Marketing Budget Allocation for Home Services

The average home service company spends 5-12% of gross revenue on marketing. Companies in growth mode push that to 15% or higher. The question isn’t how much to spend. The question is where to put it.

Most contractors allocate budget based on habit. They’ve always run Google Ads, so they keep running Google Ads. They tried Facebook once and it didn’t work, so they never touch it again. They heard about direct mail from another contractor at a trade show, so they give it a shot for two months before abandoning it.

This approach wastes money. Real allocation decisions require understanding what each channel actually delivers and how those economics change based on your specific situation.

The baseline numbers

Home service marketing costs have increased 10% year-over-year on average. 69% of contractors reported rising lead costs in the past 12 months. Google Ads clicks run $32.77 for HVAC keywords, among the highest of any industry.

At these prices, a contractor spending $5,000/month on Google Ads gets roughly 150 clicks. At a 4% website conversion rate, that’s 6 leads. At an industry-average 7.8% close rate, that’s less than one booked job per month from $5,000 in ad spend.

The math doesn’t work unless you improve conversion rates, close rates, or both.

Contractors who understand these unit economics make fundamentally different allocation decisions than those who just look at the monthly bill and wonder why leads feel expensive.

How to think about allocation

Budget allocation should answer a simple question: where does the next dollar generate the most revenue?

For most contractors, the honest answer is uncomfortable. The next dollar probably shouldn’t go to acquiring new leads at all. It should go to converting more of the leads you already have.

78% of customers go with the first contractor to respond. Responding in under 5 minutes versus 47 hours (the industry average) can mean the difference between closing 10 jobs and closing 2 from identical lead volume. No new ad spend required.

Read more about speed to lead and the 5-minute rule.

Before adding budget to any acquisition channel, audit your current conversion path. How fast do you respond to inquiries? What percentage of calls go unanswered? How many website visitors leave without converting? 96% of visitors leave most contractor websites without taking action, and most contractors have no way to identify or follow up with them.

Fix the leaky bucket before pouring in more water.

Channel breakdown by cost and performance

Google Ads (Search)

Average cost per click for home services: $25-45 depending on trade and market. Emergency keywords cost more. Branded keywords cost less.

Pros: High intent, immediate visibility, measurable results, geographic targeting.

Cons: Expensive, competitive, requires ongoing optimization, costs rise during peak season when you least need help.

Recommended allocation: 30-40% of budget for established businesses with optimized conversion paths. Lower for businesses still fixing fundamentals.

The mistake most contractors make is setting up campaigns and letting them run without optimization. Google Ads requires weekly attention to keywords, bids, ad copy, and landing pages. Contractors who treat it as set-and-forget burn through budget on irrelevant clicks.

Local SEO and Google Business Profile

Cost: $500-2,000/month for professional management, or significant time investment for DIY.

Pros: Compounds over time, captures high-intent local searches, builds long-term asset, no per-click cost.

Cons: Takes 6-12 months to show results, requires consistent effort, algorithm changes can disrupt rankings.

Recommended allocation: 15-25% of budget, but this varies based on current position. Contractors with weak local presence should invest more upfront.

88% of local searches result in a service call within 24 hours. Contractors in the Google Local Pack get 126% more traffic than those ranked below. The math favors SEO investment, but only if you have the patience to wait for results.

Read more about SEO for home service businesses.

Review generation

Cost: $50-200/month for automation tools, plus staff time for manual requests.

Pros: Massive ROI on both conversion rates and local rankings, compounds over time, differentiates from competitors.

Cons: Requires operational changes, some customers won’t respond regardless of timing.

Recommended allocation: 5-10% of budget, with emphasis on systems rather than volume.

91% of homeowners check reviews before booking. Companies with 200+ reviews outperform those with 30 in both rankings and conversion rates. Getting from 30 to 200 reviews requires systematic requests, not occasional asks.

Automated SMS requests sent within 2 hours of service completion get 42% response rates. Waiting two days drops that to 6%. The budget line item is small, but the operational change is significant.

Read more about review generation strategies.

Direct mail and postcards

Cost: $0.50-2.00 per piece including design, printing, and postage.

Pros: Physical presence stands out, geographic targeting, no algorithm changes, works for neighbor marketing.

Cons: Lower response rates than digital, requires volume to be effective, tracking is harder.

Recommended allocation: 10-15% of budget for contractors with established territories and repeat service opportunities.

Direct mail works best when targeted. Sending 5,000 generic postcards to random addresses generates minimal response. Sending 50 postcards to neighbors within 500 feet of a recent job converts at dramatically higher rates because social proof from a nearby job builds trust.

The contractors getting real ROI from direct mail aren’t doing mass campaigns. They’re doing targeted follow-up tied to completed work.

Read more about postcard marketing for home services.

Email marketing

Cost: $20-300/month for email platform, plus time for content creation.

Pros: Highest ROI of any channel at $36-44 per dollar spent, direct relationship with customers, no advertising costs.

Cons: Requires email list, needs consistent content, can’t acquire new customers.

Recommended allocation: 5-10% of budget, primarily in time rather than dollars.

Most contractors ignore email entirely or send sporadic blasts with no strategy. This leaves money on the table.

Two email approaches work. Drip campaigns nurture leads automatically over weeks, building trust until they’re ready to buy. Blast campaigns reactivate past customers during slow periods. One contractor generated $60K from a single “we miss you” campaign to customers who hadn’t booked in 18 months.

Read more about email marketing for home services.

Social media

Cost: Variable, from free organic posting to thousands for paid campaigns.

Pros: Brand building, community presence, younger demographics, before-and-after content performs well.

Cons: Low intent, algorithm dependence, time-intensive, hard to track to booked jobs.

Recommended allocation: 5% or less of budget for most contractors.

Social media works for brand building and community presence, but rarely drives direct leads for home services. Homeowners don’t scroll Facebook looking for a plumber. They search Google when the toilet won’t flush.

Exceptions exist. Storm damage restoration companies can reach homeowners immediately after weather events. Landscaping companies can showcase portfolio work. But for most trades, social media is a supporting channel, not a primary lead source.

Allocation by business stage

Solo operator ($200K-500K revenue)

Total marketing budget: $1,000-4,000/month

Recommended allocation: 40% Google Ads, 25% local SEO and GBP, 20% review generation, 15% direct mail to past customers and neighbors.

The priority at this stage is getting the phone to ring with jobs you can actually complete. Avoid spreading budget across too many channels. Pick two or three and execute well.

Small team (2-5 trucks, $500K-2M revenue)

Total marketing budget: $4,000-15,000/month

Recommended allocation: 35% Google Ads, 20% local SEO, 15% review automation, 15% email marketing, 10% direct mail, 5% social media.

At this stage, you have more jobs to leverage for neighbor marketing and email reactivation. Systems become critical because you can no longer manage everything manually.

Multi-location ($2M+ revenue)

Total marketing budget: $15,000-50,000+/month

Recommended allocation: 30% Google Ads (separate campaigns by location), 20% local SEO (per-location optimization), 15% brand building, 15% review automation across locations, 10% email, 10% direct mail.

Multi-location businesses face a different challenge: maintaining brand consistency while allowing location-specific execution. Budget should include line items for cross-location marketing coordination, not just per-location spend.

Read more about multi-location marketing strategies.

The metrics that matter

Cost per lead is the metric most contractors track. Cost per booked job is the metric that actually matters.

A $50 lead that converts at 2% costs $2,500 per job. A $150 lead that converts at 20% costs $750 per job. Chasing cheap leads without tracking close rates leads to budget allocations that look efficient on paper and lose money in practice.

Track these numbers by channel: leads generated, cost per lead, leads converted to jobs, cost per job, average job value. Channels with high CPL but strong close rates may outperform channels with low CPL and poor quality.

The contractors who consistently beat their competitors on unit economics aren’t spending more. They’re measuring better and reallocating faster.

Seasonal adjustments

Most contractors make a critical error during slow season: they cut marketing budget because revenue is down.

This is backwards. Peak season requires less marketing because demand is already high. Slow season requires more marketing because you’re competing for a smaller pool of available jobs.

During shoulder seasons, shift budget toward maintenance agreement promotion, reactivation campaigns to past customers, and service bundles designed for off-peak work. Equipment installations with manufacturer rebates can fill winter schedules.

During peak season, shift budget toward efficiency. Reduce acquisition spend if you’re already booking out. Invest in operational improvements that increase close rates and average job size.

Read more about slow season marketing strategies.

What most contractors get wrong

The biggest allocation mistake is treating all leads as equal. A lead from a homeowner who visited your water heater page three times and spent 6 minutes reading about tankless options is not the same as a lead from someone who filled out a generic “get a quote” form on Angi.

Intent matters. Channels that deliver high-intent leads deserve more budget even if their raw cost per lead looks higher.

The second mistake is ignoring the 96% of website visitors who leave without converting. Most contractors accept this as normal because they have no way to see who those visitors are. When you can identify which homeowners visited your emergency AC page at 10pm, you can follow up before they call your competitor.

Capturing demand you’re already paying for delivers better ROI than paying for new traffic to a website that converts at 4%.

The best budget allocation in 2026 isn’t about which channels to fund. It’s about fixing conversion first, measuring what actually drives revenue, and reallocating faster than your competitors.