Home Forums Marketing mastery How much should you budget for marketing new products

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  • #993284
    Mischelle
    Member
    • Total posts: 805

    Hi Everyone,

    I needs some input, I am arranging to have a meeting with a marketing consultant next week, but thought I would get some input from all of you soloists as well.

    How much should I budget for the launch of my new products. HARD QUESTION isn’t it :)

    In the past I have always allowed a minimum of 5% of revenue from a product to be fed back into the marketing budget, but my dilemma is my new products have no history of sales only projected and they are for a separate company so I can’t gouge the other company bank account, so I need to put a budget together to finance it from my other business as a loan.

    As a small business owner the money pot is not endless so I want to make sure I have everything clear in my head before starting.

    I want to include everything sales and marketing related in my budget, or is that unrealistic, so far I have:

    • Website development
    • Brochures (digital and print)
    • Consultant for strategy
    • Staff for social media management
    • Trade shows
    • Conference Sponsorship (great for branding)
    • My time for content development
    • Association Memberships

    What am I missing that could cost me more money than I anticipate?

    SUMMARY OF PRODUCT:

    We are a B2B with on-line business management software, for contractors, training and more being developed. We have a solid corporate base for our existing systems and have had then for 10 to 15 years, but the new systems have a different target market and I have 10 BETA testing clients lined up, which will help as I will have a client base to start, but not nearly enough.

    I would really appreciate your help.

    :)

    #1190810
    Dave Gillen – FS Concierge
    Keymaster
    • Total posts: 2,543

    Hi Mischelle,

    A couple of key (general) factors come to mind:

    1. Upside. I’d expect your budget to reflect your ambitions for the business. Richard Branson might have the same list of items on his list, but spend 100x more on them because you know he’s aiming for a $1b+ business. You haven’t mentioned whether your goals for revenue are $100k, $1M, $10m and that will have a big impact on the answer.

    2. Confidence. The more confidence you have in the product, the safer a larger investment becomes. Early on (pre-revenue) your confidence in the product is limited by the lack of track record, so your initial investment might be smaller and focused on gaining the confidence you need for something bigger.

    Getting your beta testers sounds like one of those steps that will increase your confidence, and getting your first few customers will be a critical step. With this in mind you might look to fund your own company the way startups seek external funding – a little at first to test the idea, then more later as confidence increases. Otherwise you risk a lot on an product that is untested in the market.

    Hopefully you’ll get some more views over the weekend. :)

    Dave

    Dave Gillen - Client Acquisition | Brisbane | (07) 3180 0288
    #1190811
    Gizmo
    Member
    • Total posts: 731

    Hello Mischelle,

    As you outlined 5% is with in the normal 5-7% we are all told we should do.

    As you have no history then 5% come out to $0!

    So for new things I always have a business plan, yeah they are all based on educated guesses but at least some thought has gone into the revenue you expect to see.
    In that you should then have your 5-7% factored in.

    So what I am saying is make a business model.
    Make it something you want to achieve as a minimum.
    Then find out what 7% of that revenue is over a year.
    Spend 30% upfront and the rest divided evenly over the 12 months.

    Keep measuring the performance of what you spend on a month to month basis. And tweak you efforts to go into what’s working best.

    #1190812
    Mischelle
    Member
    • Total posts: 805

    Thanks Dave and Gizmo,

    OK, so based on both of your posts I need to sit down and do some projections, I have not done that at all, OK maybe some hopeful dreams but not hard numbers and that will help me establish the budget and then the business plan / marketing plan will help me achieve them.

    Dave I totally understand what you are saying about confidence, maybe I am lacking a little in that area due to not having the product finished yet and it makes it hard to see where all my hard work has been going.

    I love the suggestion of starting smaller and feeding it as it grows, we will discuss that on Monday Dave if that’s OK.

    Thanks guys, I truly appreciate the suggestions and that you are taking the time out of your busy day to help me :)

    #1190813
    Warren Cottis
    Member
    • Total posts: 807

    Hi Mischelle

    Let’s not confuse Marketing with Branding, Marketing should make you Money.

    So, if you want to fast track the growth of a serious business, I’m going to say $10,000 for your base start up budget

    If making that initial commitment to your product scares you then you should take another look at your Market Research.

    #1190814
    Mischelle
    Member
    • Total posts: 805

    Hi Warren,

    Good point about the Branding and marketing, another thing I hadn’t thought of.

    $10K doesn’t scare me in the slightest, I sat down over the last couple of nights and did some planning and I am estimating about:

    1. $30K for marketing
    2. About $5K for the technical side of branding (IE Trademarks etc) I do the TM myself online.

    After your comment I might break that up a little bit more for my own clarity and that will also help me measure the ROI a bit better.

    Do you think I am being reasonable, under estimating, over estimating etc?

    I want to do this right the first time, but I will break the budget up even more once I meet with Dave.

    Cheers and a big thanks Warren, Dave and Gizmo :)

    #1190815
    Warren Cottis
    Member
    • Total posts: 807

    Hello Mischelle

    Whether $10k or $30… spend frugally in increments and make Testing your mantra. Measure your results for each channel you try and work to identify what combination gives your the best return.

    Getting the combination right the first time is very hard to do so again… test, test, test… and measure

    #1190816
    RichL
    Member
    • Total posts: 3

    Here’s what I would advise you to do:-

    > Not spend any money whatsoever right now on any sales/marketing/tech.
    > Get the product into your 10 beta clients
    > Hire a good copywriter (I’m not one) – pay them for the work and a percentage of online revenue
    > Get them to speak with your beta clients and work out what the concept/big idea would be for your product and audience.
    > Get them to write the sales copy for your sales funnel (if you can’t put a funnel together yourself, hire an online consultant to work with your copywriter and you)
    > Get the tech in place and send targeted traffic to your funnel – measure results and adjust accordingly

    You have more than enough of a budget to do all of this to a good standard, as long as the sales cycle isn’t measured in years.

    #1190817
    Warren Cottis
    Member
    • Total posts: 807
    RichL, post: 226621, member: 43999 wrote:
    Here’s what I would advise you to do:-

    > Not spend any money whatsoever right now on any sales/marketing/tech.
    > Get the product into your 10 beta clients
    > Hire a good copywriter (I’m not one) – pay them for the work and a percentage of online revenue
    > Get them to speak with your beta clients and work out what the concept/big idea would be for your product and audience.
    > Get them to write the sales copy for your sales funnel (if you can’t put a funnel together yourself, hire an online consultant to work with your copywriter and you)
    > Get the tech in place and send targeted traffic to your funnel – measure results and adjust accordingly

    You have more than enough of a budget to do all of this to a good standard, as long as the sales cycle isn’t measured in years.

    There’s only one problem Rich

    If Steve Jobs had done this with the iPhone nobody would have had a clue what he was suggesting.

    Every situation is Different and that is the Knowledge and Skill that you should pay for… which ultimately saves you lots of start up Heart Ache.

    #1190818
    MD Clean
    Participant
    • Total posts: 308

    Hi Mischelle,

    It all sounds so exciting. If you ever do a blog or journal around you experience of launching a new product, please let me know.

    Dave is an awesome operator and it is great to know that you are in good hands!

    To contribute to the thread, 1 approach not mentioned is to do a pre-launch strategy (and budget) where you create just a landing page and use a platform like Adwords to test the strength of demand for your idea.

    It is a cost effective way to do A/B testing as well (different ads, different landing pages.

    Out of a failed enterprise, 1 entrepreneur came across an important book based around market testing methodology called the Mom Test.

    “This is a topic superbly explained in Rob Fitzpatrick’s (@robfitz) great book “The Mom Test”. It’s definitely the most important business book I read in the last few years. It’s right up there with “The Lean Startup”. I can’t recommend it enough. Conduct customer research without it at your peril.”

    The full story is here and it is sobering:
    https://medium.com/@michalbohanes/seven-lessons-i-learned-from-the-failure-of-my-first-startup-dinnr-c166d1cfb8b8#.81aruus76

    In terms of drip-feeding your budget, try to work out in order, what will give you your biggest bang for your buck and release your funds on that basis from highest to lowest if that is possible.

    The other way to do that is to work on a staged basis so that stage 1 is a 5 page website. Stage 2 builds to 15 pages and stage 3 might be 30 pages etc.

    Good luck with your new product and let us know how you go.

    #1190819
    Mischelle
    Member
    • Total posts: 805

    Hi All,

    Thanks so much for all your feedback, now Christmas is over and I can get back on track, I am meeting with Dave this week, finally, after loads of business trips away and Xmas I got delayed (sorry Dave).

    I will read through all of the post very carefully, a few of you suggested the staged approach so I will plan that out.

    I am also going to organise social media marketing training for my staff so they can help me stay on top of it all, of course they will not be writing any content as they are not qualified on the subject, but they will help with the maintaining.

    Thanks everyone

    #1190820
    MarketingAnt
    Member
    • Total posts: 20

    Y

    Mischelle, post: 223937, member: 60404 wrote:
    Hi Everyone,

    I needs some input, I am arranging to have a meeting with a marketing consultant next week, but thought I would get some input from all of you soloists as well.

    How much should I budget for the launch of my new products. HARD QUESTION isn’t it :)

    In the past I have always allowed a minimum of 5% of revenue from a product to be fed back into the marketing budget, but my dilemma is my new products have no history of sales only projected and they are for a separate company so I can’t gouge the other company bank account, so I need to put a budget together to finance it from my other business as a loan.

    As a small business owner the money pot is not endless so I want to make sure I have everything clear in my head before starting.

    I want to include everything sales and marketing related in my budget, or is that unrealistic, so far I have:

    • Website development
    • Brochures (digital and print)
    • Consultant for strategy
    • Staff for social media management
    • Trade shows
    • Conference Sponsorship (great for branding)
    • My time for content development
    • Association Memberships

    What am I missing that could cost me more money than I anticipate?

    SUMMARY OF PRODUCT:

    We are a B2B with on-line business management software, for contractors, training and more being developed. We have a solid corporate base for our existing systems and have had then for 10 to 15 years, but the new systems have a different target market and I have 10 BETA testing clients lined up, which will help as I will have a client base to start, but not nearly enough.

    I would really appreciate your help.

    :)

    Hi,

    you have missed on critical factor. What’s your customer lifetime value?
    calculate this single item, and it will let you know how much you can spend to attract new customers and convert them into sales.

    #1190821
    MikeDav
    Member
    • Total posts: 163

    Hi Michelle, personally I generally go for around 10% on an established product or service. This would usually be on more direct measurable marketing options like adwords.

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