How to find out the tight marketing budget for your practice?

One of the oft-asked questions from healthcare practitioners is “How do I figure out the right marketing budget for my practice?” The answer depends on what type of practice you have, your location, your sub-specialty, annual revenues and your revenue target. Normally, the greater your revenue goal, the more money you should give to marketing.

For instance, if your present revenues are around $500,000 a year, and you want to grow by another $100,000 (20 percent growth), your marketing allocation should be about $50,000 the first year. That figure assumes an ROI of at least 2:1, or $2 earned for every $1 invested. Healthcare marketing agencies normally aim for a 3:1 ROI, and we have 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 like practice type, location and specialty.

Always begin with your annual revenues and revenue goals

Your marketing budget should always be tied to your gross revenue and added revenue goal. Here are some more instances 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

You can also find out your marketing budget based on a percentage of your present revenue. Most businesses invest 5-10 percent of their revenues back into marketing, with 7 percent being a typical average. The same is the case with many healthcare practices.

Your practice type and location are also key considerations.

Your practice type is a vital component in determining your marketing budget. There are many clients who are plastic surgeons. They regularly invest 20 percent or more of their revenues back into marketing. Orthodontists who often have larger cases, also tend to invest 10-25 percent or more into their orthodontist marketing.

To a lesser extent, your practice location will also have an impact on your investment. If you’re in a major metropolitan area like New York, Chicago, Dallas or Los Angeles, your media budget (for print advertising, radio, TV or outdoor) will be more. And if you are in a more rural area, your media costs will be lower. In both case, you can adjust your investment up or down by as much as 20 percent.

You should remember that marketing is not an expense. It is an investment. Turn to healthcare marketing agencies to learn more about budgeting your marketing program.