The Percentage of Sales method is a method of determining an advertising budget in which the budget is defined as a given percentage of current or projected sales or as a percentage of the selling price per unit of a product.
This method is easy to use and provides financial stability because advertising costs vary with revenue. The main disadvantage is that it considers sales to be the cause, not the result, of the promotion. It does not take into account communication needs and can lead to under-advertising during a sales slump.
