How much should a contractor spend on marketing?

There’s no single right percentage for a contractor marketing budget. The number that works comes from your own jobs: how many you need, how many leads it takes to sign one, and what a lead costs in your area. Then you check that against what a signed job can afford to pay for itself, and you spend up to that line and no further.

The short version

• Don’t start with a percentage of revenue. Start with the number of signed jobs you need from marketing this year.
• Leads needed = jobs needed ÷ the share of leads that sign.
• Ad budget = leads needed × cost per lead.
• Affordable cost per signed job = average job value × gross margin × the share of that margin you’ll spend to win the job.
• If your real cost per signed job is under half of what you can afford, and you have crew capacity, spend more. If it’s over what you can afford for two sales cycles, fix the channel or cut it.
• Keep fixed costs (website, software) separate from variable costs (ads). Keep agency fees separate from ad spend.
• Raise spend before your slow season, not during it. The lag between first click and signed contract is longer than most builders plan for.

Is there a standard percentage contractors should spend on marketing?

No, not one you can trust for your business.

You’ll see “spend X% of revenue” all over the internet. Most of those numbers are averages across every kind of business, from restaurants to software companies, and most aren’t sourced. Even the U.S. Small Business Administration, in a 2019 post on marketing budgets, says there’s no hard and fast answer. It notes many businesses use a percentage of revenue as a guide, and the averages it passes along come from third-party surveys across all industries, not from builders.

A percentage of revenue has three problems for a builder:

1. It ignores job size. A remodeler doing $40,000 kitchens and a custom builder doing $700,000 homes can’t use the same percentage. The custom builder needs far fewer jobs, and each lead costs more.
2. It ignores margin. Revenue isn’t money you keep. A 2% of revenue budget at a 30% gross margin is a very different bet than at 12%.
3. It ignores referrals. If 60% of your work comes from past clients and referrals, you don’t need to buy all your jobs. You only need to buy the gap.

So build the number from the job backward. You’ll still end up with a percentage if you want one. It’ll just be yours.

How to budget from the job backward

This is the framework we use with builders. It’s our method, not an industry standard. It takes four numbers you can find in your own records in an afternoon.

Step 1: How many jobs do you need from marketing?

Start with the jobs you want next year. Subtract the jobs you reliably get without paying for them: repeat clients, referrals, builder friends who pass work.

Jobs needed from marketing = jobs wanted − jobs from referrals and repeat clients

Say you want 10 custom homes and you’ve averaged 6 a year from referrals for three years. You need 4 from marketing. That’s the number to budget for, not 10.

Be honest about the referral number. Use your three-year average, not your best year.

Step 2: What share of leads sign?

Count your last 40 to 50 leads, all of them, including the ones that never called back. How many signed?

Lead-to-signed rate = signed jobs ÷ total leads

This rate includes two things: how many leads are real (own the land or the home, have a budget that fits, want to start soon) and how many of the real ones you close. Many builders know their close rate on proposals but have never counted raw leads. Count raw leads. That’s what you pay for.

If you don’t have 40 leads in your records, use a conservative guess and fix it after 90 days.

Step 3: What does a lead cost?

Cost per lead = money spent on a channel ÷ leads that channel produced.

If you’ve run ads before, pull the last 90 days. If you haven’t, you don’t know yet, and anyone who gives you a firm number before you run ads in your town is guessing. Start with a test budget (more on that below) and measure.

What a lead costs depends on your trade, your town, how many builders bid on the same searches, and how good your landing page is. A builder with a fast page and a short quiz pays less per lead than one sending clicks to a slow home page, on the same budget.

Step 4: Do the math

Leads needed = jobs needed from marketing ÷ lead-to-signed rate

Ad budget per year = leads needed × cost per lead

Ad budget per month = ad budget per year ÷ 12

Say you need 4 custom homes from marketing, 1 in 20 leads signs (5%), and leads cost $175.

• Leads needed: 4 ÷ 0.05 = 80 leads a year, about 7 a month.
• Ad budget: 80 × $175 = $14,000 a year, about $1,167 a month.
• Cost per signed job: $14,000 ÷ 4 = $3,500.

That’s the spend. Now check if it’s worth it.

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What can you afford to pay for a signed job?

This is the ceiling. Above it, marketing loses you money even when it “works.”

Affordable cost per signed job = average job value × gross margin × share of margin you’ll spend to win the job

• Average job value: the average contract amount of your last 10 jobs of this type.
• Gross margin: what’s left after materials, subs and direct labor, as a percent of the contract. Use your real number from your books, not your target.
• Share of margin to win the job: a decision you make. How much of the gross profit on one job are you willing to spend to get it? In our examples we start at 10%. That’s our starting point for the math, not a benchmark. Some builders go lower because their overhead is heavy. Some go higher to fill a slow quarter.

Say your average custom home is $600,000 and your gross margin is 15%. Gross profit per home is $90,000. You decide you’ll spend up to 10% of that to win a home: $9,000.

So $9,000 is your affordable cost per signed home. The example above came in at $3,500. That’s well under the line. This builder can afford to spend more if they have the crew for more homes.

If you want this as a percentage: $9,000 ÷ $600,000 = 1.5% of the job value. That’s your own percentage, built from your margin, not a number borrowed from a restaurant survey.

Why cost per lead is the wrong number to watch

A $40 lead that never signs is more expensive than a $300 lead that signs one in eight. Cost per lead is useful for comparing ads inside one channel. For deciding your budget, use cost per signed job.

Cost per signed job = cost per lead ÷ lead-to-signed rate

$175 per lead at a 5% lead-to-signed rate = $3,500 per signed job. $60 per lead at a 1% rate = $6,000 per signed job.

The cheaper leads cost almost twice as much per job.

Example budgets for 5 builder types

Here’s the full chain worked for five kinds of builders. Every input is hypothetical. We picked numbers that look like a plausible small business so the arithmetic is easy to follow. Your job values, margins, rates and lead costs will be different. Plug in your own.

The inputs

Example builder (hypothetical)	Avg job value	Gross margin	Share of margin to win	Jobs needed from marketing / yr	Lead-to-signed rate	Cost per lead
Custom home builder	$600,000	15%	10%	4	5% (1 in 20)	$175
Remodeler	$65,000	30%	10%	20	10% (1 in 10)	$90
Pool builder	$85,000	25%	10%	30	12% (about 1 in 8)	$80
Barndominium builder	$300,000	18%	10%	8	4% (1 in 25)	$60
Metal building contractor	$180,000	15%	8%	12	5% (1 in 20)	$150

The results

Example builder (hypothetical)	Leads needed / yr	Leads / mo	Ad budget / mo	Cost per signed job	Affordable cost per signed job	Affordable as % of job	Verdict
Custom home builder	80	about 7	$1,167	$3,500	$9,000	1.5%	Room to grow (39% of the ceiling)
Remodeler	200	about 17	$1,500	$900	$1,950	3.0%	Room to grow (46%)
Pool builder	250	about 21	$1,667	$667	$2,125	2.5%	Room to grow (31%)
Barndominium builder	200	about 17	$1,000	$1,500	$5,400	1.8%	Room to grow (28%)
Metal building contractor	240	20	$3,000	$3,000	$2,160	1.2%	Over the line (139%). Fix before spending more

Ceiling on monthly ad spend if every job hit the affordable number exactly:

Example builder (hypothetical)	Max ad spend / yr	Max ad spend / mo
Custom home builder	$36,000	$3,000
Remodeler	$39,000	$3,250
Pool builder	$63,750	$5,312
Barndominium builder	$43,200	$3,600
Metal building contractor	$25,920	$2,160

What the table tells you

Custom homes: Few jobs, so the monthly budget is modest even though each lead costs more. The danger isn’t overspending. It’s underspending and then judging the ads after six weeks, when a custom home takes months to sign.

Remodelers: Lots of jobs, thinner dollars per job. Remodelers live or die on lead-to-signed rate. Going from 1 in 10 to 1 in 7 cuts cost per signed job from $900 to $630 with no change in ad spend.

Pool builders: Margin and job value give room to spend, and the season forces it. A pool builder’s budget is less about the yearly total and more about when it’s spent (see seasonality below).

Barndos: Cheap leads, low lead-to-signed rate. Many barndo leads don’t own land yet or haven’t talked to a lender. The fix is a form that asks about land and financing up front, so you spend your time on the 1 in 25 and not the other 24.

Metal buildings: In this example the math fails. $3,000 per signed job against a $2,160 ceiling. Spending more just loses more. The fixes, in order: raise lead-to-signed (answer faster, qualify harder, follow up on every bid), lower cost per lead (tighter keywords, better landing page), or accept a bigger share of margin if the jobs bring repeat work from the same owner. Only then add budget.

Fill-in worksheet: your marketing budget

Copy this into a notebook or spreadsheet. Fill in the blanks from your own records. Do one sheet per job type if your jobs vary a lot (kitchens vs additions, for example).

Line	What it is	How to get it	Your number
A	Jobs you want next year	Your goal, limited by crew capacity	_____
B	Jobs from referrals and repeat clients	Three-year average	_____
C	Jobs needed from marketing	A − B	_____
D	Total leads, last 12 months	Count every form, call and message	_____
E	Signed jobs from those leads	Count them	_____
F	Lead-to-signed rate	E ÷ D	_____
G	Leads needed per year	C ÷ F	_____
H	Cost per lead	Last 90 days of spend ÷ leads, or a test budget	$_____
I	Ad budget per year	G × H	$_____
J	Ad budget per month	I ÷ 12	$_____
K	Average job value	Last 10 jobs	$_____
L	Gross margin	From your books	_____%
M	Share of margin you’ll spend to win a job	Your decision. Try 10% to start	_____%
N	Affordable cost per signed job	K × L × M	$_____
O	Expected cost per signed job	H ÷ F	$_____
P	Ratio	O ÷ N	_____%
Q	Fixed marketing costs per month	Website, software, phone/text tools	$_____
R	Agency or freelancer fee per month	If you use one	$_____
S	Total monthly marketing budget	J + Q + R	$_____

Line P is the one that matters. Under 50%: you can grow. 50% to 100%: hold and improve. Over 100%: fix it before spending more.

Line A matters too. Don’t buy more jobs than your crews can build. A budget that brings 12 homes when you can build 7 makes you slow, and slow builders lose referrals.

Fixed costs vs variable costs: what goes in a marketing budget?

Builders mix these up, then cut the wrong thing in a slow month.

Cost	Fixed or variable	What it does	Cut it in a slow month?
Website hosting and domain	Fixed	Keeps your site up	No
Website build or rebuild	One-time	Turns visitors into leads	Spread it over 2 to 3 years in your math
Google Business Profile	Free	Calls and directions from Maps	Never stop updating it
Lead tracking or CRM software	Fixed	Keeps leads from falling through	No
Text and call tools (missed-call text back, call tracking)	Fixed	Answers leads fast	No
Google search ads	Variable	Clicks from people searching now	Adjust, don’t zero out
Local Services Ads	Variable	Pay per lead	Adjust weekly budget
Facebook and Instagram ads	Variable	Reach people before they search	Adjust
Lead sites	Variable	Per-lead fees, shared leads	Cut first if cost per signed job is high
Yard signs, truck wrap, print	Mostly one-time	Local name recognition	Rarely needs more spend
Referral thank-yous and partner lunches	Variable, small	Keeps referrals coming	Never cut
Agency or freelancer fee	Fixed monthly	Someone runs the work	Review quarterly

The rule: fixed costs are the pipe. Variable costs are the water. If you cut the pipe to save money, the water you do buy leaks out. A builder who cancels the missed-call text tool to save a small monthly fee, then misses a $400,000 inquiry on a Saturday, didn’t save anything.

When you calculate cost per signed job, include a share of the fixed costs. Say your fixed costs are $300 a month and you sign 4 homes a year from marketing. That’s $3,600 ÷ 4 = $900 per home on top of ad spend. Our custom home example goes from $3,500 to $4,400 per signed home. Still well under the $9,000 line.

Agency fee vs ad spend: what are you actually paying for?

Two separate things often get blended into one invoice. Ask for them separately.

Ad spend is the money that goes to Google, Meta or a lead site. It buys clicks, views or leads. You can’t get it back.

The agency or management fee pays someone to set up the ads, write them, pick keywords, block bad searches, build landing pages, track leads and report. It doesn’t buy a single click.

Agencies charge in a few common ways:

• Flat monthly fee. Same fee whatever the ad spend. Easy to budget.
• Percentage of ad spend. The fee rises as spend rises. Ask how they decide when to raise spend, since they earn more when it goes up.
• Per lead. You pay for each lead delivered. Ask how a “lead” is defined, and whether junk leads are refunded.
• Bundled plan. Website, ads, Google profile and follow-up together for one monthly price. Ask whether ad spend is included or billed on top.

Questions to ask any agency, including us:

1. Is ad spend included in your fee, or billed separately? Who owns the ad account?
2. If I leave, do I keep the website, the ad account and the lead data?
3. Do you report on cost per lead only, or on signed jobs too?
4. Who answers the leads?

For the math in this guide, only ad spend goes into line J. The fee goes into line R. Both count toward total cost per signed job.

What does ad spend actually buy?

Ad spend buys a chance to talk to a buyer. It doesn’t buy the job. What happens after the click decides whether that money turns into a contract.

Google search ads

You pay when someone clicks your ad after searching something like “custom home builder [county].” You set a daily budget. As of October 2026, Google says a campaign can spend up to twice its average daily budget on a single day, but over a month you won’t be charged more than 30.4 times the average daily budget (Google Ads help). So a $40 daily budget means up to about $1,216 in a month, not $1,200 flat and not $40 every single day.

What the click turns into depends on the page it lands on and how fast you answer. Read more in how to get construction leads.

Google Local Services Ads

You pay per lead, not per click. Leads Google judges invalid aren’t charged, and As of October 2026, Google reassesses charged leads for 30 days and automatically credits ones it judges invalid, duplicate or low quality; you can also report a poor lead in its feedback survey (Google help). More in are Google Local Services Ads worth it.

Facebook and Instagram ads

These reach people who aren’t searching yet. Good for showing finished projects and asking a few questions on a form. In the U.S., Meta requires advertisers running housing ads to declare a Special Ad Category and use approved targeting options (Meta ad standards). Some builder ads may fall into it. Check when you set up the campaign, as of October 2026.

Lead sites

You pay per lead, and the same request often goes to several pros. On Angi, there’s also a membership. The lead price is only the start. You’re competing with other pros on the same request, so your lead-to-signed rate on those leads may be lower than on leads that found you directly. Run the cost per signed job math on your own numbers before you judge. More in lead sites for contractors and is Angi worth it.

What ad spend can’t buy

• A fast reply. If your leads sit until tomorrow, you’re paying for clicks that go to the builder who called first. See speed to lead.
• A good landing page. Clicks to a slow page with no phone number are money spent on nothing.
• Reviews. Ads send people to look you up. If your Google profile has 4 reviews and your competitor has 60, your ads help them too.

“Ad spend buys the chance to talk. You still have to answer.”

How should you split the budget across channels?

It depends on how established you are. A builder with 15 years of referrals doesn’t need the same mix as a builder in year one.

These splits are our starting points for the variable budget (ads, lead sites, partner spend). They’re not industry benchmarks. Adjust after 90 days based on cost per signed job by channel.

Stage	Foundations first	Google search ads and LSA	Facebook and Instagram	Referral partners and past clients	Testing a new channel
New business (under 2 years, under 20 reviews)	Website, Google profile and review requests before any ads	60%	20%	10%	10%
Growing (2 to 5 years, steady referrals)	Fix the website if it doesn’t convert	45%	25%	20%	10%
Established (5+ years, most work from referrals)	Keep it current	30%	20%	40%	10%

Why the shift:

• New businesses need people who are already looking. Search ads and LSA catch them. Facebook helps people see your work, but cold audiences take longer to turn into jobs. Spend part of month one on getting reviews from every past client, even from jobs you did for someone else. Ask everyone, not just happy ones (Google doesn’t allow picking only happy customers to ask). See how to get more Google reviews.
• Established builders have their best leads in their own phone. A past-client text, a lunch with two land agents, and a thank-you note to the lender who sent the last family often beat another $1,000 in ads. Keep paid search on as a base so you’re never at zero.
• The 10% testing slice is how you find what’s next: a new keyword set, a new town, a Meta form with harder questions. Give a test 90 days or one full sales cycle, whichever is longer, then keep it or kill it.

Trade notes:

• Custom homes and barndos: Put more toward referral partners (land agents, construction lenders) than the table shows. They meet your buyer before you do.
• Remodelers: Search ads and your Google profile carry more weight. People search “kitchen remodel near me” when they’re ready.
• Pools: Facebook and Instagram matter more. People decide they want a pool from seeing one.
• Metal and commercial buildings: Ads matter less. Relationships with developers, brokers and commercial lenders matter more, plus following up on every bid.

When should you spend: seasonality and the lag

The most common budget mistake isn’t spending too much. It’s spending at the wrong time.

Here’s the pattern: the builder gets busy, stops the ads to save money, finishes the jobs, then turns ads back on when the schedule goes empty. But there’s a lag between the first click and the signed contract. By the time new leads sign, the slow stretch is already here.

How to time your spend

Spend start date = the month you need signed jobs − your sales cycle − one month to ramp up

Your sales cycle is the average time from first contact to signed contract. Check your last 10 jobs.

Hypothetical examples:

Example builder (hypothetical)	Sales cycle	Wants signed jobs by	Raise spend in
Remodeler with a slow February	6 weeks	Mid-January	Early November
Pool builder wanting spring digs	8 weeks	March	December
Custom home builder wanting spring starts	5 months	March	September or October of the year before
Barndo builder	4 months	April	November

For most builders, this means raising the budget 2 to 6 months before you feel slow. It feels backward because you’re busy. Do it anyway. Why you get slow in February covers the pattern in detail, and the slow season forecast shows when your own gap is coming.

A seasonal budget pattern (hypothetical)

Say a remodeler’s yearly ad budget is $18,000. Spread flat, that’s $1,500 a month. Spread by season:

Months	Monthly spend	Why
January to March	$1,800	Fill spring and summer, people plan after the holidays
April to June	$1,500	Steady
July to August	$1,100	Schedule is full, keep a base running
September to December	$1,550	Fill the winter gap and early next year

Total: (3 × $1,800) + (3 × $1,500) + (2 × $1,100) + (4 × $1,550) = $5,400 + $4,500 + $2,200 + $6,200 = $18,300. Close enough to plan, and you trim one month to land on $18,000.

Notice the spend never drops to zero. Restarting from zero means weeks of re-checking keywords, pages and tracking while the slow season gets closer.

When should you raise or cut your marketing budget?

Here’s a decision rule we use. It’s simple on purpose.

Compare your actual cost per signed job (line O) with your affordable cost per signed job (line N).

Your ratio (O ÷ N)	What to do
Under 50%	Raise spend about 20% a month, if you have crew capacity and you’re answering leads within the hour. Watch the ratio as you go. It often rises as you spend more, because the best searches and buyers get used up first.
50% to 100%	Hold the budget. Work on lead-to-signed rate: faster replies, better qualifying, follow-up on every proposal.
Over 100% for one full sales cycle	Don’t add money. Find the leak: bad searches, a slow page, slow replies, wrong buyers. Cut the worst channel first.
Over 100% for two full sales cycles	Cut that channel or rebuild it from scratch.

Don’t judge too early

You need enough leads to read the numbers. A rough rule we use: wait for at least 20 leads from a channel, or one full sales cycle, before you decide. For a custom home builder getting 7 leads a month, that’s 3 months of leads plus the months it takes those leads to sign.

Use an early signal for slow-signing work

Custom home builders can’t wait 9 months to learn whether ads work. Use cost per site meeting as an early read.

Affordable cost per site meeting = affordable cost per signed job × share of site meetings that sign

Say your affordable cost per home is $9,000 and 1 in 4 site meetings becomes a contract. You can afford $9,000 × 0.25 = $2,250 per site meeting. If ads are producing site meetings for $900 each, you’re in good shape months before the first contract signs.

Raise when

• The ratio is under 50% and your calendar has room.
• You’re entering the window before your slow season.
• A competitor just retired or closed and searches in your area are up.
• You hired a crew and need to keep them busy.

Cut or pause when

• You’re booked past your sales cycle and still adding leads you can’t answer fast. Unanswered leads are wasted spend.
• The ratio is over 100% and you haven’t found why.
• You’re about to change your website or phone setup. Fix the pipe, then turn the water back up.

Even when you cut, keep a base running on your best search terms. Zero is hard to restart from.

How much should a new contractor spend on marketing?

New businesses don’t have the data to run the full formula. Do this instead:

1. Fix the foundations first. A website with a page per service and a short qualifying form, a complete Google Business Profile, and reviews from every past client you can reach. Check your site with the website score.
2. Set a 90-day test budget. Pick an amount you can lose without hurting payroll, enough to get at least 20 leads at a plausible cost per lead in your area. Run search ads on your one best service in your one best town.
3. Track every lead. Name, source, whether they were qualified, whether you met, whether they signed.
4. After 90 days, fill in the worksheet with real numbers and decide.

Your first 90 days of ads are partly tuition. You’re buying the numbers you need to budget properly.

Common marketing budget mistakes

• Copying a percentage from the internet. Fix: use your own job value, margin and close rate.
• Judging by cost per lead. Fix: judge by cost per signed job.
• Budgeting for all your jobs. Fix: subtract the jobs referrals already bring.
• Turning ads off when busy. Fix: drop to a base, never to zero, and raise spend before the slow season.
• Judging a channel in 3 weeks. Fix: wait for 20 leads or one full sales cycle.
• Mixing fees and ad spend. Fix: get them on separate lines. Know what buys clicks and what buys labor.
• Spending more when the math says stop. Fix: if cost per signed job is over your ceiling, fix lead handling first. More money into a leaky process just leaks faster.
• Not counting fixed costs. Fix: add a share of website and software costs to cost per signed job.
• Not knowing your real margin. Fix: get the gross margin on your last 10 jobs from your books before you set the ceiling.

Frequently asked

How much should a contractor spend on marketing?

There’s no single right number. Work backward: the jobs you need from marketing, divided by the share of leads that sign, times your cost per lead. Then check that the cost per signed job stays under what a job can afford: job value × gross margin × the share of margin you’ll spend to win it.

What percentage of revenue should a construction company spend on marketing?

Whatever your own math says. If you budget the way this guide shows, you can convert the result into a percentage of job value. In our hypothetical examples it ranged from 1.2% to 3% of job value at the affordable ceiling, but your margins and close rates will give you a different number.

What’s a good marketing budget for a home builder?

Start with the homes you need from marketing after referrals, not your total homes. A builder who needs 4 homes from marketing and signs 1 in 20 leads needs about 80 leads a year. Multiply by your local cost per lead to get the budget, then check it against the affordable cost per signed home.

Should I include my website in my marketing budget?

Yes, but as a fixed cost, separate from ad spend. Spread a website build over 2 to 3 years in your math. Include its monthly cost when you calculate cost per signed job.

Is an agency fee part of the marketing budget?

Yes. Keep it on its own line, separate from ad spend. Ask any agency whether ad spend is included in their fee or billed on top, and who owns the ad account.

How long before I know if my marketing budget is working?

Wait for at least 20 leads from a channel or one full sales cycle, whichever is longer. For slow-signing work like custom homes, watch cost per site meeting as an early signal.

Should I spend more on marketing in the slow season?

Spend more before the slow season. Leads take weeks or months to sign, so raise spend one sales cycle plus a month ahead of when you need signed jobs.

How much should a remodeling contractor spend on marketing?

Use the same chain. In our hypothetical remodeler example, 20 jobs from marketing at a 1 in 10 lead-to-signed rate and $90 leads came to about $1,500 a month in ads. Your numbers will differ, so run your own with the ad budget calculator.

Want the budget, the ads and the follow-up handled for you, tracked to signed jobs? That’s what Get Fully Booked does.