Podcast Summary: "How to Budget Marketing in 2026 (Without Wasting Cash)"

Owned and Operated – A Plumbing, Electrical, and HVAC Business Growth Podcast
Host: John Wilson
Guest: Sam Preston, CEO of Service Scalers
Episode Date: January 27, 2026

Episode Overview

In this episode of Owned and Operated, John Wilson and guest Sam Preston dive into the practicalities and strategies behind marketing budget planning for home services businesses in 2026. The conversation, grounded in their experience with HVAC, plumbing, and electrical companies, explores not only how much to spend, but critically, how to think about spending – focusing on profitability, adaptability, and measurable results. They break down budgeting frameworks, common mistakes, and actionable tactics for both new and established operators, emphasizing data-driven flexibility over outdated rules of thumb.

Key Discussion Points & Insights

1. Rethinking Marketing Budget Formulas

• Gross Profit vs. Revenue: John advocates for setting marketing budgets as a percentage of gross profit, not revenue.

  • “I think that marketing budget should not be a percentage of revenue. I think that it should be a percentage of gross profit.” (03:07 - John)
  • The traditional revenue-based percentage doesn't account for differing business margins, potentially leading to overspending or underspending.
  • Gross margin variations make budgeting needs unique for each business.

• Understanding Gross Profit: John provides a quick accounting 101:

  • If you do $10 in revenue and $5 is spent on labor, materials, etc., your gross profit is $5, or a 50% margin. Overhead (including marketing) comes out of gross profit, not revenue. (04:13–07:34)
  • Takeaway: Marketing is part of overhead and should be evaluated in context of actual profitability, not just revenue.

2. Separating Fixed and Variable Costs

• Marketing is Not a Fixed Cost: Unlike salaries or rent, marketing spend should flex based on market demand, seasonality, and channel performance.

  • “Marketing is like its own animal. So I like separating it out.” (08:03 - John)

• Baseline + Flexibility: Have a baseline marketing spend, but be prepared to adjust up or down as channels perform or market needs evolve. (09:53–10:11)

3. Budgeting by Business Stage

• New vs. Established Companies:
  • New companies will need to spend more to acquire leads due to lack of organic sources, memberships, and established reviews.
  • Older, established companies can rely more on recurring and organic leads, reducing needed marketing spend.
  • “If you're a new business, like you should expect to spend differently than a 10 year old business.” (00:07 - John; 13:14-16:48)

4. Determining “The Number”: How Many Leads Do You Need?

• The fundamental starting point for any marketing budget: How many leads do you need each day?
  • “The short answer is what does it take to fill your board?” (13:59 - John)
  • Many businesses don’t know this basic number and struggle needlessly as a result.
  • The “raise your floor” concept: Build up recurring/organic streams to reduce the number of paid leads needed daily. (16:08-18:21)

5. The Five Budget Buckets (Sam’s Framework) (18:21–20:27)

1. What worked last year: Double down on channels with proven ROI.
2. Wasted spend: Identify and eliminate unproductive campaigns.
3. Discovery: Money set aside to test new channels or tactics (“willing to lose it all” bucket).
4. Emergency: Reserve for crisis moments when lead flow drops unexpectedly.
5. Investment: Long-term bets (SEO, branding, social), paying off over time.

• “If you can back into how many leads you need, that's when you're really winning.” (20:27 - Sam)

6. It’s Usually Not a Lead Problem

• Most operators misdiagnose their problems—it's often booking rate or sales process, not lack of leads.

  • “I'm always convinced that companies don't have a lead problem. Something else is broken out there in the chain.” (20:27 - John)

• Example: A company with plenty of leads but a call center failing to book appointments. Improving scripts and outbounding doubled bookings overnight. (21:39–24:02)

7. How Much Should You Spend?

• Industry standard: 10% of revenue is common, but John finds 7-8% more realistic as businesses scale and gross margin becomes the guiding factor. (24:40–29:00)
• A $10M company might spend $80k/month on marketing, but allocation varies (direct lead gen, salaries, branding, software, etc.).
• Channel breakdown and clarity on what’s included (personnel, agency fees, direct spend, field marketing, software). (27:38–30:46)

8. Discovery & Testing: Don’t Spread Thin, Scale What Works

• For new businesses: Discovery is most of the budget—test LSA, Google Ads, etc.
  • “If you knew what worked, you wouldn’t be small.” (32:30–32:39 - John)
• For midsize/large: Try new channels, but don’t fragment budget across too many simultaneously; maximize one, then move to the next.
• “The more channels you have driving leads, the safer your business is...” (33:18 - Sam)

9. Robust, Binary Method for Testing Campaigns

• “Kill vs. Scale” (36:29–38:34, John):
  1. Did the source give 100 leads?
  2. Did you close a sale?
  3. Was ROI positive? (5x ROI = acceptable, 8x = great, below 5x = kill)
• “I want to put in energy or dollars...and I want to have a rough idea of what I should expect to get out of it.” (38:34 - John)

10. Emergency Budgets & Tactics

• Have tiers of emergency response for slow days: quick wins (outbound calling, SMS, door knocking) versus ramping up ad spend.
• “The shorter the time period [for results], the less budget, because budget doesn’t work...” (39:55–43:27 - John)
• Real morning example: Board was empty; direct actions filled it in hours.

11. Tuning Paid Campaigns

• For existing PPC campaigns, flex budgets by +/-20-30% in response to demand, rather than totally on/off or radical swings.
• But don't expect instant results from cold start campaigns. (43:46–45:02)

Notable Quotes & Moments

• John: “I think that marketing budget should not be a percentage of revenue. I think that it should be a percentage of gross profit.” (03:07)
• Sam: “What worked for you last year? What was wasted spend? What do we want to try this year?...what happens when your callboard is in the red?...and where are you investing for the future?” (18:21)
• John: “Most people don’t actually have a lead problem. Something else is broken out there in the chain.” (20:27)
• Sam: “You can’t hit a target if you don’t know what the target is.” (16:48)
• John: “[On leads from PPC] I would scale that. If I sold $10,000 and I broke even, I would not scale that.” (37:53)

Timestamps for Key Segments

• [03:07] - The case for gross profit-based budgeting
• [07:34] - Overhead, gross profit, and what goes in each bucket
• [13:14] - How to advise a $5M-$10M business on spend
• [16:08] - The “raise your floor” approach for repeat/organic leads
• [18:21] - The 4 (turned 5) marketing budget “buckets”
• [20:27] - Why finding your “lead problem” often reveals a booking or sales process problem
• [24:40] - How much to spend: Rules of thumb and real numbers
• [27:38] - What’s included in the marketing budget—personnel, agency, direct spend, etc.
• [32:30] - Don’t spread ‘discovery’ budget too thin; max out channels then test new ones
• [36:29] - Kill vs. Scale: A binary method for testing new marketing channels
• [39:55] - Emergency budget strategies: fast vs. long-term levers
• [45:02] - Final takeaways and advice

Big Takeaways

• Always Know Your Lead Number: You must know how many leads you need per day—otherwise, you’re flying blind.
• Build Budgets by Gross Profit and Stage: Use gross profit as a baseline, consider your business age, and adjust as you grow—not one-size-fits-all.
• Flexibility is Essential: Marketing budgets aren’t static; they flex with market, season, and winning channels.
• Systematize Discovery and Testing: Don’t scatter small bits across every channel—validate with real numbers before scaling.
• Have a Crisis Playbook: Emergency budgets and direct action tactics keep your board full when things get lean.
• It’s Rarely Just a Lead Problem: Address booking, sales, and operational process before assuming more leads are the answer.

Coming Up Next

The next episode will tackle when and how to hire your first marketing manager, what their responsibilities should be, and how to maximize this key role as your business scales. (47:21–end)

This summary captures the detailed frameworks, candid business insights, and the direct, sometimes lighthearted, exchange that make the Owned and Operated podcast a practical guide for every home services entrepreneur.