Industry Financial Ratios

I would highly recommend the industry ratio reports from Software Success (click on a banner ad). I have used them several times to justify the percentage of my budget for new initiatives. For example, while a VP of Marketing at a Fortune 10 company, I was asked to justify the requested increase in our marketing budget by the group CFO. Following is part of a slide that shows how I used the ratios:

software, marketing ratios

Based on this slide, I had recommended increasing our ratio of marketing expenses for one of our divisions from 4% to 9%, which was still low compared to comparable profitable companies, but more than twice our previous budget. Based on this slide, it was approved!

Another time I was needed to complete the marketing and operational ratios within a business plan for a new start-up. Considering that this was a new market for the start-up, we didn’t have any historical data for start-up costs. In addition, the budgets for our competitors were unknown, so we used the industry ratios for a profitable company in our similar market (from the Software  Success reports) to forecast our operational, development, sales and market expenses within the business plan that was used to finance the company.

Following is a sample from one of their freely downloadable PDF files that shows how the % of a marketing budget within a company that uses resellers.

software, marketing ratios

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