How to Determine the Right Marketing Budget for Your Practice
One of the most frequently asked questions from healthcare practitioners is "How do I determine the right marketing budget for my practice?" The answer depends on what type of practice you have, your location, your sub-specialty, your annual revenues and your revenue goal. Generally, the greater your revenue goal, the more dollars you should allocate to marketing.
For example, if your current revenues are about $500,000 annually and you want to grow by another $100,000 (20% growth), your marketing allocation should be approximately $50,000 the first year. That figure assumes an ROI of at least 2:1, or $2 earned for every $1 invested. At Practice Builders, we typically aim for a 3:1 ROI, and we’ve occasionally seen ROIs as high as 50:1. Of course, your ROI will depend largely on the strategy or tactic being measured and other variables such as practice type, location and specialty.
Always start with your annual revenues and revenue goals.
Your marketing budget should always be tied to your gross revenue and additional revenue goal. Here are some examples of typical marketing allocations based on desired revenue growth goals:
To Increase By This Amount: Invest Approximately This Amount:
Always start with your annual revenues and revenue goals.
Your marketing budget should always be tied to your gross revenue and additional revenue goal. Here are some examples of typical marketing allocations based on desired revenue growth goals:
To Increase By This Amount: Invest Approximately This Amount:
$100,000 $30-50,000
$250,000 $100-125,000
$500,000 $200-250,000
$250,000 $100-125,000
$500,000 $200-250,000
You can also determine your marketing budget based on a percentage of your current revenue. Most businesses invest 5-10% of their revenues back into marketing, with 7% being a typical average. The same is true of many healthcare practices.
Your practice type and location are also important considerations.
Your practice type is an important factor in determining your marketing budget. We have many clients who are plastic surgeons. They routinely invest 20% or more of their revenues back into marketing. Orthodontists and cosmetic dentists, who often have larger case sizes, also tend to invest 10-15% or more into marketing.
To a lesser extent, your practice location will also effect your investment. If you are in a major metropolitan area like New York, Chicago, Dallas or Los Angeles, your media costs (for print advertising, radio, TV or outdoor) will be higher. If you are in a more rural area, your media costs will be lower. In either case, you can adjust your investment up or down by as much as 20%.
Keep in mind that marketing is not an expense. It’s an investment. To learn more about budgeting your marketing program, call Practice Builders at 800.679.1262 today.
Your practice type and location are also important considerations.
Your practice type is an important factor in determining your marketing budget. We have many clients who are plastic surgeons. They routinely invest 20% or more of their revenues back into marketing. Orthodontists and cosmetic dentists, who often have larger case sizes, also tend to invest 10-15% or more into marketing.
To a lesser extent, your practice location will also effect your investment. If you are in a major metropolitan area like New York, Chicago, Dallas or Los Angeles, your media costs (for print advertising, radio, TV or outdoor) will be higher. If you are in a more rural area, your media costs will be lower. In either case, you can adjust your investment up or down by as much as 20%.
Keep in mind that marketing is not an expense. It’s an investment. To learn more about budgeting your marketing program, call Practice Builders at 800.679.1262 today.