Launch budget arithmetic: what to spend, and when to stop

Step 1: find the gross profit on a typical sale

Start with the average sale or job, then subtract what it costs you to deliver it: materials, direct labour, card fees. Leave out rent and your own salary for now.

These are illustrations, not industry figures. Use your own.

Step 2: estimate your closing rate

Of every ten people who call, text or email, how many become customers? Established businesses usually know. A new business has to estimate.

• Trades and home services often close a meaningful share of enquiries but not most of them. If you have no data, start with one in four.
• Walk-in businesses such as studios usually "close" visitors who arrive, so the question is what share of enquiries turn into visits.
• Revisit the figure after 30 days. Early numbers are noisy, but they're yours.

Step 3: add repeat value, cautiously

Some customers come back. A hair studio client might return every six weeks; a tutoring family might stay for a school year; an electrician's customer might call again in two years.

Count only what you can reasonably expect in the first year. For the hair studio, if half of new clients return four more times in a year, each new client is worth $50 + (0.5 × 4 × $50) = $150 in first-year gross profit.

Step 4: calculate the value of one enquiry

Now combine the numbers:

Value of one enquiry = gross profit per customer (first year) × closing rate

• Electrician: $200 first job, little repeat in year one, closing rate one in four. Value per enquiry: $50.
• Hair studio: $150 first-year value, two in three enquiries become visits. Value per enquiry: about $100.
• Tutoring centre: $140 a month, families stay an average of six months, so $840; one in three enquiries enrols. Value per enquiry: $280.

This is the ceiling. Paying more than this for an enquiry loses money even before rent.

Step 5: set a working ceiling below the maximum

You don't want to spend the full value of every enquiry, because then marketing eats the whole profit. A common working rule is to aim for a cost per enquiry at a third to half of its value, so the rest covers overheads and profit.

• Electrician: value $50, working ceiling about $20 to $25.
• Hair studio: value $100, working ceiling about $35 to $50.
• Tutoring centre: value $280, working ceiling about $95 to $140.

Write the ceiling down before spending anything. It becomes the rule for opening-season ads.

Step 6: work out break-even on a monthly plan

A monthly marketing plan is a fixed cost. To see whether it can pay for itself, divide its cost by the value of an enquiry.

Using the Growth plan from Trades.Agency's pricing, $1,999 a month month-to-month:

• Electrician: $1,999 ÷ $50 = 40 enquiries a month to break even on first jobs.
• Hair studio: $1,999 ÷ $100 = 20 enquiries a month.
• Tutoring centre: $1,999 ÷ $280 = about 7 enquiries a month.

Add 5% GST as a BC client, which raises the electrician's break-even to about 42 enquiries. Not every enquiry comes from the plan, of course; some would have come anyway. Be honest about that when you judge results.

This arithmetic often gives a clear answer. A small electrician needing 40 extra enquiries a month in their first season may be better served by doing the profile and site work themselves for now. A tutoring centre needing seven may find a plan easy to justify.

Step 7: lay out six months

A launch budget should shrink over time. A typical shape:

If ads still supply most enquiries at month six, that usually points to a weak profile or site, not a need for more ad money.

Step 8: check the numbers every 30 days

Your first estimates will be wrong in some direction, and that's fine. What matters is replacing them quickly with real figures.

At day 30, pull three numbers: total enquiries by source, how many became customers, and the actual average sale. Recalculate the value of an enquiry with them. If it went up, your ceiling can rise a little. If it went down, tighten the ceiling, trim the weakest ad groups and look at whether the profile and site are converting visitors.

At day 60 and day 90, repeat the exercise and add one more check: how many customers came back. Repeat visits are often the number that turns a doubtful launch into a sound one, especially for studios, clinics and tutoring.

Keep the arithmetic on one page you can update in ten minutes. A spreadsheet with five inputs is enough.

Common budget mistakes

1. Using revenue instead of gross profit. It inflates the value of an enquiry and justifies overspending.
2. Assuming a high closing rate. New businesses usually close fewer enquiries than they expect.
3. Counting lifetime value nobody has earned yet. Stick to first-year repeat value.
4. Treating the website as a monthly cost. It distorts the monthly picture.
5. Never revisiting the numbers. Redo the arithmetic after 30, 60 and 90 days with real data.

Where we fit

We run this arithmetic with every owner in the first conversation, and we'll tell you if the answer is "not yet". The pricing page has the full plan table, and the launch countdown guide shows where the budget fits in the wider timeline. To check your own numbers with us, contact us by call, text or email.

This guide is marketing arithmetic, not accounting or tax advice. We are not a contractor, and our fees pay for marketing work only.