Every article on this question opens with a percentage. Five to ten per cent of revenue for an established business, fifteen to twenty for a young one. It is repeated so often that it has stopped sounding like advice and started sounding like a fact.
It isn't one. A percentage of revenue tells you what you can afford to lose, not what you can afford to spend. Two businesses with identical revenue and wildly different margins have wildly different answers, and the rule treats them the same.
The number that actually governs a marketing budget is contribution margin: what's left of a sale after the costs that scale with it. If a product sells for 1,000 and costs 600 to make, deliver and support, you have 400 to work with. Everything about your budget lives inside that 400 — never inside the 1,000.
The second number is payback period: how long you're willing to wait to get acquisition cost back. A business with cash in the bank and repeat customers can spend the full 400 to win one, because the second and third purchase are nearly all margin. A business paying suppliers before customers pay it cannot, however good the lifetime value looks on a slide.
Put together, the calculation is unglamorous. Take contribution margin per customer. Decide what share of it you're willing to pay to acquire one — a third is comfortable, a half is aggressive, all of it is a bet on repeat purchase you should make deliberately rather than by accident. Multiply by how many customers you want. That's the budget.
What this produces is usually smaller than the percentage rule for low-margin businesses and considerably larger for high-margin ones. That's the point. A software business with 85% margins and an agency with 25% should not be spending the same share of revenue, and the fact that the rule tells them to is the clearest evidence it isn't a rule.
There's a version of this conversation we have often, and it goes badly exactly once: when the honest answer is that the margin can't carry any meaningful acquisition spend at all. That isn't a marketing problem, and no amount of budget fixes it — it's a pricing problem wearing a marketing problem's clothes. Fixing the price first is cheaper than funding the gap forever.