

Marketing Budget Recommendations by Business Stage

Instead of using one percentage for every company, we recommend matching your budget to your current stage of growth.

Established Contractors

If your business has been operating successfully for several years and generates between $1 million and $2 million annually, a marketing budget between 5 and 10 percent of annual revenue is typically appropriate.

For a company generating $1 million annually, that equals approximately:

• $50,000 to $100,000 per year
• $4,000 to $8,000 per month

This level of investment allows contractors to maintain steady lead generation while continuing to strengthen their local market presence.

Contractors in Growth Mode

If you’re opening a new location, entering a new market, or trying to double your revenue over the next year, expect to invest more aggressively.

A marketing budget between 10 and 12 percent of revenue often produces the best long-term results.

While that may seem like a significant investment, acquiring quality customers today creates opportunities for repeat business, referrals, and long-term revenue.

Marketing should be viewed as an investment, not simply an expense.

A Real Example

One of our roofing clients generates approximately $1.5 million annually.

Their total marketing investment is roughly $8,000 per month, including advertising, SEO, and agency management.

That equals approximately 6.4 percent of annual revenue.

During the past year, the company grew by roughly 40 percent.

Growth like that doesn’t happen because a company spends money.

It happens because there is a clear strategy behind every dollar invested.

Where Should Contractors Invest Their Marketing Budget?

Knowing how much to spend is only half the equation.

Knowing where to spend it matters even more.

Here’s how we recommend allocating your marketing budget.

If Your Budget Is Around $3,000 Per Month

For contractors generating between $500,000 and $1 million annually, the highest priorities are:

Google Business Profile

Your Google Business Profile continues to be one of the highest ROI marketing assets available to local contractors.

It should include:

• Weekly posts
• Consistent review generation
• Updated project photos
• Accurate service information

Nearly half of the leads generated for our clients continue to come from Google Business Profile.

Ignoring it means leaving qualified local leads on the table.

Local SEO

Local SEO builds long-term visibility through:

• Service pages
• Location pages
• Service area pages
• Helpful educational content

SEO typically requires several months before producing consistent results, but once rankings improve, lead costs become significantly lower than paid advertising.

Local Service Ads

Google Guaranteed ads appear above traditional search results and often generate some of the fastest leads available for contractors.

For businesses working with smaller budgets, Local Service Ads frequently provide an excellent starting point before investing heavily in Google Ads.

If Your Budget Is Around $5,000 Per Month

At this level, continue investing in:

• Google Business Profile
• Local SEO
• Local Service Ads

Then add:

Google Ads

Google Ads allow contractors to target homeowners actively searching for services.

Instead of bidding on broad keywords, focus on high-intent searches such as:

• Roof replacement
• AC repair
• Foundation repair
• Bathroom remodeling
• Emergency plumbing

High-intent keywords generally produce stronger conversion rates because homeowners are already looking to hire.

If Your Budget Is Around $10,000 Per Month

For contractors targeting $2 million to $5 million in annual revenue, the strategy expands further.

Marketing should include:

• Advanced SEO
• Google Business Profile
• Local Service Ads
• Google Ads
• Retargeting campaigns
• Video marketing
• Social media advertising

At this stage, the objective shifts from generating leads to dominating local search visibility across every major platform.

Four Marketing Investments Contractors Should Avoid

Not every marketing opportunity delivers a positive return.

Here are four investments we commonly recommend avoiding.

Shared Lead Platforms

Platforms that sell the same lead to multiple contractors create intense price competition.

Instead of building your own pipeline, you’re competing against several companies for every opportunity.

Owning your lead generation system almost always produces stronger long-term results.

Boosted Facebook Posts

Boosting random social media posts without a defined strategy rarely generates qualified leads.

Effective paid social campaigns require:

• Targeting
• Landing pages
• Conversion tracking
• Follow-up automation

Without those elements, most boosted posts simply generate engagement rather than customers.

Cheap SEO Packages

If someone promises comprehensive contractor SEO for a few hundred dollars per month, the work is usually extremely limited or ineffective.

Quality SEO requires technical optimization, content creation, local authority building, and ongoing improvements.

Those activities require time, expertise, and consistent investment.

Traditional Print Advertising

While direct mail can still perform well in specific situations, many traditional print channels such as newspapers and magazines struggle to compete with digital marketing when measuring cost per lead and ROI.

For contractors working with limited budgets, digital channels usually provide significantly better tracking and measurable performance.

Contractor Marketing Budget Cheat Sheet

Use these recommendations as a starting point.

Build Your Marketing Budget Around Your Growth Goals

There isn’t one perfect marketing budget that works for every contractor.

The right investment depends on your revenue, your market, your competition, and your growth objectives.

What matters most is having a strategy behind every marketing dollar.

When contractors know exactly where their budget is going and can measure which channels generate revenue, marketing becomes a predictable growth engine instead of an unpredictable expense.

At Builders of Authority, we help contractors build marketing systems that generate qualified leads, improve ROI, and support long-term growth.

If you’d like a customized marketing budget based on your goals and your market, schedule a free strategy call with our team. We’ll review your current marketing, identify opportunities, and build a plan designed specifically for your business.