The honest answer is that there is no right percentage, and the rule of thumb you've been handed is answering a question you didn't ask. Five percent of revenue, ten percent of revenue, pick a number. None of them know anything about your school.
A percentage rule tells you what a business your size typically spends. It tells you nothing about whether spending it will work, and nothing about whether you can survive having spent it. Those are the two things you actually need to know before you set a daily budget, and a school doing $30,000 a month with no free slots on the timetable and a school doing $30,000 a month with half-empty afternoon classes should not be spending the same amount. One of them has somewhere to put new students.
Here is a more useful frame. Your ad budget is not a number you choose. It's a ceiling you run into, and you run into whichever of these three is lowest:
- The cash you can float between paying the ad platform and the new students paying you.
- The space on your mat and the instructor hours to cover it.
- The amount you can afford to have wasted if this particular month is a dud.
Find all three. The lowest one is your budget this month. That's the whole method, and the rest of this article is how to work each one out.
First, the floor
Before the ceilings, there's a floor, and plenty of schools are spending under it.
A budget too small to produce a readable result is worse than no budget, because you pay for it and learn nothing. If you spend enough to get four enquiries in a month, and one of them books, and they don't show, you now have a month of data that means nothing. Four is noise. You will conclude "ads don't work for my school" on evidence that couldn't have shown you anything either way.
The floor is the smallest spend that produces enough enrolments for the average to mean something. You cannot know that figure in advance, which is uncomfortable, but you can bracket it: if your spend in a month can't plausibly produce double figures of enquiries, you're buying anecdotes, not information. Either commit to a number that can teach you something over eight to twelve weeks, or don't start. The half-hearted version costs money and settles nothing.
Ceiling one: the cash-flow gap
This is the constraint nobody warns you about, and it's usually the one that actually bites.
You pay Meta today. The family who clicked today books for next Tuesday. They show up Tuesday, take the trial, take a week to decide, enrol the following Monday, and their first payment lands some time after that. Meanwhile you've paid the platform every single day in between.
That gap is where growing schools get frightened. One owner wrote to us in the middle of an unusually good month, and the passage worth reading is not the good news:
"I appreciate the credit as seeing all the bookings plus the Meta ad spend adding up every day was getting a bit stressful, especially not having gotten any of the students actually paying anything in yet."
A school owner. Source:
t07.png
Read that carefully, because everything in it was going right. In the same message he'd worked out his own enrolment history: "from January to October I had 41 students book a class or about 4 a month. In November you've brought in 22 for just the first half of the month." The marketing was doing what he'd hired it to do. He was still stressed, and he was right to be, because the spend was daily and the revenue wasn't there yet.
He wasn't looking at a profit-and-loss problem. On paper those students were worth a great deal more than the ads had cost. He was looking at a timing problem, which is a different thing and can close a business that is technically making money.
So work out your own gap. From the day you spend a pound to the day the student it bought makes their first payment, how many weeks is that in your school? Four? Six? Whatever it is, multiply your proposed daily budget by it. That is the amount of cash you need to be able to be out of pocket by, comfortably, before a single new student has paid you anything.
If that number frightens you, your budget is above this ceiling. Lower it until it doesn't. You can raise it out of the revenue once the first cohort starts paying, which is precisely how the owner above should have been told to start.
Another owner hit the same wall in plainer terms:
"Hi Neil how are you? everything is running really good, I'm getting more than I expected, but I need to stop for this week due it is out of my budget and resume in the week after"
A school owner. Source:
t10.png
Everything running really good. More than expected. Stop anyway. Stopping and restarting costs you momentum and it costs you the leads already in the system, and it is entirely avoidable by setting the number at what you can sustain for a full quarter rather than what looks affordable on the first of the month.
Ceiling two: the space on your mat
The second ceiling has nothing to do with money, and schools discover it with a jolt.
"Please turn down the ad spend to £12 daily. We have hardly any spaces left in our current classes!"
A school owner. Source:
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That's not a complaint, and it's not a failure. That's an owner reading his own timetable correctly and adjusting the tap. He goes on to say he's opening new classes at a new location the following month and will want separate ads for them, which is exactly the right sequence. Capacity first, spend second.
Another put a hard cap on it:
"I cant believe I'm saying this but can we maybe put cap limit of 5 per day and then I'll keep an eye on anyone who cant find a slot and do some manual bookings based on availability? Im not saying this because want to scale down, I just need to find more closers to keep up with what your team is doing!"
A school owner. Source:
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Note what he's capping. Not money. Arrivals. He's worked out that his binding constraint is the number of people who can be properly handled in a day, and he's throttling the input to match it rather than letting the overflow turn into bad first impressions.
This is the part owners get backwards. They set the budget from the bank balance and then discover the consequences on the mat. Do it the other way. Count the genuinely available places in your current timetable this month. Not theoretical capacity, not what you could take if you added a class you haven't staffed. Actual seats, with an instructor already assigned. Then work backwards through your own conversion rates: if it takes roughly four enquiries to produce a show and roughly two shows to produce an enrolment, then twelve available places means you want somewhere near a hundred enquiries a month, and no more. Spending for two hundred buys you families you cannot serve, which is worse than not having them.
If you don't know your own ratios, that's the first thing to fix, and it's covered in more detail in what to do in the twenty minutes after a trial class ends.
Ceiling three: what you can afford to have wasted
The third number is psychological and it matters more than either of the others, because it determines whether you can leave the thing running long enough to learn anything.
Ask yourself: if I spend this every month for three months and it produces nothing, is my school in trouble?
If yes, the number is too high. Not because it won't work. It might work extremely well. It's because you will not be able to leave it alone. You'll be checking the account at eleven at night, you'll pull it after five weeks, and you will have converted a real test into an expensive non-answer.
Pick a number you can lose three months of without flinching. That's usually smaller than what the agency suggests and larger than what you first thought of, and it's the number you'll actually be able to hold steady for long enough to read the result.
How to raise it
Once the money starts coming back, the budget question changes shape. It stops being "what can I risk" and becomes "what's the return on the next pound", which is a far nicer problem.
"Can we increase our Ad Budget to 1500.00, it was 1000.00 this should keep our momentum going forward. Dec. was a great month as your team continues to do a great job for me."
A school owner. Source:
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A fifty percent increase, and look at what it sits on: a month he already measured. He isn't raising the number because it's January and he feels optimistic. He's raising it because December told him something, and he's extending what December did.
That's the only defensible way to scale an ad budget. Raise it after a measured result, in increments you could reverse, and check the cost per enrolment after each step rather than after each quarter. The cost of a student is not a constant. Push spend far enough past what your local audience can supply and the same money starts buying worse enquiries, and the only way you'll know you've crossed that line is by watching the figure move.
And the way to know whether the figure is any good is to hold it against what a student is worth to you over their whole stay, not against your monthly fee. If you haven't done that calculation, do it before you touch the budget. Here's how to work out your own number. A cost per enrolment that looks alarming against a $150 monthly fee can be comfortable against the total that student will pay you before they leave.
The budget isn't only a size, it's a choice of where
One more from the wall, because it reframes the whole question:
"Hi :-) I think I need to pause the karate as everything is going great. We have lots of busyness, but I need to move the advertising budget to Crossfit."
A school owner. Source:
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He hasn't cut his marketing. He's moved it. The karate programme is full, so the money goes to the programme that isn't.
Most owners treat the ad budget as one number attached to the school. It's more useful as a number attached to a programme, reallocated when one fills up. The right question isn't "how much should I spend on ads" but "which of my programmes has empty places, and what will it cost to fill them" — and the answer will be different for your kids' classes, your adult classes and your second location, because they have different capacity, different value per student and different competition.
What to do this week
- Work out your cash-flow gap. Days from ad spend to the new student's first payment. Multiply by your daily budget. Can you carry that? If not, that's your ceiling.
- Count actual available places in your existing timetable, with instructors assigned. Convert backwards through your own show and close rates to an enquiry target.
- Name the three-month loss you could absorb without hurting. Divide by ninety.
- Take the lowest of the three. That's the budget. Run it for a full quarter without touching it.
- Then move it on evidence, in steps you could reverse, watching cost per enrolment after each one.
Nobody in this can tell you your number, including us, because three of the five inputs are facts about your building and your bank account. But the exercise takes an afternoon and it replaces a guess you'll second-guess every week with a figure you can defend.
If you'd rather the spend only counted when a student actually walked through your door, that's how we're paid. You keep your own ad account and your own budget, and we invoice on attendance. The arithmetic above still applies; it just changes which risks sit on which side of the table. The billing side of that is worked through in what each marketing billing model pays someone to do.
Client quotes on this page are reproduced as written, from messages sent by the owners concerned, and re-checked against the original screenshots. Source images: t07.png, t10.png, t21.png, t28.png, t40.png, t43.png. Nothing has been rounded, projected forward or tidied up, and no owner's caveat has been removed. The stress, the cash-flow worry and the mid-month stop are all the owners' own words and are the reason they're here. All quoted owners are anonymised; where the source material carries identifying details we have not reproduced them. Two quotes are reproduced with the owners' own spelling and grammar intact; one stray character produced by the screenshot's text layer has been dropped from the t10.png quote and nothing else in any quote has been altered. No industry statistic, benchmark or average appears on this page. The illustrative conversion ratios are labelled as examples, not as figures from any school. The $150 monthly fee is the worked example from our own earlier article, not a market rate.