"What percentage of revenue should we spend on paid acquisition?" comes up in almost every strategy conversation I have, and the honest answer is that the percentage itself is the wrong place to start. It is an output of your unit economics and growth stage, not an input you should set first and work backwards from.
The more useful framework is CAC payback period, how many months it takes to recover what you spent acquiring a customer, and LTV:CAC ratio, how much value that customer generates relative to acquisition cost over their lifetime. A business with a strong LTV:CAC ratio and a short payback period can justify spending aggressively, sometimes exceeding revenue in a given month if it is venture-backed and prioritising growth over near-term profitability. A business with thin margins and a long payback period needs to be far more conservative, regardless of what a generic "aim for 10-15% of revenue" benchmark suggests.
Early-stage companies often need to spend a higher percentage of revenue on paid acquisition than mature ones, not because the unit economics are necessarily better, but because they need the volume to learn: which channels work, which messaging resonates, what the real CAC looks like at scale. This spend is partly an investment in information, not just in customers. Mature companies with established channels and refined targeting can often achieve the same customer volume at a lower percentage of revenue because they are not paying the same learning cost.
Published benchmarks put B2B SaaS paid acquisition spend commonly somewhere between 10 and 30% of revenue depending on growth ambitions, and DTC ecommerce often runs higher as a percentage given lower average order values and shorter purchase cycles. These numbers are descriptive of what companies in those categories commonly do, not prescriptive of what your specific business should do. A company with unusually strong margins can sensibly spend above category norms. A company with thin margins should not spend at the category average just because it is the average.
Every acquisition channel has a saturation curve, the point at which additional spend produces proportionally fewer incremental conversions because you have exhausted the most efficient inventory and are reaching increasingly marginal audiences. There is no universal spend level where this happens, it depends on your market size, competition, and creative quality. The way to find your actual ceiling is incremental testing, not applying a category-average percentage and assuming it is safe.
When people ask about the right percentage of revenue, what they usually want to know is "am I spending too much or too little relative to what is healthy." That is answered by looking at payback period trends, LTV:CAC trends, and whether marginal spend is still producing efficient results, not by comparing yourself to an industry average that may have nothing to do with your specific margin structure or growth stage.
If you want help building a spend framework based on your actual unit economics rather than a generic benchmark, get in touch.