What should your practice’s marketing budget be?
Marketing is an essential aspect of running a successful dental practice, but there is sometimes confusion around what portion of a practice’s budget should be dedicated to it. In fact, I have met with several dental practice owners who never officially allocated any funds to marketing before. Marketing is an investment, and as with all investments, there is a direct correlation between what you put into it and what you will get out of it. Therefore, it is important to know what your practice’s marketing budget should be for what you want to accomplish.
For practices just getting used to the idea of establishing an official marketing strategy, the recommended (or really required) investment can come as a bit of a shock. This happens often when the practice owner is unaccustomed to thinking about marketing in this way, or they have been getting away with keeping everything in house and don’t really understand what a professional marketing strategy involves. I won’t go into those details here, but suffice it to say, there are a lot of moving parts and people behind them to make the “marketing machine” work smoothly. When a practice owner realizes they need to start dedicating real resources to marketing, it can seem like a big investment because the initial marketing strategy was more ad hoc and less of an organized, consistent, and continuous plan.
One thing I recommend for any practice owner who is looking into what their marketing budget should be is to consult a trusted financial advisor, whether that is their accountant or a professional business consultant. While these people are not marketing experts, they do understand the concept of “return on investment” and what is considered a reasonable monthly expenditure for marketing a small business. These professionals also know how to correctly incorporate new expenses into an existing budget and can explain what to expect in the short and long terms.
When it comes to a recommended investment amount, every practice is going to be different, and it depends largely on the overall goal. For instance, if the practice is in growth mode, looking to attract a large number of new patients over an extended period of time, the US Small Business Administration recommends a marketing budget of 12-18% of pre-tax annual sales. To put that into numbers, if a practice has gross sales of $1 million per year, which is about average, a growth strategy marketing budget should be anywhere from $10,000-15,000 per month.
Some practices only want modest growth and are more concerned with maintaining their patient base, that is keeping their existing patients engaged and not losing them to competitors in the area. In this case, the SBA recommends an investment of 5-10% of annual sales. Using the same example of $1 million per year, the average maintenance marketing budget for a dental practice should be approximately $4,100-8,300 per month.
These numbers are a general guideline that a practice should keep in mind when budget planning. However, a particular practice may decide to invest a different amount based on what the overall strategy goals are. If a practice is just starting up or is well established but has never had any marketing in place, for example, the necessary investment could be higher until a baseline is reached, after which the budget can be re-evaluated.
We are not expert financial planners, but we are expert marketing professionals, and we have years of experience and industry knowledge to support our pricing. When we consult with a dental practice owner, we know exactly what it will take to achieve the goals they have in mind, and we price our services accordingly and fairly for what we are able to consistently deliver. We are always happy to talk more in depth about what is included in our service packages to demonstrate why they are a good value for the investment and to help a practice feel more comfortable with making the commitment to a professional marketing strategy.
For more information about what goes into a professional marketing strategy, check out this blog post from August – What you’re actually getting for your marketing investment. – My Dental Agency