SaaS is ubiquitous. What I mean by that is, most systems in several sectors deploy some form of SaaS.
It goes without saying that this has given rise to cut-throat competition in the field. Your service plays a huge role in its reach.Â
However, it is marketing your service that will help you reach the ideal customer and grow your user base.
Some view marketing as an investment while others view marketing as superfluous and an easy way to go bankrupt.
Of course, this depends on how you view it but most importantly, on how you plan the expenditure. Or in other words, marketing budget.
Let’s figure out how to plan a effective SaaS Marketing Budget.
Types of Costs in SaaS Marketing:
In SaaS marketing, understanding direct and indirect costs is key to managing your budget effectively and maximizing ROI.Â
1.Direct Costs
These are expenses that go directly into your marketing campaigns and efforts, such as:
Advertising Spend: Ad Spend refers to costs for paid ads on social media platforms or traditional channels.
Content Creation: There is a cost involved in creating content : payments to writers, designers, or videographers for blogs, videos, and infographics.
SEO Tools: Subscription fees for tools like SEMrush or Ahrefs.
Event Participation: Costs for webinars, trade shows, or expos promoting your SaaS.
Marketing Team Salaries: Compensation for in-house or outsourced teams handling your campaigns.
2.Indirect Costs
Indirect Costs are the behind-the-scenes Expenses of marketing i.e. they support your marketing efforts though they do not go to any specific campaign fund.
They’re harder to track because they work in the background to help your SaaS grow.
Examples of Indirect Costs:
Brand Building: If you’re investing in social media to grow your audience or creating a company blog, that’s an indirect cost.
It doesn’t always show immediate results but builds trust over time.
Example: Regular posts on LinkedIn to share industry tips and build credibility for your SaaS company.
Software Infrastructure: Tools like HubSpot or Salesforce that manage your customer database and track leads are indirect costs.
They support your marketing efforts by organizing information but aren’t tied to a specific campaign.
Training Your Team: Sending your marketing team to workshops or buying courses on SaaS trends and tools is an indirect cost.
Example: Training your team to use AI for personalized marketing.
Customer Support: If a customer service team is responding to queries brought in by a campaign, their salaries are indirect costs related to marketing.
Example: A support agent answering questions about a promotion you ran for your SaaS.
Analytics and Reporting: Tools like Google Analytics or Tableau that measure how well your campaigns are doing fall into indirect costs.
What to Keep in Mind When Planning a SaaS Marketing Budget?
1.Stage of your SaaS Business
In what phase do you belong? Do you just enter the stage where you need higher marketing costs, or is it an ongoing business where marketing is a mode of expanding your customers or maintaining them at the present state?
2.Revenue Goals
What are your revenue targets? Your marketing budget should match your goals.
If you want fast growth, you might need to spend more. For steady, long-term growth, you can keep the budget smaller but more focused.Â
3.Customer Acquisition Cost (CAC)
How much does it cost to get a new customer? Make sure you’re not spending too much compared to the revenue each customer brings.
Keeping your CAC in check is key to making sure your marketing is cost-effective.Â
4.Customer Lifetime Value (CLTV)
How much does an average customer bring over their whole relationship with you? The greater the Customer Life Time Value (CLTV), the more you can afford to spend on acquiring new customers.
The better your CLTV knowledge, the more strategic you’ll be in managing your budget.
5.Competitor Analysis
Look at what your competitors are doing. What marketing strategies are working for them?
This can give you ideas for your own budget and help you find ways to stand out. Â
By keeping these factors in mind, you’ll be able to create a marketing budget that supports your goals and grows your business.
SaaS Marketing Budget - Industry Benchmarks
The right marketing budget for growth is quite essential. But how much should you actually spend? That’s simple:Â Â
Let’s look at the Benchmark:
For SaaS companies, marketing budgets typically range between 6% and 13% of annual revenue.
Of course, this percentage may vary with the size and development stage of your company.
Startups generally spend closer to 20% and are more focused on building awareness and acquiring customers.
More established companies focus on keeping their customers and spend at the smaller end of the spectrum.
SaaS marketing budgets usually consist of the following expenses:Â
1.Content Marketing: Blogs, eBooks, webinars, and videos that educate and attract customers.Â
2.Paid Advertising: Google Ads, social media campaigns, or sponsored content that drives traffic quickly.Â
3.SEOÂ and Website Optimization: Ensuring your website ranks well in search engines and converts visitors into leads.
4.E-mail marketing and CRM: Lead follow-ups and follow-up from existing customers.
5. Events and Partnerships: Conferences, webinars, or partnerships with other businesses.
Why Does It Matter?
Spend enough to market yourself to stay competitive and increase the size of your user base.
It can go over the top, however, and interfere with profitability if you are not tracking return on investment.
For that reason, it’s about keeping it in balance-spend prudently, measuring the yield and adjusting along the way.
Keep your goals in mind. If you’re in a hurry to grow fast, you may splurge on budget.
In case of steady and sustainable growth, fine-tune what you have. You should keep track of metrics like CAC and LTV for your marketing efforts to pay off.
How to Set Your SaaS Marketing Budget?
Setting a marketing budget for your SaaS business doesn’t have to be tricky.
Here’s a simple guide to help you break it down:
1.By Channel
Think about where you’ll spend your marketing dollars:
- Organic Channels: These include content marketing, social media, SEO, and email. These strategies are cost-effective but take time to show results.
- Paid Channels: This includes ads on Google, social media platforms, or other paid campaigns. Paid channels are great for quick visibility and driving immediate traffic.
Strike a balance between organic and paid efforts based on your goals and resources.
2.By Funnel Stage
Divide your budget based on the stages of the customer journey:
- Awareness: Invest in getting your name out there through ads, content, and social media. This helps attract new leads.
- Consideration: Focus on educating potential customers about your product. This could include webinars, case studies, or comparison guides.
- Decision: Spend on strategies that convert leads into customers, like free trials, demos, or retargeting ads.
Each stage plays a role, so allocate your budget wisely across them.
3.By Priority
What’s most important for your business right now? Are you looking to grow fast, retain customers, or optimize spending?
Set your budget based on what matters most to your business goals.
By organizing your budget this way, you’ll have a clear plan that aligns with your goals and helps your SaaS business grow effectively.
Tips to Create Your SaaS Marketing Budget:
1.Define marketing goals (awareness, lead generation, retention).
2.Assess current performance metrics like CAC, LTV, churn rate etc.
3.Set priorities (organic growth, paid campaigns, partnerships).
4.Assign budget percentages based on goals and historical performance.
5.Monitor and adjust quarterly based on ROI.
What Not to Do When Setting Your SaaS Marketing Budget?
Avoid These Common Mistakes in SaaS Marketing
1.Relying on One Channel
- Using just one marketing channel, like paid ads, is risky.
- If the platform changes its rules or the market shifts, your results could drop fast.
- Try a combination of ads, content marketing, email campaigns, and SEO to reach more people.
2.Lack of Specific Objectives
- Without clear objectives, it’s difficult to determine if marketing efforts are effective.
- Create SMART goals. “Get 100 new signups this month” are examples of such objectives.
- The objectives keep you focused on a plan and make you readjust the plan whenever it becomes necessary.
3.Missing Customer Lifetime Value (LTV)
- Many companies forget to factor in Customer Lifetime Value (LTV) when setting the marketing budget.
- LTV displays how much money a customer will bring over time.
- The formula is: LTV = Average Revenue Per Customer Ă· Churn Rate.
- When knowing your LTV, you know how to spend smart on gaining and keeping customers.
- By spreading out your efforts, setting clear goals, and keeping LTV in mind, you’ll create a strong marketing strategy that helps your SaaS business grow.
Conclusion
At the end of the day, marketing is about balance—spending enough to grow without overspending.
So, focus on your goals, know your numbers, and stay flexible.
With a well-planned budget, your SaaS business will be positioned for growth and success.