How Much Should You Spend on Marketing your Practice in 2021?

How much money should you allocate to your marketing budget?

You probably heard the saying "you need to spend money to earn money".  Nothing could be more true when it comes to preparing the marketing budget for your private practice.  

Many private practice owners find it difficult to know how much money to allocate to their marketing budget, or even how much marketing costs. The result of this is that private practices set incorrect marketing budgets which in turn costs them lost opportunities. This article goes through how much a private practice should spend on marketing and what prerequisites should be in place to calculate the marketing budget.

Marketing is an investment in your private practice

Many private practices make a mistake of looking at their marketing budget as an expense - and as with most other expenses, they also look here for opportunities to cut costs. In reality, the money private practices, or any other businesses, spend on marketing is an investment.  Once you start to recognize that marketing is an investment in new clients and increased revenue through measurable channels, it will be easier to see it as a crucial tool in growing your business.

Know what you want to achieve

In order to set a suitable marketing budget, you need to know what your goals are. You should be clear about what you want to achieve with the money you are going to invest in marketing before investing it.  Do you want to reach new customers? Increase the awareness of your brand?  Maybe you're looking to book more of your high-value services.  Make sure you define these goals clearly before you begin.

Measure every marketing activity

You or the agency you work with should be tracking all of your marketing activities. There should be no doubt as to whether a campaign has been profitable or not. How much did a click on your Google Ads ad cost you? What has an ad on Facebook cost? And how many times did the customer actually click on your ad before making a call to book an appointment with you?

What is a new client worth to you?

When you know the value of a new client, or even better - the customer's lifetime value (CLV), you know how much you need to spend on "buying" a new customer. This allows you to more easily determine the budget in the various marketing channels. Knowing the lifetime value of a customer relationship opens up many more opportunities for marketing than if you only look at the cost per acquisition.

What do traditional marketing budgets look like?

Traditionally, a marketing budget is been planned in relation to the company's revenue.  So in this regard, research and comparison data are easy to find. Here are some examples of marketing budget allocations relative to business revenue:

  • Established private practices that have been operating for more than 5 years, would have a marketing budget of 5-10% of their overall revenue
  • New private practices that have been in business for less than 5 years would typically have a higher marketing budget of 10-15% of their overall revenue

The above examples are consistent with the marketing budget research prepeared by the Business Development of Canada (BDC).  For comparison, here are some other marketing budget allocations, depending on the nature of the business:

    • In consumer services, the marketing budget is typically 7 to 15% of the revenue
    • In services where the brand is the most important differentiator, the marketing budget is typically 15-30% of the revenue
    • In an e-commerce-based business, it's a good idea to define the marketing budget purely on a margin basis. The budget can well be 20% - 50% of the product's sales margin

What is your cost of lost opportunities?

As we just said, many private practices that are well-positioned for success measure the effect of their marketing activities and have an overview of the lifetime value of their customers. Despite this, they are hampering their own growth by setting the wrong market budget.

Many companies operate with fixed market budgets. For example, it might look like this:

  • A fixed budget each year, evenly distributed over each month
  • A fixed budget each year, distributed differently over each month depending on seasonal fluctuations in the market or the previous month's results

This is a simplified view, but we can say that private practices that manage their market budgets in this way lose opportunities.  Let us ask you:

If $1000 banknotes were on sale for 100 dollars, how many would you buy? The answer is that you would probably get as many as you could afford. 

If a private practice that comes across the opportunity above has decided to spend only $1,000 a month they will miss out on tens of thousands of dollars because of their strict marketing budget.  If you know what a new customer is worth to you, you will benefit the most from buying as many customers as you can afford and handle, at any given time.  Put differently, if you can earn $10 for every dollar you spend on marketing, then having a flexible marketing budget is a no-brainer.

How to set a flexible private practice marketing budget

Flexible marketing budgets are based on set key performance indicators (KPIs) and give you great freedom to achieve the goals you set for your marketing. There are several ways to find KPIs to manage your flexible marketing budget. Below are two examples:

  • Marketing budget based on CPA or ROAS

CPA, cost per acquisition, says something about the cost of a single "sale". If you are selling your service at a fixed price, it can be helpful for your private practice to operate with this type of goal when setting your marketing budget.  If you know that you make money by spending up to $100 on a single sale, you can buy as many sales for $100 each, as needed.

ROAS, or return on ad spend, says something about how many dollars you get in revenue for each advertising dollar you spend. This can be a good goal to follow if you set budgets for an online store with different products in different price ranges, but it also works for service-based businesses provided that booking clients are asked how they heard about you and the answers are tracked.

  • Marketing budget based on the customer's lifetime value

If you have insight into what the CLV is for your private practice, you increase the degree of flexibility in your budget further. When you know what you want to earn from the client over time, you will be able to more easily adjust your ROAS or CPA goals accordingly. If you know that an average client buys $250 of your services the first time they visit you, but that the total lifetime value of this customer is $10,000 - you are probably willing to pay a higher price for the first purchase. You may even be willing to lose on the first conversion.

Think of all your marketing touchpoints

A tip to get the most out of your marketing is to see the big picture and think of all marketing touchpoints. A sale is rarely the result of a single channel or one point of contact alone. It's frequently the result of several touchpoints with ads or brand reminders across different channels. Make sure you don't just look at the high ROAS from your Google Ads as an isolated case and compare these with the channels that seem less profitable at first glance.  If you dive deeper into your data and see the entirety of your marketing activities across channels, you will probably get a better picture of how the different channels each play their important role in the customer journey and influence each other. It is the whole that counts!


Private practices should track all of the marketing activities they carry out, set clear goals for the results they want to achieve,  have awareness of the lifetime value of a customer, and stay flexible when it comes to their marketing budget.  Taking these points into account will set your private practice on a great path to future success and reliable leads.

Do you need help figuring out the marketing budget, or wonder about outsourced marketing agency costs for your private practice? We'd love to hear from you. We specialize in marketing services for private practitioners in Canada or the U.S, and we're ready to help.  We invite you to contact us at

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Marketing is complicated.  We make it simple.  See how we help private practices just like yours.

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