Marketing Budgeting Methods: Percentage of Sales, Objective-and-Task, Top-Down vs Bottom-Up, Zero-Based
Written by
CMO with 10+ years experience managing marketing budgets at B2B SaaS companies
Guide chapters (12)
There are five methods for setting the marketing budget number and one pair of directions for building it. Percentage of sales multiplies expected revenue by a benchmark share; objective-and-task works back from the growth target through the funnel; competitive parity copies the market; the affordable method spends what is left; zero-based budgeting rebuilds every line from zero. Top-down and bottom-up describe whether the number starts with leadership or with channel owners. Every example below uses the same company: $20M revenue, growing 25%, sales-led B2B SaaS.
Percentage of sales method
The budget is a fixed percentage of expected revenue (or of last year's revenue). The percentage comes from a benchmark or from what the company spent before.
| Input | Value |
|---|---|
| Expected revenue | $20,000,000 |
| Benchmark share for B2B product companies | 7.4% (CMO Survey 2025) |
| Chosen share (growth stage, above benchmark) | 8% |
| Marketing budget | $1,600,000 |
Percentage of sales on the example company. The CMO Survey 2025 average is 11.4% of total company budget across all sectors; B2B companies sit at 6.7 to 7.4%.
- Strength: takes an afternoon, and finance recognizes the logic instantly because it is how they think about every cost line.
- Weakness: it treats marketing as a consequence of sales rather than a driver of them. In a year where revenue is expected to fall, the method cuts the one budget that could reverse the fall.
- Use it as: a ceiling check on the number the objective-and-task method produces. If the two disagree by more than a few points of revenue, one of them is wrong and you need to know which.
Objective-and-task method
Start from the objective, list the tasks required to reach it, cost each task, and add them up. This is the method the rest of the guide is built on: the CPA target chapter derives the acquisition spend and the categories chapter adds the rest.
| Step | Input | Result |
|---|---|---|
| Objective | 25% growth on $20M | $5M new revenue; at $25k ACV, 200 new customers |
| Conversions needed | 25% SQL win rate, 40% MQL to SQL | 800 SQLs, 2,000 MQLs |
| Acquisition tasks | 2,000 MQLs at last year's $400 blended CPA | $800,000 paid media, content, events |
| People tasks | Five-person team plus one hire in Q2 | $620,000 headcount |
| Supporting tasks | Tools, agencies, creative production | $230,000 |
| Budget | Sum of tasks | $1,650,000 (8.25% of revenue) |
Objective-and-task on the example company. The funnel rates are illustrative; use last year's.
- Strength: every dollar traces to a conversion, so the budget survives line-by-line questioning and the cut conversation becomes “which 200 customers do you want to give up?”.
- Weakness: it needs funnel data and takes two to three weeks longer than a percentage. Teams without last year's CPA end up guessing the most important input.
- Use it as: the method that builds the plan. Then compare the total with the percentage-of-sales number; here they land within a quarter point of each other, which is what you want.
Competitive parity method
Set the budget to match competitors' share of voice or their estimated spend as a share of revenue. If the three closest competitors spend an estimated 10% of revenue, the example company would budget $2M.
- Strength: it protects share of voice in categories where visibility is the game, such as paid search in a crowded market.
- Weakness: competitor spend is guessed from ad libraries, job postings and analyst estimates, and competitors' goals are not yours. Copying a company that is over-investing is still over-investing.
- Use it as: one input to the growth-initiatives review, when deciding how much a specific channel needs to be competitive, not as the method for the total.
Affordable method
Also called the all-you-can-afford method: finance projects revenue, subtracts every other cost and the target margin, and marketing gets what remains. Common in bootstrapped and early-stage companies and in any company with a runway problem.
- Strength: it never breaks the company. When cash is the binding constraint, this is the honest method.
- Weakness: the budget shrinks exactly when marketing is needed most, and it is the first budget cut in a revision because it was never tied to a target.
- Use it as: the floor. If the affordable number is below the objective-and-task number, the conversation with the CEO is about the growth target, not about the marketing budget.
Zero-based budgeting
Every line item starts at zero each cycle and must be justified against the current objective. Nothing is carried forward with a 5% uplift because it existed last year.
| Apply zero-based review to | Carry forward with a review |
|---|---|
| Tool subscriptions (overlap, unused seats) | Headcount (justified at hiring, not annually) |
| Agency retainers and contractor agreements | Proven channels at target CPA |
| Event sponsorships and memberships | Contracted annual commitments |
| Any line item with no conversion metric | Compliance and brand basics (website, domain, legal) |
Where zero-based review pays off in a marketing budget, and where it only adds work.
- Strength: it finds the zombie spend: the analytics tool nobody opened since March, the retainer for work that moved in-house.
- Weakness: applied to everything it doubles the planning cycle and burns the team's goodwill. The 10-15% of the budget that is genuinely questionable does not justify re-arguing the other 85%.
- Use it as: discipline on variable spend in a cost-pressure year, and a once-every-two-years review of tools and agencies.
Top-down vs bottom-up budgeting
Top-down and bottom-up are not budgeting methods; they describe where the number starts. In a top-down process the CEO or board sets the envelope (a total, or a percentage-of-revenue range) and marketing allocates within it. In a bottom-up process channel owners estimate what their targets cost and the total is the sum. Your budget autonomy level decides which one you are in.
| Aspect | Top-down | Bottom-up |
|---|---|---|
| Starts with | A total or a % of revenue from leadership | Channel owners' estimates for their targets |
| Typical method | Percentage of sales, affordable | Objective-and-task |
| Speed | Days | Two to four weeks |
| Fails when | The envelope ignores channel capacity and CPA reality | The sum overshoots what finance will approve, then gets cut flat |
| Best for | Setting the target range and the ceiling | Building the line items and defending them |
Run both and reconcile them in the target-setting phase of the planning process: the top-down envelope tells you whether the bottom-up plan is fundable, and the bottom-up plan tells leadership what the envelope actually buys.
Which method to use: comparison table
| Method | How the number is set | Example result | Best for | Main weakness |
|---|---|---|---|---|
| Percentage of sales | Revenue × benchmark share | $1.6M (8%) | Ceiling check, mature companies | Marketing follows sales instead of driving them |
| Objective-and-task | Goal → funnel → cost of tasks | $1.65M | Building and defending the plan | Needs funnel data; slower |
| Competitive parity | Match competitors' estimated spend | $2.0M (10%) | Share-of-voice decisions per channel | Inputs are guesses; goals differ |
| Affordable | Revenue − other costs − margin | Whatever is left | Cash-constrained companies | Shrinks when needed most; cut first |
| Zero-based | Every line justified from zero | Objective-and-task minus zombie spend | Cost-pressure years; tools and agencies | Doubles the planning cycle if applied to everything |
The methods side by side on the $20M example company.
The combination the guide recommends
- Build the plan with objective-and-task, delegated to channel owners (bottom-up).
- Check the total against the percentage-of-sales benchmark and the leadership envelope (top-down).
- Apply zero-based review to tools, agencies and anything without a conversion metric.
- Use the 70/20/10 rule only for the allocation between proven, adjacent and experimental spend, never for the total.
Frequently asked questions
What are the main marketing budgeting methods?
- Five methods set the number and one pair describes the direction: percentage of sales (revenue × benchmark share), objective-and-task (work back from the goal through the funnel), competitive parity (match the market), affordable (spend what is left) and zero-based (justify every line from scratch), plus top-down versus bottom-up, which describes whether the number starts with leadership or with the channel owners.
What is the percentage of sales method?
- The marketing budget is set as a fixed percentage of expected (or last year’s) revenue. A $20M company at 8% budgets $1.6M. It is fast and easy to defend with benchmarks (the CMO Survey 2025 average is 11.4% of total company budget, 6.7 to 7.4% for B2B), but it treats marketing as a consequence of sales instead of a driver of them. Use it as a ceiling check, not as the plan.
What is the objective and task method of budgeting?
- Start from the objective (for example 80 new customers), list the tasks required to reach it (800 MQLs at a $750 blended CPA, two campaigns, one hire), cost each task, and the sum is the budget. It produces a number finance can interrogate line by line, which is why the guide builds the plan this way; the cost is that it takes two to three weeks longer than a percentage.
Is top-down or bottom-up budgeting better for marketing?
- Neither on its own. Top-down gives the envelope: a revenue target and an acceptable percentage-of-revenue range from the CEO or board. Bottom-up builds the line items from channel CPAs and resource needs. Reconcile them in the target-setting phase; a pure top-down number ignores channel capacity and a pure bottom-up plan usually overshoots what finance will approve.
What is zero-based budgeting in marketing?
- Every line item starts at zero each planning cycle and has to be justified against the current objective, rather than being carried forward from last year with an increase. It surfaces zombie subscriptions and retainers, at the cost of a much longer planning cycle. The practical version applies zero-based review to variable spend (media, agencies, tools) and carries headcount forward.
Which budgeting method do most companies use?
- Most companies combine a percentage-of-revenue envelope set by finance with bottom-up estimates from marketing. Growth-stage companies lean on objective-and-task because they have to show the link between spend and pipeline; mature companies lean on percentage of sales with zero-based reviews in cost-cutting years.
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