Your board just approved a $5M GTM budget for next year. Marketing wants $2M for demand gen. Sales wants $3M for headcount. Customer success says they need more resources to prevent churn. Product marketing is asking for budget to hire two more people and upgrade the tech stack.
Everyone has a compelling case. Everyone's request is reasonable. And there's no way to fund everything.
How do you decide? Most companies allocate GTM budgets based on last year's spend plus 20%, or by letting the loudest executive win. The result is misaligned investment that underperforms.
Here's a framework for allocating GTM budgets that aligns spending with revenue strategy, not politics.
Start With Your Revenue Model
Before allocating a single dollar, understand your unit economics and what drives revenue growth.
Calculate your customer acquisition cost (CAC), average contract value (ACV), gross margin, and sales cycle length. If you spend $10K to acquire a customer worth $30K annually with 80% gross margin, you have room to invest. If CAC is $50K for a $40K customer, you have a business model problem no budget allocation will fix.
Next, identify your growth constraints. Do you have enough pipeline but can't convert it? You need sales capacity. Do you have great close rates but not enough opportunities? You need demand generation. Are you signing customers who churn quickly? You need CS investment before adding more new bookings.
Your budget allocation should relieve your biggest constraint, not spread resources evenly across all functions.
Standard GTM Budget Allocations by Stage
These benchmarks provide a starting point, but customize based on your specific business model:
Seed/Pre-PMF ($0-$1M ARR):
- Sales: 60-70% (mostly founder-led or first AE)
- Marketing: 15-20% (content, some events, minimal paid)
- CS: 5-10% (embedded in sales or founders)
- PMM: 5-10% (usually first PMM hire)
At this stage, budget goes to proving you can sell, not scaling marketing.
Series A ($1M-$5M ARR):
- Sales: 50-60% (expanding AE team, adding SDRs)
- Marketing: 20-30% (demand gen, content, first events)
- CS: 10-15% (building CS function)
- PMM: 5-10% (2-3 PMMs enabling sales)
You're building repeatable systems while still heavily weighted toward direct sales.
Series B ($5M-$20M ARR):
- Sales: 40-50% (scaling proven motions)
- Marketing: 30-35% (demand gen at scale, brand investment)
- CS: 15-20% (dedicated CS team, reducing churn)
- PMM: 5-10% (PMM team with specialization)
Marketing's share increases as you shift from purely direct sales to omnichannel acquisition.
Growth Stage ($20M+ ARR):
- Sales: 35-45%
- Marketing: 30-40%
- CS: 20-25%
- PMM: 5-10%
CS gets larger share as expansion and retention drive growth efficiency.
These percentages include fully-loaded headcount costs, tools, and programs.
Allocating Within Each Function
Once you set top-line allocations, distribute spending within each function strategically.
Sales budget breakdown:
- 70-75% headcount (AEs, SDRs, SEs, managers)
- 10-15% sales tools (CRM, prospecting, enablement platforms)
- 5-10% sales enablement (training, SKO, collateral production)
- 5-10% sales programs (contests, SPIFs, team events)
Marketing budget breakdown:
- 40-50% headcount
- 30-40% programs (paid media, events, content, campaigns)
- 10-15% marketing tech stack
- 5-10% agencies and contractors
CS budget breakdown:
- 65-75% headcount (CSMs, support, renewals)
- 15-20% CS platform and tools
- 10-15% customer programs (QBRs, training, community)
PMM budget breakdown:
- 70-80% headcount
- 10-15% research (win/loss, market research, customer interviews)
- 5-10% tools (competitive intel, sales enablement platforms)
- 5-10% content production and agencies
Motion-Specific Considerations
Your GTM motion dramatically affects budget allocation.
Product-led growth shifts budget from sales to product, marketing, and in-product experience. You might spend 50% on product and engineering for PLG features, 30% on marketing for user acquisition, 15% on self-serve CS, and 5% on sales for expansion.
Enterprise sales-led concentrates budget in sales capacity and field marketing. You might spend 60% on sales, 25% on marketing (heavily weighted to ABM and events), 10% on CS, and 5% on PMM.
Channel/partner-led requires investment in partner enablement and co-marketing. You might allocate 15-20% of total GTM budget specifically to partner programs, reducing direct sales investment.
The 70-20-10 Rule for Marketing Spend
Within your marketing budget, use the 70-20-10 framework:
70% on proven channels that drive predictable pipeline. If paid search generates qualified pipeline at acceptable CAC, invest heavily here. Don't experiment with your core budget.
20% on optimization of working channels. A/B testing, landing page improvements, conversion optimization on channels that already work.
10% on experimentation with new channels and tactics. This is your innovation budget for testing podcasts, influencer marketing, community, or new platforms.
Most companies do the opposite—spreading budget evenly across 15 channels and never achieving mastery in any. Focus wins.
Common Budget Allocation Mistakes
Allocating based on headcount requests rather than revenue impact results in hiring three marketers because marketing asks, not because demand gen is the constraint.
Treating all GTM spending as equally valuable ignores that a dollar spent on sales hiring when you lack pipeline performs very differently than a dollar spent on demand gen when that's your constraint.
Failing to reallocate mid-year when constraints change. If you budgeted for demand gen but hired great AEs who filled the pipeline through outbound, shift mid-year budget to support what's working.
Underinvesting in enablement and tools causes a 20-person sales team to waste time on manual processes because you wouldn't spend $50K on sales ops tools.
Optimizing for efficiency too early before you have product-market fit. At seed stage, spending $30K to acquire a $20K customer might be fine if you're learning. At Series B, it's a disaster.
Building Your Budget Plan
Start with your revenue target. If you need to grow from $10M to $20M ARR at a CAC ratio of 1.5:1, you can spend $15M on the $10M in new ARR. That's your total GTM budget envelope.
Analyze your current constraints using funnel metrics. Where do opportunities get stuck? What's your MQL-to-SQL conversion? SQL-to-close? Sales cycle trends? This reveals where to invest.
Model 2-3 scenarios with different allocations. What if you added 5 AEs versus 3 demand gen marketers? What revenue impact would each have based on historical performance?
Allocate budget to relieve constraints first, maintain proven channels second, and experiment third.
Build in 10-15% reserve budget for mid-year adjustments. No plan survives contact with reality.
Review quarterly. If Q1 performance shows different constraints than you budgeted for, reallocate. Budgets are hypotheses, not contracts.
The best GTM budget allocation doesn't come from benchmarks or formulas. It comes from understanding your specific business model, identifying your constraints, and investing to relieve them. The companies that grow efficiently allocate budgets based on unit economics and funnel math, not organizational politics.