How much should contractors actually spend on marketing?

“5 to 10% of revenue.”

That’s the answer everyone gives. Your CPA. The agency pitching you. The guy in your peer group who heard it from his agency. It’s the contractor marketing version of “drink eight glasses of water a day.” It sounds reasonable. Nobody knows where it came from. And it doesn’t actually answer the question you’re asking.

The right answer isn’t a percentage. It’s an allocation.

Build the allocation correctly and your budget could land somewhere between 5% and 23% of revenue (not advocating for this, just see the example) depending on what you’re trying to achieve in a year’s time. The percentage is a result, not a target, and largely can check growth appetite with reality of marketing performance likely at each stage of business age.

This article walks through three real case studies using the Moneyball Marketing™ Model, the same framework Free Agency applies across $38M+ in managed spend. Three businesses. Same framework. Final budget percentages of 10%, 5%, and 23%. All three are honest answers. Only one of them is profitable in year one.

Free template, no email required: Open the Google Doc. Or read on for the math.

First, a note on your data

Every number below assumes clean, segmented data. If your reports blend things, you’re likely looking at inflated ROAS that will be a harsh reality when the numbers don’t hold for scale. More on brand vs non-brand obfuscation in this article.

You need to know:

• New customers vs. existing customers, by revenue and by lead source.
• Brand search vs. non-brand search. Different intent, different ROAS, different role in the budget.
• Prospecting channels vs. database channels. Different math entirely.

If your ServiceTitan campaign and category structure isn’t built to split these out, you’re flying blind. Blended ROAS is the contractor marketing version of batting average. It looks authoritative. It hides everything that matters. A 7.6x blended ROAS could be a 100x SEO campaign carrying a 3x Paid Search campaign that’s actually losing you money.

If your account was migrated to ServiceTitan recently and doesn’t have customer-created dates to identify new vs existing, ask your CSM to add them. If your agency hasn’t split brand from non-brand or prospecting from database, ask them to and if they have a 3rd party DNI they should be able to fix campaigns in the API retroactively. If they push back, that’s also data.

You won’t get perfect retroactive segmentation. You’ll get clean-enough going forward. That’s the goal.

The Moneyball Marketing™ allocation

Here’s the framework. Four zones. Each does a different job.

Fans is brand visibility. TV, radio, OOH, sponsorships, print, branded collateral. Directly attributed ROAS is near-zero and that’s correct. Real ROI shows up downstream as branded search lift in Loading Bases. You’re filling the stadium so the rest of the team has somebody to play in front of.

Fielding is new customer acquisition. Paid search (non-brand), paid social, paid listings (LSA, Yelp, Angi, eLocal), direct mail prospecting. The only zone where if you spend more, you get more leads. This is where the game is played, and it’s where most of your budget goes.

Bases is conversion capture. SEO, GBP, website, brand search, remarketing. High-intent traffic that’s already in motion toward you. You don’t buy these runners. You earn them through years of investment. The directly attributed ROAS looks unreal (often 75x to 100x) because the cost is small relative to the revenue it captures.

Home Runs is database monetization. Email, SMS, database mail, referrals, outbound to existing customers. Every customer in your database is already paid for. Cost to monetize them again is near-zero. Most contractors leave $1M+ a year sitting in their database because they’re afraid to “annoy” customers.

Underneath all four zones is the Dugout: ServiceTitan, MarketingPro for call tracking, Hatch for engagement, a real game plan with monthly KPI targets, and a roster of partners that can actually execute. If the Dugout is broken, none of the four zones work. Fix that first or none of the rest matters.

That’s the framework. Now the cases.

Case 1: $16M pushing to $20M

Ten years in. $16M last year, $5M of that from existing customers who don’t need marketing to come back. Want to grow to $20M, which means roughly $15M in new customer revenue plus what they retain from the existing base.

They’ve been investing in SEO and website for years. Their database is real. The math works in their favor.

Zone allocation: Fans 14.4% / Fielding 80.0% / Bases 3.7% / Home Runs 1.9%

The $5M from SEO didn’t show up because they wrote a check this year. It showed up because they wrote checks every year for the last six. Compounding does the heavy lifting. The Fielding budget gets the new leads. The Bases zone catches demand the Fans budget creates. The Home Runs zone brings back customers the Fielding budget already paid to acquire.

This is the most common Free Agency client. Mature operator, real database, real SEO foundation, real ambition. Most fractional CMO engagements look something like this allocation. The 10% of revenue isn’t aggressive. It’s the cost of compounding done right.

Case 2: $44M compounding to $50M

Fifty years in. $44M in revenue, $20M of that already locked in from existing customers. Want $50M, which means $30M in new customer revenue plus what comes back from the base. The base keeps producing whether they show up this quarter or not.

When you’ve spent five decades building the database, the math is on your side.

Zone allocation: Fans 22.5% / Fielding 69.5% / Bases 5.1% / Home Runs 2.9%

Notice what’s different from Case 1. The Fans allocation more than doubles, from 14% to 22.5%. The Fielding allocation drops from 80% to 70%. Why? Because at this scale, the cheapest new customer the business can buy is one who already knows the name. TV that returns 2x and radio that returns 1.5x looks weak in isolation. It looks correct when you see what it does to brand search ROAS the next quarter.

Bases and Home Runs ROAS clear 75x because the database is enormous, the SEO foundation is two decades deep, and the brand has been compounding even longer. Every TV spot, radio buy, and sponsorship that looked weak on its own attribution report fed into the brand recognition that now lifts every Bases channel. SEO compounded the search visibility. Brand compounded the trust. They’re not separate systems. Same playbook as Case 1, run on a bigger field.

This is the profile of a business with longevity. Five decades of operating gives them something most contractors don’t have: enough trust in the market to put more than a fifth of their budget into brand and watch it pay off through every other zone. The 5.2% of revenue isn’t efficiency. It’s the dividend on decades of investment most operators won’t ever match. Don’t look at this percentage and aim for it. Earn it.

Case 3: $0 to $5M

No prior year revenue. No existing customers. No SEO compounding. No database. Just ambition and a checkbook.

This is the hard one.

Zone allocation: Fans 2.6% / Fielding 93.0% / Bases 3.5% / Home Runs 0.9%

A few things look different and they all matter.

TV and radio are zero. Not because Fans don’t matter for a startup. Because at this revenue level you can’t afford to buy awareness that takes 12 months to monetize. Every brand-new business runs Fans-light because the math doesn’t work yet.

Fielding is 93% of the budget. That’s not strategic. It’s structural. When nothing else exists yet, Fielding is the only zone with high attribution and high performance, and there’s almost no room for risk while pushing for those kinds of numbers. Every dollar has to go where the return is measurable in 30 days. SEO will be there in two years. The database will be there in three. The customers you book in month four come from LSA, Paid Search, and direct mail, full stop.

Bases ROAS is 10x, not 100x. SEO that compounded for a decade in Case 1 is generating $5M on $50K. SEO that’s six months old in Case 3 is generating $300K on $30K. The framework is the same. The output isn’t, because compounding hasn’t happened yet.

We’re sharing this allocation because we’re seeing more of it. There’s a culture of rapid scale and extreme ambition in the trades right now, founders who’ll spend whatever it takes in year one to get to year three faster. We respect the bet. We also have to be honest about what it costs.

23% of revenue is not a profitable budget. It’s an investment in the assumption that years two and three will start to look like Case 1, when SEO compounds, the database produces, and brand search lifts conversion across every channel. If the founder has the capital and the conviction to bridge to that, the math eventually works. If they don’t, this is the budget that closes the company in year two.

What it teaches you, even if you’re not in this position: rapid scale without brand, longevity, or a database is the most expensive way to grow. Every marketing dollar has to do all of the work, because none of the other zones are pulling their weight yet. That’s the cost of starting from zero.

So how do you actually calculate this?

Three things determine your allocation:

1. Your goal. Not your gross revenue. Your new customer revenue gap between this year and last.
2. Your foundation. What do Bases and Home Runs already produce with the spend you’ve already made? If your SEO compounds at 50x, your % of revenue can be lower. If you don’t have one yet, your % has to be higher.
3. Your aggression. How much are you willing to spend to compress the timeline on growth?

Build the allocation. Run the channel ROAS. The percentage falls out at the bottom.

The free template walks you through the whole thing, and it’s an open Google Doc. No email gate, no form, no “we’ll send it to you” runaround. Open the template, make a copy, pull a customer report from ServiceTitan, segment new vs. existing, assign each campaign to one of the four zones, and the math fills itself in. Instructions tab in the file. If something doesn’t make sense, the email’s in step 15.

The bottom line

Three businesses. Same framework. 5%, 10%, and 23% of revenue. All three honest answers to the question, only one of them is comfortable.

If you’re spending 10% of revenue and stuck flat, the problem isn’t necessarily that 10% is the wrong number. The problem is that agencies often assign this number arbitrarily without actually reverse engineering how to hit your goal and where to spend to achieve it. If you’re spending 4% of revenue and growing 50%, you’re not necessarily underspending, if you’re not plateauing, ride that baby til the wheels fall off, or spend more to grow faster if there is more market share to be had.  If you’re spending 23% of revenue, you’re sacrificing profit for rapid growth and that is not for the faint of heart. Just know exactly what year three has to look like to make it worth it.

The 5 to 10% rule survived this long because it’s safe and an almost impossible range to disprove. The Moneyball Marketing™ Model survives because it produces a proven framework that comes with it’s own segmentation & scoreboard. We hope to make it the standard for trades marketing measurement & planning, so contractors stop throwing good money after bad… The only people that benefits are agencies.

So run your numbers. We made the template free. If you want a coach instead of a calculator, you know where to find us.

Bri Ski

 bri@freeagency.ai