How Much to Spend on Marketing in a Product Business

There is no percentage. Every guide you will read says five to ten percent of revenue, and that number was built for businesses whose biggest cost is people. Yours is stock. The money everyone assumes you have sitting there for marketing is already in a box in your garage, or on a boat.

How much should you spend on marketing in a product business?

Work from your gross margin, not your revenue. A sensible starting point is 10 to 20 percent of the gross margin on each unit you sell. On a product that retails for $120 and lands at $38, that is roughly $8 to $16 of marketing money per unit sold. Before you have any sales there is no percentage to work from, so pick a fixed dollar amount you have decided you can afford to lose, and do not move it. For most founders launching one product that first number sits somewhere between $500 and $3,000 in total, not a monthly retainer.

Why the five to ten percent of revenue rule does not work for product businesses

The rule is real enough. The Gartner 2025 CMO Spend Survey put marketing budgets at 7.7 percent of company revenue, flat on the year before. The CMO Survey puts it closer to 9. Those are large companies, and most of them sell software or services, where a dollar of revenue is very close to a dollar of margin.

A $120 sale in a product business is not $120. Take out the landed cost, the card fees and the postage and you might keep $70. Spend 8 percent of revenue and you have spent $9.60 out of that $70, which still sounds fine. The problem is what else is happening in the same month. You also have to pay for the next production run, usually long before you sell any of it.

Marketing money and reorder money come out of the same account, and only one of them has a deadline. That is the real constraint, not the percentage, which is why managing cash flow and setting a marketing budget are the same job.

Start with your gross margin, not your revenue

You cannot set a budget until you know what you keep on a sale. Not your markup. What is left in your account after everything has come out.

That starts with landed cost, and plenty of founders have never worked theirs out line by line. If you have not, do that first over on Source Haus, because every number below sits on top of it.

• Retail price, say $120
• Landed cost per unit, say $38, covering the unit, the freight, the duty and the packaging
• Payment fees, roughly 2 to 3 percent, call it $3
• Shipping to the customer, say $9 if you are not charging for it
• What you actually keep, about $70

Ten to twenty percent of $70 is $7 to $14. Sell 200 units in a quarter and your marketing budget is $1,400 to $2,800. That is a real number built out of your own product, and it moves when your volume moves instead of when you feel optimistic.

If that margin looks thin once you write it out, your budget is not the problem. Your pricing is. A product priced off a factory quote rather than a landed cost leaves nothing to market it with, and no amount of clever spending fixes that.

What I actually spent at Incy, and what it bought

In the first year at Incy Interiors I spent money on two things. Photography, and a stand at a trade show. Both worked, and they worked for the same reason. Each one produced something I was still using long after I paid for it.

The photos went on the website, into every email, into press pitches and onto stockist order forms for years. The trade show put the beds in front of buyers who could place an order that afternoon. Neither was clever. Both were assets rather than activity.

Then I got it wrong. A couple of years in I put an agency on a monthly retainer to run social, because the business was growing and that felt like the responsible next step. I could not have told you what a customer cost me. I paid that retainer for most of a year and I still cannot tell you what it returned, because we never built a way to know. I was buying activity and calling it marketing.

The catalogue was worse. We printed thousands of them, beautifully, and most of them sat on a pallet in the warehouse. I had made a decision about how a brand our size was supposed to look, instead of a decision about what would sell a cot.

The pattern in both is the same. I spent the money before I had a number to judge the money by.

What can you afford to lose?

Answer this before you set any budget. Not what you should spend. What you could lose without anything else in the business changing.

Write down the amount you could spend over the next three months and still pay your reorder, your rent and yourself. That is your budget. It is allowed to be $600. A $600 budget spent on one thing and measured properly will teach you more than $6,000 spread across five channels you cannot track.

Free product belongs in that number and most founders leave it out. A gifted unit costs you landed cost plus postage, which is real money leaving the business. Here is what gifting actually costs before you put it in the budget.

Where should the first $1,000 go?

In this order, and not all at once.

1. 1Photography. Not a full production. Enough images to make the product look worth the price, because everything else you spend money on sends people to those photos
2. 2Email capture on your site, and something worth giving an address for. This is the only audience you will ever own
3. 3One paid test. Small, one product, one audience. Two hundred dollars is enough to find out whether anyone clicks
4. 4Nothing. Hold the rest. You will want it the week something starts working

The first one is cheaper than people assume and you can do a surprising amount of it yourself. Here is how to shoot product photos that sell, without hiring anyone.

Before you spend anything on reach, be honest about whether you have asked the people you already know. Almost every first sale I have watched a founder make came out of a conversation rather than an ad, which is the whole argument in finding your first 100 customers.

How do you know if your marketing spend is working?

One number. What an order costs you to get, against what you keep on an order.

Spend $400 in a month and get six orders and that is $67 an order. If you keep $70 on a sale you have roughly broken even and learned something real. Get two orders and that is $200 an order, and you stop. The number is blunt and it is usually uncomfortable, which is exactly why most founders never work it out.

• Run one channel at a time, so you can tell what caused what
• Count every order in the period, not only the ones with a tracked click
• Compare cost per order to gross margin per order, never to retail price
• Give it enough spend to mean something. Four orders is not data, but it is a warning
• Write the number down every month, in the same place

Should you pay someone to do your marketing?

Not until you know what an order costs you. An agency or a freelancer cannot discover that number for you, and very few will volunteer that they have not. Without it you have no way to tell good work from expensive work.

When you do hire, buy a specific job with a finish line. A shoot. A set of email flows built once. A landing page. Each of those leaves you with something you can point at. A monthly retainer for general marketing is the thing I would warn almost every early founder off, and I say that as the person who paid one for most of a year.

When should you spend more?

• When cost per order sits under your gross margin per order for two or three months running, not for one good week
• When you have the stock to sell. Spending into a product that is about to go out of stock is money set on fire
• When the same channel does it twice. Once is luck
• When you can pay for the increase out of margin already earned, rather than out of the reorder money

What I do now

Smaller, slower, and written down.

1. 1Set the number once a quarter, as a dollar figure, built from the margin last quarter actually produced
2. 2Spend it on one thing at a time
3. 3Hold back about a quarter of it for whatever starts working
4. 4Put the money into things that keep working. Photos, email, content. Not reach you rent by the month
5. 5Keep a one page record of what went out and what came back, and read it before setting the next number

Marketing in a product business is not a percentage of anything. It is what is left once your stock is paid for, spent on one thing, measured honestly. That sounds small. It is how most of the brands you admire started.