I often get the question: “How much should I spend on marketing?”

Most leaders still view marketing as a shotgun-and-prayer expense — you fire off some ads, hope they work, and chalk it up to “the cost of being in business.”

But in today’s digital world, we can measure everything. Literally everything. From the first click on an ad to the last dollar that person gives or spends with your organization, we have tools to track the journey.

So how should you calculate your marketing expenditure?

Start by flipping your mindset: marketing shouldn’t just be an expense — it should be your greatest revenue generator.

The key metric you need to know is LTV — Lifetime Value.

For a business owner, that means understanding the total revenue one customer brings to you over the entire time they remain your customer.

For a nonprofit leader, it’s the total donations one donor is likely to contribute during their lifetime of giving.

For a church leader, it’s the total financial impact of a new family over the years they’re engaged members.

Here’s a simple way to calculate it:

How to Calculate Lifetime Value (LTV)

1. Average Value per Transaction – what’s the typical amount a customer/donor/member gives or spends at one time?

2. Average Frequency of Transactions per Year – how often do they give, buy, or tithe each year?

3. Average Retention (in Years) – how long does the average customer/donor/member stay engaged?

Multiply these three numbers:

LTV = Average Value × Frequency × Retention

For example:

• A church family gives $5,000/year and stays engaged for 7 years: LTV = $35,000.

• A donor gives $1,200/year and stays engaged for 5 years: LTV = $6,000.

• A customer spends $250/month for 3 years: LTV = $9,000.

Once you know the LTV, you can make informed decisions about your marketing budget.

If it costs you $500 to acquire a new donor who will give $6,000 over time, that’s not an expense — that’s an incredible investment with a 12x return.

A Rule of Thumb

Many organizations aim to spend 10–20% of the first-year value of a customer/donor/member to acquire them. Why? Because the long-term payoff is worth it. And if your retention is strong, you can even justify spending more up front to fill your pipeline.

Stop thinking of marketing as a cost center.
Start thinking of it as your growth engine.

If you don’t know your LTV yet, that’s your homework. Once you do, you’ll know exactly how much you can afford to invest confidently in growing your organization.