Home builders frequently ask me how much I think they should allocate for their marketing budget. I find that, if they’re asking, they’re probably not spending enough—or not spending it on the right things.

One percent of your gross revenue—GROSS, not net—is a good rule of thumb. Now, if you’re grossing $10 million a year, then your marketing budget should be $100,000. Before you squirm, let me say that if your marketing isn’t getting you where you need to be, then maybe you’re not taking the steps you need to make it happen. Start by allocating a sufficient amount in your budget. As I said, 1 percent is a good figure, but if you’re trying to expand—into a new market, for example—you might need to increase the figure. If you have some brand building to do—maybe the competition has gotten tougher—you should also consider a more aggressive marketing budget.

Remember, marketing is not an expense. An expense refers to spending money that delivers no appreciable return. An investment generates value. Consider your marketing budget like any other investment in your business. Leverage its power to grow your new home sales by generating more interest, inquiries, leads, and referrals that you can convert into revenue.

What do you think? How much do you allocate yearly for marketing purposes? Leave your comments below.