Business Owners Exude Caution In fact, some research shows that the average small-business owner spends about 1 percent of his business revenue on advertising. This means that a business that racks up \$1 million a year in sales spends \$10,000 on advertising, while a business that sells \$500,000 a year spends \$5,000.

## How are advertising costs calculated?

Calculate the potential cost of an ad campaign.

1. Total cost = (Total impressions x CPM) / 1000.
2. For example: 1,000,000 impressions at a rate of 50 CPM (that’s 50 dollars per 1000 impressions) would cost 50,000 dollars.

The U.S. Small Business Administration recommends spending 7 to 8 percent of your gross revenue for marketing and advertising if you’re doing less than \$5 million a year in sales and your net profit margin – after all expenses – is in the 10 percent to 12 percent range.

The average cost-per-click (CPC) on Google Ads is \$1 to \$2 for the Google Search Network and less than \$1 for the Google Display Network. Generally, small-to-midsized companies will spend \$9000 to \$10,000 per month on Google Ads, which doesn’t include additional costs, like software.

## What are examples of advertising expenses?

Advertising expense refers to cost incurred in promoting a business, such as publications in periodicals (newspapers and magazines), television, radio, the internet, billboards, fliers, and others.

## How much should a startup spend on advertising?

During this brand-building phase, a typical startup budget spends 20% of revenue on marketing efforts. Once the business is operational and generating sales, the U.S. Small Business Administration recommends budgeting 7-8% of gross revenue for marketing expenses.

## What percentage should business expenses be?

The Profit First system highlights that business expenses should be no more than 30% of total revenue. He suggests that this strategy will ensure profitability and if there isn’t enough leftover after profit and compensation to cover expenses, then expenses should be cut.

## What is the average small business revenue?

8 Small Business Revenue Statistics Small businesses with no employees have an average annual revenue of \$46,978. The average small business owner makes \$71,813 a year. 86.3% of small business owners make less than \$100,000 a year in income.

## How much do pay per click Ads cost?

On average, businesses should expect to pay \$1-\$2 per click to advertise on the Google search network. On a monthly basis, the average small and medium-sized businesses spend between \$9,000 and \$10,000 on PPC.