Every generic answer to this question is wrong, because none of them know your conversion rate.
"Spend 5–10% of revenue" is the standard advice. It's useless for a broker, because two brokerages with identical revenue can have wildly different conversion rates — and the one converting better can profitably spend twice as much per lead.
Here's how to work it out properly: backwards from the outcome you want.
Four numbers, in this order.
Step 1 — How many extra settlements do you want per month? Be specific. "More" isn't a number. Say five.
Step 2 — What's your average commission per settlement? Your own figure, across your actual mix of consumer and commercial deals. Say $2,200.
Step 3 — What's your real lead-to-settlement conversion rate? This is where most brokers guess, and where the whole calculation lives or dies. If 100 leads produce 8 settlements, it's 8%.
Step 4 — Do the arithmetic. At 8% conversion, five settlements needs about 63 leads. If you'll accept 25% of a $2,200 commission as acquisition cost, that's $550 per settled deal — roughly $44 per lead. Sixty-three leads at $44 gives a monthly budget of about $2,750.
That's a defensible budget. It's derived from your economics, not a rule of thumb.
Run the same brokerage at a different conversion rate and watch the budget move:
| Conversion rate | Leads for 5 settlements | Affordable cost per lead |
|---|
| 4% | 125 | $22 |
| 8% | 63 | $44 |
| 12% | 42 | $65 |
| 16% | 31 | $88 |
The broker converting at 16% can pay four times more per lead than the broker at 4% — for the same result.
That's the whole game. In competitive channels, the broker who can afford the higher cost per lead wins the auction, gets the better placement, and gets the volume. Conversion rate isn't just a sales metric; it determines what marketing you can afford to buy.
Which leads to the uncomfortable but useful conclusion: if your conversion rate is weak, fixing it is a cheaper path to growth than increasing spend. More on why that is.
In the example above I used 25% of commission. That's a reasonable starting point, but the right number depends on:
- •Repeat and referral value. If a settled client typically produces one referral or a refinance in three years, their lifetime value is well above the first commission — and you can justify spending more to acquire them.
- •Your fixed costs. A sole operator with low overhead can allocate more of a commission to acquisition than a brokerage carrying staff and premises.
- •Your growth stage. Deliberately accepting a thinner margin per deal to build volume and brand is a legitimate choice, provided it's a decision rather than an accident.
Most brokers don't, precisely. Start here:
- 1Count leads properly for one month. Every enquiry from every source, logged.
- 2Track them to outcome — contacted, application, approved, settled.
- 3Split it by source. A blended average hides everything useful. Dealer referrals and cold online leads convert nothing like each other — and shouldn't be handled the same way.
One month of honest tracking gives you a budget you can defend and a baseline to improve against. Guessing gives you neither.
Setting the budget first. "I'll try $1,000 a month and see." Without knowing your conversion rate, you can't tell whether $1,000 was too little to produce a meaningful test or whether the channel simply doesn't work for you. You learn nothing either way.
Judging too early. Paid campaigns typically need 4–8 weeks to optimise, and organic search needs months. Pulling spend at week three because it "isn't working" guarantees the outcome you were worried about.
If you genuinely have no data yet:
- •Start with one channel, not three. You'll actually learn something.
- •Budget enough for statistical significance — roughly 30+ leads before drawing conclusions.
- •Commit to a minimum 90 days before judging.
- •Track everything from day one, so at the end you have real numbers instead of another guess.
There's no correct percentage. There's only your settlement target, your commission, and your conversion rate — and those three numbers give you a budget you can actually defend. If you don't know your conversion rate, that's the first thing to fix, because it determines both what you can afford and how far the money goes.