Two questions:
1.  What are 3 - 5 ways that an annual marketing budget is established
for a custom software development company (IT Consulting). An example
is "The marketing budget is n% of revenue."  Provide 3 - 5 additional
examples.

2.  Provide with each example a specific number or range of numbers. 
Using my example above, a great answer to my question would be "For
custom software companies companies that set their marketing budgets
as a percent of revenue, the range is 3% - 10% of revenue."

Your best bet is to look at publicly traded IT services companies and
try to find a comparable statistic there to what you seek.

You usually will find "pure marketing" as an expense to revenue is an
extremely low number (e.g. 1% or less) in this space for several
reasons.  First, it is a relationship business.  The unique nature of
IT consulting in any shop means you have to know the customer well and
you really have to know what the specs of a deal are before signing
your contract. If you price the contract wrong because the scope was
wrong, you will very likely lose money or have to get the customer to
pay more -- which they hate to do.  Second, the space is highly
competitive so there is not enough margin in the IT consulting space
to support marketing spending.  Third, IT consulting has a HEAVY fixed
cost component in the headcount that must be supported.  What I mean
by this is service firms must always consider the cost of their
"bench" vs. deploying people.  Firms will cut a contract price to the
bone rather than have people sitting on the bench.  When you have an
IT consultant sitting on the bench, you eat 100% of their salary.  If
you can put that person to work even at half salary, you are better
off than having them sitting on the bench.  In this kind of business
model, you simply cannot afford to do much true marketing and you have
to depend on direct selling.

DIRECT SALES costs, as opposed to pure marketing, are generally in the
7-8% range with lots and lots and lots of caveats.

First, you must consider the typical size of your contracts.  It takes
the same sales time and energy to close a $1 million dollar contract
as it takes to close a $50,000 contract.  If you spend six months of
one person's time to close a contract, and you pay that person $100k a
year, you spent $50k on "sales".  In the larger $1m deal, that is only
5% of revenue.  In the smaller $50k deal, it is 100% of revenue. You
could not make any money off the smaller deal.  You also need to
understand the "life-time value" of a customer.  Very rarely can you
sign one contract and make money off the first sale.  You usually make
money off the third or fourth contract -- where you get economies of
scale because you don't have to "re-sell" the client and your team
knows the systems very well.

Anyway, this is an incredibly difficult business model and with cheap
off-shore software development resources, I don't envy any marketing
person's role here.