30Oct
By: Kristi Hines October 30, 2017

Are you thinking about your marketing budget for the new year? Whether it’s your first time creating a marketing budget or if you’re looking for some advice on typical marketing expenses and how to determine which ones you should keep, increase, or trim, we’re here to help. In this post, we’re going to teach you how to come up with a solid marketing budget that helps you map out your marketing plan and make sure that your marketing expenses generate results.

Marketing Costs for New Businesses and Retail

marketing expenses

Marketing costs can vary greatly based on the type of business you have. The U.S. Small Business Administration (SBA) offers the following suggestions and statistics for startups and retailers on how much of your actual or projected gross revenue to allocate for marketing.

  • Small businesses with less than five million dollars in annual revenue should budget seven to eight percent for marketing expenses.
  • Startups across most industries usually utilize three to five percent for startup-specific marketing.
  • Retailers establishing their brand spend up to 20% of their sales revenue towards marketing costs.

To achieve success in marketing, the SBA recommends that businesses allocate a specific budget for marketing as opposed to just using whatever is left of your budget after other business expenses have been paid. They also recommend that you focus on creating a solid marketing strategy that includes analytics to determine what marketing strategies generate the best return on investment (ROI) so that your marketing spend is utilized efficiently.

Common Marketing Expenses

marketing expenses

Now, let’s do a detailed breakdown with the most common marketing costs that are typically included a marketing budget for everyone, from small businesses to established businesses.

Brand Development

If you have a startup or new business, your first marketing expenses will be related to the establishment of your business brand.

  • Domain – You can start your domain name search on Shopify. Your address on the web (yourbusiness.com) will typically start at $14 per year, depending on the extension you choose. Available .com’s, for example, are $14 per year whereas specialty extensions (yourbusiness.camera, yourbusiness.glass, yourbusiness.kitchen, yourbusiness.shoes, etc.) are up to $46 per year. Note that if your domain is not available and you choose to purchase an already established domain, you could initially pay hundreds or even thousands of dollars to gain ownership of the domain.
  • Website – If you’ve chosen Shopify as your website’s platform and ecommerce service provider, you can expect to pay $9 – $299 per month based on the features you want for your website.
  • Logo Design – The first thing most startups need is a logo, since it will be included on almost all offline and online marketing assets. Fortunately, designing your own logo doesn’t have to cost a fortune. Shopify offers ecommerce merchants a free logo generator where they can design their own logo easily. You can choose fonts, icons and positions to customize your logo the way you want.

Search Engine Optimization

Search engine optimization (SEO) is an on-going process and one that’s vital for any business looking to reach customers in organic (unpaid) search on Google, Bing, and other search engines. Search engine optimization can be boiled down to three main tactics: on-site optimization, off-site optimization, and monitoring.

On-site optimization ensures that every page on your website is optimized to rank for a specific keyword. Off-site optimization ensures that search engines (and customers) can discover links to your website from other high-quality, relevant websites. Monitoring ensures that your website continues to either maintain or gain visibility in search engines without any issues (missing pages, search engine penalties, etc.).

lowering marketing expenses

The key to any good search engine optimization effort is to approach it with quality in mind. To do that, many small businesses will outsource the work to an SEO professional. The cost of SEO services varies. You can use Shopify’s search engine listing preview on the bottom of each product page to fill out an optimized title and meta description. You can also install SEO apps on your Shopify store. This will reduce your SEO costs as you won’t need to hire an expensive consultant. Best part: many of the tools drastically simplify the SEO process making it easy for a beginner to do.

Social Media Marketing

One of the nice parts about social media marketing is that the entry cost for promoting your business on social media is free unless you run ads. Your time commitment will be the biggest investment you make. You’ll need to do marketing activities like creating your social profiles, updating each with new content, building your audience, and engaging with them on a regular basis.

marketing expenses

With that said, the time investment can be substantial since most businesses will want to create maintain active presences on the top social networks. Needless to say, your social media marketing strategy will be an ongoing one. Fortunately, you can use social media apps to make managing and building your social media accounts easier.

One cost typically associated to social media marketing is the use of a social media management tool that helps with publishing to and monitoring activity on each social network in one place. You can use a tool like Buffer to automate your social media. If you’re just starting out, they have a free plan where you can post up to 10 social media posts at a time.

Social media analytics tools are also popular amongst the top social media marketers. Your best bet as a small business with a limited marketing budget is to stick with the built-in analytics provided by each of the top social networks for business profiles and pages. Invest more time in posting quality content and engaging with your audience to see the best results.

Pay Per Click

Both search engines and social media networks offer PPC advertising options. PPC allows you to reach new customers by paying for space on search engine results pages, within social media news feeds, and on websites and apps that are part of a search engine or social media advertising network. PPC is great for businesses that want to reach new customers as they are building their rankings through organic search engine optimization and their audiences organically on social media networks.

What you spend on PPC will depend on the number of new customers you want to reach, how you want to reach them, and how well you optimize your advertising campaigns for conversions. For example, if you aren’t interested in search engine ads but want to reach social media audiences, you can purchase advertising on Facebook (which also includes Instagram) and Pinterest. All of these networks have advertising options that will allow you to reach new customers directly in their newsfeeds on each respective network.  

marketing costs

Most startups and new businesses can receive free advertising credits from a number of sources. Google offers new AdWords users a $75 credit once you spend $25.

To get the most out of your PPC budget on any network, you will want to do the following.

  • Define your target audience (ideal customers) as specifically as possible.
  • Use a landing page specific to the target audience and product you will create the ad for. Oberlo has very specific landing pages such as dropshipping, clothing, cell phones and backpacks that you can use as reference to see how one product can be catered to different target audiences.
  • Create text, images, and video (as applicable) for your ad that is focused on getting a specific target audience to click through to your landing page for a specific product or service. Make sure that the text, images and video match your landing page seamlessly.
  • Measure your results from each PPC campaign and compare with other PPC campaigns and across all of the PPC networks you choose to see which ones deliver the best results (most sales) and then focus your budget on the winning campaigns and winning networks.

Content Marketing

content marketing expenses

Content marketing is an ongoing strategy where you create new content to reach new customers. Most businesses will start with text-based blog posts on their websites, but may also create ebooks, infographics, presentations, podcasts, and videos as a part of their content marketing efforts.

The main ways you will reach new customers with content is through organic search, social media sharing, and retargeting blog traffic with PPC advertising. Ideally, each piece of content you create will be optimized for keywords that your ideal customers are searching for, and thus each piece of content will give you more visibility in search. Each piece of content can also be used to attract new customers on social media through shares made by everyone who consumes your content.

Depending on the kind of content you want to create, your marketing expenses may vary. Some businesses will create their content in-house, while others will hire freelancers and agencies to create and promote new content. You may also spend more on PPC if you choose to push your content to new customers via advertising on search engines and social media. You can monetize your blog content by running retargeting ads to users who visit your blog posts. Customers will see your product ad on Facebook or Google, depending on your ad platform choice, after visiting your blog post. If your content and products are niche specific you’ll be able to generate sales from having qualified traffic.

Email Marketing

Email marketing is a surefire way to reach current and potential customers who have shared their email address with you when making a purchase or subscribing to future updates on your website. It allows you to remind first time customers that you have more products to choose from and repeat customers to come back and see your new inventory.

One of the main costs of maintaining an email marketing campaign is the email marketing service you choose to maintain your email list and help you send regular email marketing messages to that list.

Some of the most reliable, affordable, and scalable email marketing services include the following.how to create a marketing budget

  • Mailchimp – Free for up to 2,000 subscribers and 12,000 emails per month. For more subscribers, emails, and features, plans start at $10 per month.
  • Aweber – Plans start at $19 per month for up to 500 subscribers and unlimited emails.
  • Constant Contact – Plans start at $20 per month for up to 500 subscribers.

Since most email marketing services offer a free trial, you can try them all out to see which one you like the most. In particular, look at the way each service lets you design emails to ensure that you can create email content easily for your subscribers.

Freelancers and Employees

marketing budget

There are two ways to get experts to help you out with your marketing. You can hire freelancers for temporary or as-needed help, or you can hire employees for long-term part or full-time help. For new store owners, hiring freelancers is the best option. Freelancers can be found on networks like Fiverr for as little as $5 per task, UpWork for as little as $10 per hour (depending on experience and project), or via Google search at individual rates.

If you decide to hire an employee in-house to handle all of your business’ marketing needs, you can expect to pay them the following salaries based on their education, specializations, and experience. Here are a few marketing job titles, descriptions, and salaries that may fit your in-house marketing needs.

  • Marketing Coordinator – Marketing Coordinators have a national average salary of $49,894 per year. They are responsible for developing and executing marketing and advertising campaigns for products and services, tracking sales, creating promotional materials, planning events, maintaining lead and customer databases, and reporting.
  • Digital Marketing Specialist – Digital Marketing Specialists have a national average salary of $50,912 per year. They are responsible one or more marketing strategies including search engine optimization, social media marketing, pay-per-click advertising (PPC), display advertising, and other digital marketing tasks.
  • Marketing Manager – Marketing Managers have a national average salary of $81,708 per year. They are responsible for developing and executing marketing strategies for a business.

How to Create a Marketing Budget

Now that you have an idea of the types of costs that need to be included in your marketing budget, your job is to create your marketing budget. The simplest way for a small business is to use a Google Sheets or Microsoft Excel spreadsheet.

low marketing cost

Budgets vary per brand and niche. You might add free Shopify apps whereas another store might invest in paid apps. Investing money into a second business will usually result in a different budget than a first store. You may find that once you include the necessary marketing costs, such as your domain, and Shopify and Oberlo store, you can add in additional marketing expenses. Playing around with the costs related to a potential new hire or freelancer, social media management tool, email marketing service, can give you a quick idea how much your total marketing budget will be, both monthly and annually. You can also reduce costs by investing in affordable Shopify apps instead of hiring a freelancer.

Creating a marketing budget will also help you stick with your marketing plan or allow you to adjust your budget to drive better results. For example, if you see your Facebook Ads outperforming other networks, you can quickly see the amounts from other networks that you could funnel into Facebook.

Have room for Oberlo in your marketing budget? Find out how we can help you start a dropshipping business!


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Is there anything else you’d like to know more about and wish was included in this article? Let us know in the comments below!

  • Andrew Robinson

    Thank you so much for this! Marketing is the biggest and longest running cost and no one realizes it!

  • Yalilee CV

    Thank you!! do you have like an best practice excellent sheet where you can control the Marketing budget?

  • thank you for the Great Infor . an amazing Oberlo team

  • Plamen Gerchev

    Change your adress from Aruba to Holand or USA
    Make weekly price promotions + mailing list
    add small furniture + lightning

  • Amin Touch

    Thank you friend
    I think true about what u said
    I well so some change 😌✌🏼