The marketing budget is an advertising and promotion campaign plan determined in physical and monetary terms. These are the expenses for the organization of goods distribution, advertising, and informing consumers. It reflects the projected amounts of costs, revenues, and profits.
The marketing budget is not just advertising. This is also the cost of analyzing the market situation, branding, developing a scheme for working with potential customers, attracting bloggers, various activities on social networks, and much more.
The marketing budget includes several items of expenditure: research, communication policy, advertising, etc. It is sometimes difficult to calculate everything correctly. Therefore, it is better to use budget calculators, which we will tell you more about in the article.
Why Should Use Marketing Budget Сalculator?
The essence of budgeting is to transform all marketing projects and activities included in the marketing program into expenses. You should also add subsequent compensation from the proceeds after the sale.
Here are examples of practical marketing calculators for making business changes:
- E-Mail ROI Calculator. An interesting tool, if you twist it properly, you can get interesting data for understanding the output.
- WebStrategies Budget Calculator counts the marketing budget according to the annual turnover and percentage of revenue online versus offline.
- Percent Change Calculator. A simple online program with a single function: to show how much the percentage of the number 1 differs from the number 2.
The purpose of marketing budgeting is the allocation of resources, in which investments in achieving the goals of the enterprise will be minimal. It requires certain attainments in economics, experience in applying formulas, and realization of current legislation, so small agencies prefer to use Marketing Budget Calculator
The marketing budget may vary depending on a number of factors:
- working hours of the company;
- the scale of the organization's activities;
- types of advertising used;
- the desired outcome on investment in marketing;
- qualification of a marketer.
The work experience (duration) also influences the marketing budget. If the company is a young startup, it needs much larger investments for launching. So you better use a calculator to avoid making a mistake that can become critical.
How to Calculate Marketing Budget
Methods of determining the marketing budget:
- Planning based on target profit indicators or the pricelist method. It includes indicators of expected sales volume, costs, and profit.
- Fixed percentage. Linear dependence of the budget on the previous period. It is unsuitable for budgeting the company's operating activities in the conditions of a pandemic, unforeseen circumstances, and other "bad stages".
- Do it like your competitors! The method does not always meet expectations and can often be unprofitable due to many factors: the initial positions of competing companies, goals, and options for reaching them are incorrectly determined.
- The method of maximum expenses. It works until the money runs out.
- A way of setting goals and solving them. The problem is divided into clear goals, the effect of which you can calculate. It is convenient and effective for a short period.
- The "margin income" method, in which you distribute finances for different activities, taking into account the highest profitability of individual business areas. It goes well with the "goals/tasks" methodology.
Practice shows that you have to experiment and be guided not only by theory but also by experience, market knowledge, and intuition. There are several approaches to determine whether marketing pays off or not, and all of them can be calculated with the Marketing Budget Calculator.
- ROI — return on investment in marketing. It is the difference between revenue and expenses. As soon as one indicator is different, the whole proportion shifts.
- Unity Economy. It is a basic unit that generates revenue. For each company, it has a special meaning (product, clientage, contract, so on). So, if you choose this approach, determine the unit and calculate how much profit and loss it has brought.
Creating a marketing budget is not as hard as it seems. Especially when you use specialized calculators. This is a creative process that can be infinitely improved and something new can be introduced. It is important to remember that the budget is an effective and flexible means, not an end goal in itself. Then it will work for the company, not on the contrary.