What should a contractor actually spend on marketing?

Every contractor asks this, and the internet answers with a confident number somebody made up. So here is the honest version, with sources you can check, and a way to land on your own number instead of someone else's.

The percentage, and where it comes from

Contractor marketing agencies broadly converge on a range of 5 to 12 percent of revenue, moving with your growth stage and margin. As an outside gut-check, the 2025 Deloitte and Duke CMO Survey found companies across all industries spent an average of 9.4 percent of revenue on marketing, up from 7.7 percent the year before. That is not construction-specific, but it tells you the general range is real and not conservative.

One myth worth killing: you will see "the SBA recommends 7 to 8 percent" everywhere. It is not on the SBA's site. The SBA's actual post cites average ad spend near 1 percent of revenue overall, with business-to-business firms around 6 to 7 percent and business-to-consumer firms around 10 to 12 percent. The 7 to 8 percent figure is industry commentary, not an SBA rule, so treat it that way.

Why your right number moves

Three things push it up or down:

• Growth stage. Newer or hungry-for-growth? You buy awareness, so you spend at the high end, 10 to 15 percent in a competitive market. Established and steady? 5 to 8 percent holds you.
• Referral strength. A contractor with years of happy customers feeding word-of-mouth can run as low as 3 to 5 percent, because the cheapest lead you will ever get is one referred by a past customer.
• Margin. Never spend into a loss. The percentage is a guide, not a dare. If your net margin is thin, the number lives at the bottom of the range until the work pays for itself.

Spend the first dollar on what you own

Before you buy a single lead, own your foundation: your website, your Google Business Profile, your reviews, and the system that turns past customers into referrals. This is not a preference, it is where the leads actually come from. In Jobber's 2026 Home Service Trends Report, a survey of 1,050 home-service business owners, 59 percent said referrals and repeat work are their single biggest source of leads, ahead of every paid channel. The report also found the businesses that stay consistently booked use three to five lead sources, not one or two.

Reviews are part of that owned foundation. BrightLocal's 2025 consumer survey found 96 percent of people are willing to leave a review but only 29 percent actually did in the past year, and 73 percent check more than one review site before choosing. Translation: the reviews are there for the asking, and homeowners are absolutely reading them.

What paid leads actually cost

When you do go paid, know the prices going in. On standard Google Search Ads, LocaliQ's 2025 home-services benchmarks put General Construction and Contractors at about $165.67 per lead and Roofing at $228.15 per lead, with cost per lead up roughly 10.5 percent year over year. Those are real, large-sample numbers, and they are not cheap.

Google's Local Services Ads (the pay-per-lead ads with the "Google Verified" badge) tend to run cheaper. A February 2026 analysis of 6.72 million dollars in Local Services Ads spend across 888 contractors found a blended cost per lead of about $53, from roughly $39 for electrical to $57 to $59 for plumbing and drain work, at about a 44 percent booking rate. That is roughly half the cost of a blended standard Google Ads lead. One note: Google is sunsetting the consumer money-back guarantee tied to that badge (final reimbursement requests were due December 7, 2025), though the verification badge itself continues.

Shared-lead marketplaces like Angi and Thumbtack sit at the expensive, low-control end, because the same lead is often sold to several contractors at once. That is a whole topic on its own (see the Angi and Thumbtack guide), but the short version: exclusive leads you own beat shared leads you rent.

Stop measuring cost per lead. Measure cost per booked job.

This is the mistake that wrecks contractor budgets. A channel that spits out $50 leads looks great until you notice they never close, while a channel with $150 leads that book at 40 percent quietly makes you the most money. The math that matters is your cost per lead divided by your close rate, compared against what an average job is actually worth to you. Cheap leads that do not convert are the most expensive leads you can buy.

A simple way to set your number this year

• Take your revenue and pick a starting percentage from the ranges above based on your growth stage and referral strength.
• Put the majority into owned channels first: site, Google Business Profile, reviews, referral system.
• Use paid (Local Services Ads first, then search) to fill the gaps, and track each channel by cost per booked job, not cost per lead.
• Review it every quarter against real numbers and shift the money toward whatever is actually booking work.

That is the whole game: a defensible percentage, spent owned-first, measured by booked jobs. If you would rather someone just build and run the owned foundation for you, that is what Craftvane does.