Two UK businesses both "spend £5,000 a month on marketing" and get opposite results — because one counts ad spend and the other counts agency fees, and neither remembered VAT. Here's how to read a UK marketing budget properly.
- Two separate costs: the agency fee and the ad spend.
- Small-business retainers: roughly £500–5,000/month.
- Mid-market: roughly £5,000–15,000/month.
- Plus VAT: most agency fees carry 20% VAT on top.
1. The Two Costs You Must Separate
The management fee pays the team for strategy, creative, campaign management and reporting. The ad spend goes straight to Google and Meta. Lump them together and you can't tell whether you're buying reach or just hours — so always ask for the split.
2. The Honest Pound Ranges
Roughly £500–2,500/month for one or two channels. Good for a single, focused goal.
Roughly £2,500–10,000/month for multi-channel strategy and reporting.
£10,000–15,000+/month for integrated SEO, paid, social and content.
Set by your goals and paid to the platforms. Keep it separate from the agency fee.
3. The VAT Factor
As with web design, many UK agencies quote fees excluding VAT. A £5,000 monthly retainer from a VAT-registered agency is really £6,000 once 20% is added — and over a year that's £12,000 you didn't budget for. Always confirm whether quotes include VAT before comparing.
Likes and impressions look great in a report and pay no bills. Demand cost-per-lead and cost-per-customer, and confirm whether the fee includes VAT. Both protect your budget.
4. How to Budget Smart
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