How much should a D2C brand spend on marketing?

How much should we spend is the most common question we get from founders, and the most commonly answered with a lazy percentage. Here is the framework we use instead, built on unit economics rather than vibes.

Start from contribution margin, not revenue

Take your average order value, subtract product cost, shipping, payment fees, packaging and returns. What is left is contribution margin per order, the money available to buy a customer and still not lose. If your AOV is ₹800 and contribution margin is ₹350, then a CAC under ₹350 is profitable on first order, and anything under ₹500 to 600 can be justified if repeat purchase is real. Your marketing budget is simply target orders multiplied by affordable CAC.

Benchmarks by stage

Rule of thumb: if blended ROAS is at or above 3x and stock can keep up, you are probably underspending.

The percentage-of-revenue trap

Fixed percentages punish success: revenue grows, the budget formula tells you to spend more even if marginal CAC is deteriorating, or to spend less right when a winning creative deserves fuel. Budget should follow marginal CAC, the cost of the next customer, reviewed weekly. Spend up while marginal CAC sits below your affordable line, hold when it touches it, fix creative and funnel when it crosses it.

A budget is not a percentage. It is target customers multiplied by what you can afford to pay for each one.

Where the money should go

For a typical Indian D2C brand in growth stage: roughly 65 to 75 percent to paid media, 15 to 20 percent to creative production, and 10 to 15 percent to retention, CRO and tooling. The most common imbalance we see is 95 percent media and 5 percent creative, which is exactly backwards for how Meta works today.

A worked example, end to end

A nutrition brand with a ₹700 AOV: product cost ₹220, shipping ₹70, payment and packaging ₹40, returns provision ₹30 — contribution margin ₹340. Repeat behaviour is real (a 30 percent 90-day repeat at similar margin), so the affordable CAC stretches to roughly ₹430–450 while staying cohort-profitable. Target 1,000 new customers next month and the media budget writes itself: about ₹4.3–4.5 lakh, plus 15–20 percent of that for creative production and about 10 percent for retention and tooling — call it ₹5.5–6 lakh all-in. Now the conversation with the founder is no longer "is ₹6 lakh a lot?" but "do we believe the CAC and the repeat rate?" — which are testable claims, not vibes. Category CAC ranges to sanity-check against are in our CAC benchmarks.

Budget the creative like media, because it is

The 15–20 percent creative line is not overhead — it is what makes the media line work. In practice, for an Indian D2C brand at growth stage, that buys a monthly sprint of eight to twelve concepts: a mix of UGC creators, edited performance video and statics. The imbalance we correct most often is a brand spending ₹5 lakh on media fed by two ads made in April; by month three the account is optimising a fatigued message with fresh money. When ROAS slides, the first question is not "which bid strategy" but "when did we last give the algorithm something new to sell" — the full diagnosis lives in why Meta ROAS drops.

Review it quarterly like an investor

Once a quarter, re-run the arithmetic with real numbers, because every input drifts: margins move with courier contracts, repeat rates move with retention work, affordable CAC moves with both. Raise the budget when marginal CAC has held below the affordable line for six-plus weeks and stock can absorb the growth; hold when it is touching the line; cut media (never creative first) when it crosses and stays crossed. Brands that do this ritual grow spend 3–5× in a year without ever feeling reckless, because the budget was always downstream of the unit economics — which is precisely the discipline our strategy work installs before a rupee moves.