Wizard of Ads™ · Home Services

Cost of Exposure Calculator

How much should an HVAC, plumbing, or electrical company spend on advertising?

Every business owner asks this question. Almost everyone gives them the wrong answer.

Your media rep says "spend more with me." Google says "increase your daily budget." The internet says "5 to 7 percent of gross sales" — a number with no math behind it that ignores your profit margin and your rent entirely.

This calculator gives you the right answer — one grounded in the actual economics of your business. It reconciles three things no one else connects: your sales, the profitability of your average transaction, and what your physical location is already doing for you.

The result is your cost of exposure — the investment needed to build mental availability so that when someone needs what you sell, they think of you first.

Enter your numbers below. The math will speak for itself.

$
Your target revenue for the coming year — not last year's number. You're budgeting to grow, not maintain.
Australian businesses: use GST-exclusive revenue — GST is a pass-through, not your money
%
%
Change either value — the other adjusts automatically
Not sure of your margin? Calculate it from a typical job:
Enter what you charge and what it costs you for a typical full install — HVAC changeout, repipe, panel upgrade, etc.
$
$
Direct costs = equipment, parts, labor, permits
Gross Profit $4,000
Margin 47.1%
Markup 88.9%
Enter what you charge and what it costs you for a typical service call — repairs, diagnostics, tune-ups.
$
$
Direct costs = parts, labor, truck roll
Gross Profit $225
Margin 50.0%
Markup 100.0%
This formula requires markup, not margin. Most home service company owners know their margin but never their markup. They sound similar but produce very different numbers.
Margin is gross profit as a percentage of what the customer pays.
Markup is gross profit above cost, as a percentage of your direct costs.
Example — A Service Call
1
You charge the customer
$450
2
Your direct costs (parts, labor, truck roll)
$225
3
Gross profit on that call
$225
Margin = $225 ÷ $450 customer charge
50.0%
Markup = $225 ÷ $225 direct costs
100.0%
Same $225 profit — but 50% margin vs. 100% markup. The difference matters when calculating your cost of exposure.
Your Numbers
1
Annual Revenue (what customers pay)
2
Direct Costs (parts, labor, materials)
3
Gross Profit
Your Margin = Gross Profit ÷ Revenue
Your Markup = Gross Profit ÷ Direct Costs
Formula: Markup = Margin ÷ (1 − Margin)
Shop or warehouse rent — rarely seen by your customers
$

Your Cost of Exposure

Minimum
$56,300
$4,692/mo
Maximum
$74,760
$6,230/mo
Your cost of occupancy has consumed most or all of your exposure budget. For most home service companies, this is unusual — your shop or warehouse does almost no advertising for you, which typically means more budget should go toward advertising, not less. Double-check your margin and projected revenue.
1a
10% of projected revenue
1b
12% of projected revenue
2
Margin → Markup
3a
3b
4a
4b
What Does This Budget Cover?

This formula calculates your cost of exposure — the investment needed to build mental availability so that when someone needs what you sell, they think of you first. It covers branding and awareness media, not demand capture.

✓ Included in This Budget

Radio — mass reach, frequency, mental availability
Television — broadcast & cable
Streaming / OTT — connected TV, pre-roll video
Billboards / OOH — outdoor, transit
Streaming Audio — Spotify, Pandora, podcasts
YouTube — pre-roll, in-stream, brand channels
Truck Wraps — mobile billboards, fleet branding
Cost of Occupancy — your rent (already deducted)

✗ Separate From This Budget

Pay-Per-Click (PPC) — Google Ads, Bing Ads
Local Service Ads (LSA) — Google Guaranteed
Paid Social — Facebook, Instagram, Meta ads
SEO / Content — organic search optimization
Website — design, hosting, maintenance
Direct Mail / Email — targeted outreach
Consulting / Strategy Fees — your advertising strategist

Why the distinction? Branding media creates future customers — people who will think of you when they eventually need what you sell. PPC, LSAs, and paid social intercept people who are already searching. Both matter, but they serve different purposes and should be budgeted separately. Think of it this way: your branding budget fills the pipeline, your digital spend harvests from it. Without branding, your growth is capped — digital can only capture the demand that already exists. You'll never grow beyond the number of people actively searching today. Branding is what creates tomorrow's demand.

A note on consulting fees: This budget is for media spend — the dollars that go to stations, platforms, and vendors to buy exposure. Strategy and consulting fees are a separate investment, the same way your accountant or attorney fees are separate from the cost of running your business.

Cost of Exposure Breakdown

Where your total exposure budget is allocated

"A business with a good sign in a high-visibility location will need to advertise significantly less than a similar business in an affordable location."

— Roy H. Williams, The Wizard of Ads

This is why home service companies typically need to advertise more aggressively than retail businesses. Your shop is in an industrial park — nobody drives by and thinks "I need to call a plumber." Your advertising has to do all the heavy lifting that a storefront location would do for a retailer.