Budget planning for product teams

Effective budgeting aligns spending with strategic priorities while maintaining financial discipline. Start by understanding available resources and fixed commitments before allocating discretionary funds.

Break budgets into categories like: personnel (usually 60-70% of budget), tools and infrastructure, user growth and adoption programs, and contingency reserves. Link each expense to specific outcomes or metrics. This connection helps justify spending and enables quick reallocation when priorities shift.

Zero-based budgeting (ZBB) is particularly effective for product teams because it requires starting each budget cycle from zero and justifying every expense based on current needs and value. Unlike traditional budgeting that incrementally adjusts previous allocations, ZBB prevents unnecessary spending on outdated priorities and ensures resources align with current strategic objectives. This promotes financial discipline and helps product teams focus on investments that deliver measurable impact.