How much should a home-service business spend on marketing, and what to buy first
Local businesses spend about 5% of revenue on advertising; HVAC contractors about 6%. Here's the math at three revenue levels and the order to spend it in.
The short version
- Local businesses spend about 5% of revenue on advertising; HVAC contractors about 6%.
- Spend first on your Google profile and reviews, then on answering every lead.
- Ask any agency what they'll report, what you'll own, and how to cancel.
Most home-service owners don't have a marketing budget. They have marketing expenses: a Yellow Pages habit that never got cancelled, a website someone's nephew built, a few months of ads that "didn't work." Here's a simpler way to think about it.
The benchmark
Two good data points:
- Local businesses spend about 5% of revenue on advertising, according to Borrell Associates' 2024 survey of local advertisers.
- HVAC contractors spend about 6%, according to ACCA's 2025 study of more than 1,000 contractors.
Businesses pushing to grow often spend more for a while. Established businesses with a full schedule and strong referrals can spend less.
What that looks like in dollars
| Annual revenue | 5% per year | Per month |
|---|---|---|
| $300,000 | $15,000 | $1,250 |
| $750,000 | $37,500 | $3,125 |
| $1,500,000 | $75,000 | $6,250 |
That's the whole budget: truck wraps, signs, sponsorships, ads, software, website, and any agency fees. For a business doing $300,000, a $1,500-a-month agency retainer is more than everything else combined, and probably too much. For a business doing $1.5 million, it's a quarter of the budget.
What to buy first
Spend in the order that each dollar works hardest. For most local service businesses, that's:
1. Your Google Business Profile and reviews
Free to own, and the single biggest driver of calls for most trades. When someone nearby searches for what you do, the map results come first. Get the profile right, get reviews coming in steadily, and reply to them. See the profile checklist.
2. Answering every call and lead
The cheapest lead is the one you already paid for. If calls go to voicemail during jobs, a missed-call text back and fast follow-up save more jobs than any new ad. See what happens when a call goes to voicemail.
3. A website that converts and backs up your profile
A fast, mobile-friendly site with a page for each service and town, your phone number on every page, and clear calls to action. It supports your Maps ranking and gives AI tools something to read.
4. Paid ads
Google Local Services Ads or search ads can add calls quickly, but they stop the day you stop paying. They work best once the first three are in place, because the ads send people to the same profile, reviews and website.
5. Everything else
Sponsorships, mailers, social posts, directories. Useful, but rarely the first thing that moves the needle.
Questions to ask any marketing company
About 40% of small businesses that outsource their marketing have dropped or switched agencies, according to a 2025 vcita survey, and most of that happens 6 to 12 months in. The most common reason: no clear return. Before you sign anything, ask:
- What will you report, and how often? "Rankings went up" isn't enough. Ask for calls, form leads and map rankings across your area.
- What do I own if I leave? Your Google profile, website, domain and phone numbers should be in your name.
- What exactly will you do each month? Get the list in writing.
- How long is the contract, and how do I cancel?
- Can I talk to two current clients in my trade?
- Do you guarantee rankings? If they say yes, walk away. Nobody can guarantee a Google ranking.
Measure it
Whatever you spend, track three numbers every month: calls and leads by source, booked jobs from those leads, and revenue from those jobs. If you can't say what a channel produced in the last 90 days, it's an expense, not marketing.
The free KarpOS audit is a good starting point before you spend anything: it shows where you rank across your area today, who's ahead of you, and how much search demand there is for your trade near you.
Quick answers
What percentage of revenue should a contractor spend on marketing?
Local businesses spend about 5% of revenue on advertising (Borrell 2024), and HVAC contractors about 6% on marketing (ACCA 2025). Growing businesses often spend more for a period.
What's the first thing a home-service business should spend marketing money on?
For most, the Google Business Profile and a steady flow of reviews, followed by making sure every call and lead gets answered.
How do I know if my marketing company is working?
Ask for monthly calls, leads and booked jobs by source, plus your map ranking across your service area. If they can't show those, ask why.