How Much Should A Contractor Spend On Marketing?
The usual answer is a percentage of revenue, which is nearly useless on its own. Here's how to work out your number from your own job values — and why spending more is usually the wrong first move.
Ask what a contractor should spend on marketing and you'll be told 5–10% of revenue. It's a real benchmark and it's close to useless in isolation, because it says nothing about whether the money you're already spending is working.
Here's a more practical way to think about it.
Start from what a customer is worth
Two numbers, both of which you can get from your own books:
- 01Average job value, or better, average customer lifetime value if your work recurs or repeats.
- 02Your gross margin on that work.
A plumber at $450 a job with 50% margin makes $225 gross per customer. If acquiring one costs $75, that's a 3:1 return and worth scaling. If it costs $200, you're working for nothing.
A roofer at $9,000 with 30% margin makes $2,700. They can afford to spend several hundred dollars acquiring a customer and still be comfortably ahead — which is why high-ticket trades can outbid everyone else on the same clicks.
Use lifetime value where it applies
For cleaning, pest control, pool service and lawn maintenance, a customer isn't one job. A $150 fortnightly cleaning client retained two years is worth around $7,800. Budgeting against $150 will keep you tiny; budgeting against $7,800 changes what you can afford to do.
Fix conversion before you buy more traffic
This is the part most advice skips, and it's the part that matters most for contractors.
If you're missing a quarter of your calls, replying to form submissions eleven hours later and never following up quotes, then buying more leads means paying to lose more leads. The percentage of revenue you spend is irrelevant if the bucket has a hole in it.
In rough order of cost-effectiveness:
- 01Stop missing calls. Missed call text back is cheap, fast to deploy, and recovers leads you already paid for. See what a missed call actually costs.
- 02Respond instantly to every enquiry. Free once automated, and it directly changes your win rate — the research on response time is unambiguous.
- 03Follow up on quotes. The leads are already qualified and already priced.
- 04Ask every customer for a review. Improves both conversion and ranking, costs nothing.
- 05Message your existing customer list. Zero acquisition cost — see turning past customers into repeat work.
- 06Then, and only then, buy more traffic.
Every item above the last one makes the last one work better. Doing them in the wrong order is the most expensive mistake in contractor marketing.
Where contractors actually spend
Google Local Services Ads
Pay per lead rather than per click, and appear above everything else. Usually the strongest paid channel for home services, provided you answer the phone — the scoring penalises unresponsive businesses.
Google Search Ads
Effective for high-intent terms and expensive in competitive trades. Only worth running once your response and follow-up systems are solid.
Local SEO and the website
Slower than ads, and the only channel that compounds. A contractor ranking in the map pack gets calls without paying per click, indefinitely. The correct time to start was two years ago; the second best time is before your busy season — see the local SEO playbook.
Lead marketplaces
Angi, Thumbtack and similar sell the same lead to several contractors, which means you're in a race to respond and a race to the bottom on price. Some contractors make them work; most find margins get squeezed and the customer relationship never becomes theirs.
Vans, signage and word of mouth
Cheap, underrated, and entirely dependent on people being able to find and contact you afterwards — which brings it back to the website and the phone.
A sensible starting point
For a contractor doing $500K a year, 5–10% is $25K–$50K annually, or roughly $2,000–$4,000 a month. A reasonable split:
- A fixed system cost — website, automations, reviews, SEO — that works whether or not you spend on ads.
- A variable ad budget on top, scaled up or down with your diary and your season.
The system layer is the part that makes the variable layer profitable. That's the argument for a flat monthly fee covering the whole system at $297: it's a small, predictable share of most contractors' marketing budget, and it improves the return on everything else in it.
What to measure
- Cost per lead, by channel.
- Lead-to-job close rate.
- Cost per acquired customer versus gross profit per customer.
- Percentage of leads that receive no response at all — usually the most alarming number on the list.
If you can't answer the last one, start there before changing your budget at all.