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Budget

You may be aware of the growing need to allocate some of your marketing budget for a Pay per Click (PPC) campaign, but with every industry and business being unique, do you know how much to allocate for your campaign?

This is what we are going to figure out right now.

​Now that you have your Customer Valuation number and have outlined your goals we can tackle the last factor in the equation...budget.

The 3 Factors​

There are three factors you should consider when coming up with your budget:

  • What is a new customer worth? (your customer valuation)
  • What are your goals? (how many new customers do you want per month?)
  • What can you afford to spend?

​Lets do an example:

Example

So lets say that a new customer is worth $500 to you and you would like to get 10 new customers each month.

Multiplying $500 by 10 gives us $5,000.

This means you could spend up to $5,000 each month to get 10 new customers before running at a loss. 

Obviously the point of your business is to take in more than you spend.  So anything you spend for those 10 new customers below $5,000 is profit.  The less you spend the more money in your pocket but this exercise is to get you to think of how much you have to spend before you break even and/or start losing money. You should always keep this number in mind when doing any marketing. 

Now you need to review your available capital.  If you can spend $5,000/month on advertising then you can start with that as your budget and adjust accordingly each month.

If the first month you can only afford to spend $2,000/mo on advertising then thats ok but now you should now adjust your minimum number of new customers from 10 to 4.

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