BUDGETING FOR ADVERTISING, by David Margolis, Syndicated Ad Features

One way to calculate how much a business should spend on advertising is to figure it as a percentage of sales. Using this model, a business owner uses 5% to 7% of past sales or projections of future sales to budget for advertising. For a more precise calculation, some recommend that business owners calculate both 10% and 12% of their annual projected sales and multiply each number by their gross markup percentage, which is the ratio of product costs to selling price. Once these calculations are made, the rent or mortgage payment should be deducted from each number. The remaining balances represent the range (in dollars) that should be set for an advertising budget.

Whichever method is used, we at SyndicatedAd Features are quite confident that we can offer you an effective advertising program well within your budget.