What is the B2B SaaS marketing budget?

‍

Most B2B SaaS owners aren’t sure what goes into their marketing budget. A company’s marketing budget is a detailed plan of how much will be spent on what types of promotions. They are usually done annually but dynamic B2B SaaS companies can do them quarterly or even monthly by partnering with a B2B attribution modeling agency that helps them throughout the process.

‍

‍

‍

To calculate your SaaS marketing budget effectively, you need to understand key metrics like Customer Acquisition Cost (CAC), Customer Lifetime Value, and identify your direct and indirect marketing expenses. Direct expenses are advertising, content creation, and promotional campaigns. Indirect expenses are salaries for marketing staff and overheads. Categorizing these expenses accurately will help you understand the true cost of acquiring customers and finetune your budget.

‍

What does the marketing budget cover?

‍

Paid advertising

‍

One of the biggest chunks of a SaaS marketing budget is usually allocated to paid advertising. This includes expenses for Google Ads, social media advertising, and other profitable marketing channels. Paid ads are for lead generation and brand awareness. For early-stage startups and mature SaaS companies alike, marketing spending on advertising is closely monitored to ensure it’s adding to customer acquisition cost (CAC) and overall growth goals.

‍

Content marketing and SEO

‍

Content marketing is a part of any SaaS marketing strategy, especially for organic traffic and target audience engagement. SaaS companies usually allocate a big chunk of their annual marketing budget to creating high-quality content, blogs, whitepapers, case studies, and SEO efforts to improve search visibility. These marketing investments build an inbound marketing foundation that supports customer engagement and long-term customer lifetime value (CLV).

‍

Marketing infrastructure and tools

‍

This includes email marketing tools, analytics, CRM systems, and marketing automation platforms. It also includes the cost of building and maintaining a website, hosting webinars, and tools for customer behavior analysis. The initial investment in these tools is required to run marketing campaigns and measure the effectiveness of different marketing tactics.

‍

Team development

‍

A SaaS marketing budget must also cover the marketing team—salaries, benefits, and training. As marketing strategies change and industry benchmarks change, you need to make sure the team has the latest skills and knowledge.

‍

Lead generation and customer acquisition

‍

Direct marketing spend on lead generation and customer acquisition is a big focus area for growth stage and equity-backed companies. This includes costs of hosting events, running promotional campaigns, and using third-party services to generate qualified leads. The balance between customer acquisition cost (CAC) and customer lifetime value (CLV) is key to profitable marketing channels and business growth.

‍

Brand building and market research

‍

Brand building is important for increasing market share and being a thought leader in the industry. SaaS companies allocate part of their total marketing budget to activities that increase their brand visibility and credibility—PR campaigns, partnerships, and sponsorships.

Market research helps companies stay on top of customer behavior trends and adjust their marketing strategy accordingly.

‍

Performance analytics and optimization

‍

Lastly, the marketing budget must include expenses for performance tracking and optimization. This means investing in analytics tools and regular marketing performance reviews to ensure marketing is delivering the desired results. Successful companies refine their marketing channels and tactics based on data and align their marketing spend with growth volume and revenue targets.

You need to measure ROI across different marketing channels to optimize and allocate budget.

‍

‍

8 steps to calculate your B2B SaaS marketing budget

‍

1. Set your revenue goals

‍

First, start with your revenue goals for the year. For SaaS companies, these are usually MRR and ARR. Your marketing budget will be tied to these targets, as the primary goal is to drive growth that supports your revenue goals.

‍

Example: If your goal is to reach $10 million in ARR, you’ll use this target to work backward to calculate the marketing investment.

‍

2. Calculate your Customer Acquisition Cost (CAC)

‍

Customer acquisition cost (CAC) is a key metric to determine how much you should spend on your marketing budget. CAC is calculated by dividing the total sales and marketing cost by the number of new customers acquired in a given period.

‍

Formula:

‍

CAC = Total sales and marketing cost / Number of new customers acquired

‍

Example: If your current CAC is $1,000 and you want to acquire 500 new customers, your target marketing spend would be $500,000.

‍

Knowing your current CAC helps you decide how much you need to spend to acquire the desired number of new customers.

‍

3. Calculate your Customer Lifetime Value (CLV)

‍

Next, calculate your customer lifetime value (CLV), which is the total revenue you expect to generate from a customer over their lifetime with your company. CLV is key to knowing how much you can afford to spend on new customers.

‍

Formula:

‍

CLV=Average Purchase Value×Average Purchase Frequency×Customer Lifespan

‍

Where:

• Average Purchase Value is the average amount a customer spends per purchase.
• Average Purchase Frequency is how often a customer purchases in a given period.
• Customer Lifespan is the average time a customer buys from the company.

‍

Example: If your average purchase value is $50, your average purchase frequency is 4 times a year and your average customer lifetime is 3 years, then your CLV would be:

‍

CLV=50×4×3=$600

‍

A general rule is your CAC should be about 1/3 or less of your CLV to be profitable.

‍

4. Calculate your marketing spend as a percentage of revenue

‍

Industry benchmarks suggest SaaS companies typically spend 15–25% of their revenue on marketing, but this can vary based on company size, growth stage, and goals. For early-stage startups with aggressive growth targets, this can be higher.

‍

Formula:

‍

Marketing spend percentage = (Total marketing spend / Total revenue) × 100

‍

Example: If a SaaS company spends $200,000 on marketing and generates $1,000,000 in revenue:

‍

Marketing spend percentage = (200,000/1,000,000) × 100 = 20%

‍

The company is spending 20% of its revenue on marketing, which is within the typical 15-25% range for SaaS companies.

‍

5. Allocate your budget across different marketing channels

‍

Now that you have your total marketing budget, allocate it across different marketing channels based on your strategy and past performance. Consider factors such as the cost per channel, CAC, and expected ROI.

‍

Typical allocations might be:

• Paid advertising (e.g. Google Ads, LinkedIn Ads): 20-30%
• Content marketing and SEO: 20–25%
• Email marketing and CRM: 10–15%
• Events and webinars: 10–15%
• Marketing infrastructure and tools: 10–15%
• Brand building and PR: 5–10%

‍

6. Growth stage

‍

Your SaaS marketing budget will also depend on your company’s growth stage. Early-stage startups will spend more on customer acquisition to grow their user base fast, while mature SaaS companies will focus on retention and upsell and will require a different budget allocation.

‍

7. Track and adjust

‍

Once you have your marketing budget set, you need to continually monitor your marketing performance. Use metrics like CAC and CLV to measure and adjust your budget allocation as needed. If certain channels are underperforming, reallocate funds to those that are performing better.

‍

8. Have a buffer for unexpected costs

‍

Always have a buffer (usually 10-15%) in your budget for unexpected costs or to take advantage of new opportunities that may arise during the year. This will keep your marketing flexible and able to adapt to changing market conditions.

‍

Why do you need a B2B SaaS marketing budget?

‍

‍

‍

You need a B2B SaaS marketing budget for several reasons:

• To keep an eye on your spending and get a healthy ROI.
• To make you think carefully about your marketing and focus on what’s working.
• To make sure the right people are hearing your message and to deploy resources effectively.
• To stay ahead of your competitors, who are probably spending on marketing too.

‍

Without funding, you can’t have a successful advertising strategy. Decisions require considering the ROI of marketing initiatives. If you don’t know your unit's economics, you risk overspending and wasting time building channels.

‍

A marketing budget also serves as a roadmap for strategic decision-making and helps you adapt to market changes. It provides a framework to measure the performance of different marketing channels and make data-driven adjustments and optimizations.

‍

How to create a marketing budget by revenue percentage

‍

‍

What’s the difference between B2B SaaS companies’ marketing budgets? You may have come across the “10% rule” when researching marketing for “normal” companies. That is, 7-10% of a company’s revenue should come from advertising. What about companies that offer software as a service (SaaS)? According to a SaaS Capital survey, 14% of revenue for fast-growing SaaS companies goes to marketing.

‍

SaaS startups will invest way more than this—often more than their revenue—in the early days of their company to get their name out there and their product known. This is also true for many large B2B SaaS companies, as they allocate more than 40% of their revenue to marketing. But many SaaS startups do too, as they allocate more than 50% of their revenue to marketing. Salesforce spends 46% of its revenue on marketing, Zendesk 48% and ServiceNow 48%. SaaS companies spend different percentages of their revenue on marketing and sales activities, ranging from 7% to 50% depending on their growth stage and strategy.

‍

MRR budget using the Golden Ratio (LTV - CAC)

‍

Using a second method, we maximize customer lifetime to increase lifetime value (LTV) and customer acquisition cost (CAC), two key components of a B2B SaaS company. This ratio shows the value of a single customer to your business. Since we are focusing on the targeted revenue, revenue is still factored into this method. But customer value is considered.

‍

It’s said the “golden ratio,” or the LTV to CAC ratio, is 3:1. That means getting a new customer should yield a 3X return on investment. We can use the ratio to calculate the ideal marketing spend for the targeted MRR.

‍

How to allocate my budget to market my B2B SaaS?

‍

Of course, you should consider more than just the total cost of advertising. Choosing the right channels is part of your overall marketing strategy. Why? ROI of different marketing methods vary. If you don’t have an existing network to tap into, think cold outreach and word-of-mouth growth through social media presence, affiliate recruitment, rewarding repeat customers, etc.

‍

Create a realistic marketing budget with Effiqs

‍

A B2B SaaS marketing budget can boost the productivity and efficiency of a company. For fast-growing SaaS companies, a well-crafted marketing budget is not just a financial necessity but a key to sustainable revenue growth and competitive advantage. Proper estimation and management of this budget ensures that every dollar spent is towards strategic goals from customer acquisition to brand positioning.

‍

Budgeting and allocation can be complex and demanding, especially when balancing growth and optimization, but having a clear strategy is key. Book a free strategy call with our ABM agency CEO, Alex Hollander. Or visit our homepage for more info on B2B SaaS & Tech Growth Operations!