It's true that marketing feels expensive. Sometimes it is. But the bigger problem is that most firms don't adequately budget for it — which is why it always feels like a large, unexpected expense instead of a necessary line item, like the cost of production.
The other problem: most firm owners don't know where to start. You know you need to do marketing (or you're the worst accountant of all time), but the work of figuring out a budget often feels insurmountable. As the saying goes, the cobbler's children go shoeless.
Well, it's time to get your marketing budget done. Here's a step-by-step walkthrough to get you from point A (no clue) to point B (a workable budget for your accounting firm).
TL;DR: The easiest way to set your budget is to look at the total percentage of revenue going into marketing and sales. It needs to be at least 5% for your firm to see meaningful growth.
How to determine your revenue goal for your marketing budget
If there's one thing you take from this section, let it be this: if you want your firm to grow, you should be allocating at least 4–5% of revenue to sales and marketing.
This number also changes depending on the size of your firm:
- Small firms: aim for 5%
- Larger firms: 8–10%, because the more clients you have, the more you'll lose to attrition
- Aggressive growth goals: up to 15% — with the right plan, this can dramatically shorten your ramp-up time
2–3% is the baseline for marketing specifically
There can be a fuzzy line between sales and marketing. If you have a rockstar sales team, great — but in most cases, your marketing budget should be 2–3% of revenue. That includes everything: in-house salaries, agency fees, ad spend, tech platforms, and contract employees.
If you're spending less than that, you're behind the peers who are successfully growing their firms.
How your budget connects to your sales goals
Most firm owners drastically underestimate how much it costs to bring in new business. One of the biggest reasons: as the quality of the client you want goes up, so does the cost of getting them.
Start with lifetime value
To understand that cost accurately, you need to know what a client is worth. Three numbers get you there:
- A client's average monthly fee
- Any year-end fees
- Average client lifetime (in years)
Multiply those together and you have the lifetime value of a client.
How much should a new client acquisition cost?
Take a client's monthly fee and multiply it by 4–6. That's your target cost of acquisition (COA). This is the range you want to aim for.
Running the math
Let's say you had 60 clients last year and you want to net 24 new clients this year. Factor in 15% attrition (losing ~9 clients), and you actually need to add 33 clients to net 24.
If a $6,000 marketing budget brought you 20 clients last year, you can reasonably expect the same this year — but that still leaves you 13 clients short. How do you budget for those?
Two ways to calculate it:
- 7% of lifetime value as a reasonable COA — approximately $7,000 per client
- 4 months of fees as a simpler COA target — approximately $4,800 per client
So to bring in 13 net new clients, your budget would be somewhere between:
- 13 × $4,800 = $62,400
- 13 × $7,000 = $91,000
The real answer is probably somewhere in between. And the pickier you are about client quality, the higher the COA goes — so aim high, budget high, and treat anything under that target as profit.
What this means for most accounting firms
Most accounting firms have no idea what to think about when it comes to marketing costs. These numbers probably sound high — and they are — but they're also realistic and reasonable when you factor in that a good client will pay out many times their acquisition cost over the lifetime of the relationship.
The easiest sanity check: is at least 5% of your revenue going into sales and marketing? If not, meaningful growth is going to feel like an uphill battle.
Want help building a more precise plan? That's exactly what we do for accounting firms. Give us a call.