Hey there, Jason Koeppe here from SurePath Digital.
Here's how most clinic marketing budgets get set.
Somebody at a conference says, "You should spend X percent of revenue on marketing." Somebody else's cousin says a different number. An agency rep says, "Well, our packages start at..." And the owner picks something that feels safe, which usually means "whatever we spent last year, minus whatever made me nervous."
Then, three months later, the question at the kitchen table is: "Is this working?" And nobody can answer it, because nobody decided what "working" meant.
Let's fix that. Grab a calculator (or the one on your phone, I won't judge) and your practice software reports. We're going to work this out backwards.
Why "percent of revenue" doesn't work for clinics
Percent-of-revenue rules of thumb are popular because they're easy. They're also blind to everything that matters:
- Your prices. A clinic selling care plans and a clinic selling single visits can have the same revenue and very different patient values.
- Your margins. What's left after supplies and provider pay changes how much you can spend.
- Your goals. Are you trying to hold steady or open a second location?
- Your conversion. If your team books half of your leads, you need far less ad spend than a clinic booking a fifth.
That last one is the sneaky one. More on it in a minute.
The Backwards Budget: five steps to a number you can defend
Work backward from the value of a new patient until you reach a monthly amount you can afford. I'll use made-up numbers for a made-up clinic to show the calculation; replace them with yours.
Step 1: Patient value (what a new patient is worth)
Pull this from your practice software:
- Average revenue per new patient in their first 12 months. Include every visit, plan and product.
- Your gross margin. That's the share left after the direct costs of delivering care (supplies, provider pay for those visits). Your bookkeeper can help here.
Multiply them.
Example: $1,200 average first-year revenue × 60% gross margin = $720 gross profit per new patient
Why first-year and not lifetime? Lifetime value is great for bragging and terrible for budgeting. You can't pay this month's ad bill with patient money from 2031.
Step 2: Allowable cost (what you can pay for one)
Your allowable cost per new patient is the most you're willing to spend to get one, and still be happy.
There's no universal right answer. It depends on how fast you need the money back and how much risk you can stomach. A simple starting point: set aside a third of first-year gross profit, then adjust as you learn.
Example: $720 × one-third = $240 allowable cost per new patient
Write this number down. It's the whole point. Every campaign, agency and idea gets judged against it.
Step 3: Funnel math (what a patient really costs)
Here's where it gets interesting. Your cost per new patient depends on your ads and on what your team does with the leads.
Track four numbers:
| Step | Example |
|---|---|
| Cost per lead | $40 |
| Leads who book | 1 in 3 (33%) |
| Booked patients who show up | 80% |
| Patients who start care after the first visit | 75% |
Now multiply the three percentages: 33% × 80% × 75% = about 20%. So one in five leads becomes a patient.
Example: $40 per lead ÷ 20% = $200 per new patient. Under the $240 allowable.
Now watch what happens when the clinic fixes its follow-up (the stuff in How Fast Should a Clinic Respond to a New Lead?) and starts booking half its leads instead of a third:
50% × 80% × 75% = 30%. $40 ÷ 30% = about $133 per new patient.
Same ads. Same budget. The cost per new patient dropped by about a third, because the team answered faster.
That's why I'm so annoying about follow-up and consults. Improve the bottom of the funnel (see why consults don't close) and every ad dollar stretches further.
Step 4: Monthly budget
Now the easy part.
New patients you want per month × allowable cost per new patient = monthly marketing budget
Example: 30 new patients × $240 = $7,200 per month
That's your ceiling. And if your funnel math says you're actually getting patients at $200 (or $133), you either spend less for the same 30 patients or go after more patients at the same spend. Both are good problems.
Include everything in that budget: ad spend, agency fees, software like your CRM and texting tools, printing and the slice of staff time spent on marketing. Leaving out the agency fee makes the math look great right up until your accountant finds it.
Step 5: Monthly check-in
Every month, compare reality to the plan:
- What did we spend, all in?
- How many new patients started?
- Cost per new patient (spend ÷ new patients)?
- Is it under the allowable cost?
Under? Consider spending more. Over? Look at the funnel before you cut the ads. A low booking rate can make perfectly good ads look expensive.
The one-page budget memo for your accountant
Your accountant doesn't want a 40-slide deck. Give them one page:
| Line | Your number |
|---|---|
| Average first-year revenue per new patient | |
| Gross margin | |
| Gross profit per new patient | |
| Allowable cost per new patient | |
| New patients wanted per month | |
| Monthly marketing budget (all in) | |
| Current cost per new patient | |
| Review date |
Fill in the blanks, add a one-line note on how you'll decide to increase or cut, and you've got a budget anyone can follow.
Before you spend a dollar more on ads
Two cheaper places to find new patients first:
- Your old patient list. People who already know you cost almost nothing to bring back. Here's the 4S Reactivation campaign.
- Your current leads. If your booking rate is low, fix follow-up before you buy more leads.
And when you talk to agencies, bring your allowable cost with you. It turns "Our packages start at..." into "Can you get me new patients under $240?" (Plus the 12 questions to ask before you hand over your credit card.)
What happens when the budget has a target
Once you know your allowable cost, marketing stops being a monthly argument and becomes a math problem. You can still argue about it, but now you'll at least be arguing about the same number.
We measure our own work the same way: 125+ clients have averaged a 71% ROI increase during their first three months. The systems we've used have been behind approximately $85M in combined client sales. See our results for examples.
The pain-clinic case study records a 1,010% ROI. When the work started, the doctor was three weeks from having to close his only clinic; before 60 days were up, he was planning to open and fill a new one every quarter.
If you want us to build the tracking and the system with your team, that's our Growth On-Demand program.
Frequently asked questions
How much should a clinic spend on marketing?
Enough to bring in the number of new patients you want, at a cost per new patient you can afford. Work out what a new patient is worth in gross profit, decide how much of that you're willing to spend to get one, then multiply by the number of new patients you want each month. That's a budget you can defend.
How do I calculate what a new patient is worth?
Pull the average revenue a new patient brings in over their first 12 months, using your practice software reports. Multiply that by your gross margin, which is the share left after the direct costs of delivering care, like supplies and provider pay. The result is the gross profit an average new patient brings in during year one.
What is a good cost per new patient for a clinic?
Any cost below your allowable cost per new patient, which is the most you've decided you can pay for one and stay profitable. That number depends on your prices, margins and how long patients stay. A clinic with high-value care plans can afford a much higher cost per new patient than one with single visits.
Should a clinic set its marketing budget as a percent of revenue?
It can be a rough starting point, but it isn't a plan. A percent of revenue ignores your margins, your prices, how many new patients you need and how well your team turns leads into bookings. Two clinics with the same revenue can need very different budgets. Start from new patient value instead.
What counts as marketing spend?
Everything you spend to get new patients: ad spend, agency or freelancer fees, marketing software like your CRM and texting tools, printed materials and the share of staff time that goes to marketing. Count it all when you calculate your cost per new patient, or the numbers will look better than they really are.
What's your next move?
Skip the percent-of-revenue guess. Work out what a new patient is worth, set your allowable cost and let the math set the budget. That's the Backwards Budget.
Want a hand with your numbers? Book a call with me. We'll work through your patient value, allowable cost and funnel together, and you'll leave with a budget you can take to your accountant.
Until next time, God bless and talk soon.
