“It’s working great for us,” she exclaimed.

She’s advertising on a lawyer rating website.

The advertising dollars she’s spending on the site are getting her all kinds of calls. Last month, she spent $2,000 and earned $4,000.

Her plan is to keep spending and keep earning. She has a very nice spreadsheet showing her projections.

She charted out a year of spending $24,000, with revenues projected at $48,000.

The sales rep from the rating website shares her glee. He explained that she’s “doubling her money.”

Rethink Your Marketing Math

She would be “doubling” her money if her time were free. Unfortunately, her time isn’t free: it’s valuable.

She worked hard to value her time fairly. She came up with a rate, and she’s using it to bill her clients and submit attorney fee affidavits to the court.

When you factor in the cost of the ads, she’s actually working for half of her hourly rate. Instead of saying she’s doubling her money, I’d argue that she’s cutting her money in half.

Does the lawyer rating site advertising still look like such a good deal?

The guy down the hall (she’s in a shared executive suite) is getting his business from several accountants who refer to him because they like him and he does a good job for their clients. That lawyer spends a few hundred dollars a year on lunches and holiday gifts to the accountants. He’s doing much better than “doubling” his money.

We aren’t always great at math. The advertising sales reps are even worse. Don’t get fooled by the idea of doubling your money. Figure out what you’re really earning from your advertising dollars.

How Much Should You Spend on Ads?

The amount you can spend on advertising is a function of what you charge for your services and what it costs to deliver those services to the client.

Different lawyers expect different incomes, and different markets have varying cost structures for running your business.

I see lawyers spending nearly nothing on marketing and running thriving practices based on word of mouth. At the other end of the spectrum, I see lawyers spending as much as 15 percent of revenue on marketing.

You need to develop a business model that works for your business. Run your numbers. Build your spreadsheet.

However, you’ll have a tough time making money when spending more than 15 percent of revenues on ads. That level of expenditure doesn’t leave much for paying your team and running your office.

Play with the numbers and figure out what works for your business. Be careful to ignore the excitement and hype pitched by the sales reps. This is a math problem worth solving.

Sometimes it takes money to make money. Sometimes spending that same money just helps you lose money faster.