How Much Does Email Marketing REALLY Cost? The 7 Components of Email Marketing Cost

How Much Does Email Marketing REALLY Cost? The 7 Components of Email Marketing Cost

Whether you are a startup about to start with email marketing for the first time, or an established company working out budget allocations, it’s important to understand email marketing cost. After all, it can be easy for us to pay bills and forget where the expenses are going. Unfortunately, this also allows for costs to get out of control. By understanding the costs, we can more easily ensure that we are getting appropriate ROI and make adjustments as needed.

An Intro to Email Marketing ROI

If there’s one thing that most marketers agree on, it’s the fact that most email marketing cost results in excellent ROI. Email is a popular method of communication among businesses and consumers alike. Plus, email is an easy way to do effective marketing. Consider these statistics:

  • Marketing studies indicate that over 70% of consumers prefer to communicate with businesses through email. Maybe this is one reason why a 2016 study found that 75% of companies feel email marketing has good to excellent ROI.
  • In the B2C market, automated emails can have conversion rates as high as 50%. This translates into emails earning around $38 in revenue for every dollar spent.
  • Companies that use email marketing effectively can, on average, attribute 19% of their revenue to it.
  • Small businesses are especially dependent on email marketing. In fact, 81% of them use email as their best way to get new customers, and 80% rely on it for customer retention.

When you look at these numbers, one thing is clear: email marketing is a major driver of revenue for a lot of companies. Even large businesses get a significant portion of their revenue from email marketing, but small businesses find it indispensable. One of the reasons for this, especially with small businesses, is the reasonable email marketing cost.

Factors That Determine Email Marketing Cost

Like so many things in the business world, your ultimate email marketing cost depends largely on the services that you need. Some of these costs are easier to manipulate than others. However, most of the costs associated with this marketing type are necessary, at least on some level.

1. Cost of Email Marketing Service

Cost of Email Marketing Service

Unless your business is just starting out, there’s a high chance that you will need an email marketing service. That’s because most free email providers place a limit on how many emails you can send within a given time period. Some of them even forbid the commercial use of their email client. Finally, using a personal email account can get you into trouble with anti-spam rules.

With that said, an email marketing service will charge you a platform fee every month. Some companies charge a flat fee, while others have differential pricing based on the number of subscribers, people in your company using it, or desired features. A few even have free versions. Depending on your needs, these email marketing tools can contribute a lot to email marketing cost.

Recommended Reading: The 15 Best Email Marketing Tools to Consider Investing in Today

2. Number of Email Subscribers

As I mentioned above, some email marketing software charges you upfront based on the number of email subscribers you have. However, this isn’t the only reason why subscriber counts influence email marketing cost. For instance, personalization requires a little bit more staff time. Or, you might have different content you’re emailing to various consumer subsets, which increases production costs.

With that said, subscriber counts aren’t a complete “gotcha” within email marketing cost. In fact, most email services include unlimited marketing campaigns in their price. Free services tend to have more limitations, but even then there is typically enough of an allowance for smaller companies or nonprofits. The goal of pay-by-subscriber is to make pricing fair for everyone.

3. Marketing Automation Content Creation and Setup

Marketing Automation Content Creation and Setup

Whether you send out marketing emails once a week or once a day, they have to be set up. This means having someone sit down at the computer and enter each email, or email sequence, into your email client. Then, these emails need to be scheduled at the appropriate times.

In this case, you’re pretty much looking at staff time. Depending on what level of employee you need, these costs can vary widely. Plus, you never know when forest fires need to be put out, driving up your email marketing cost. Fortunately, details such as customer groups are often set up once and then updated regularly. This means that they aren’t as labor intensive as some other tasks.

If you are looking to setup a complex sequence with various combinations of sending out dozens of emails, yes, this will take time to architect and create! Of course, once it is created and tested, you truly can set it and forget, which is one reason why email marketing ROI is so high: You are building a true asset.

4. Email Newsletter Content Creation

Newsletters are an option for emails that are most compatible with B2B brands and nonprofits. Ecommerce and other for-profit B2C brands are less likely to use this technique, but it really depends on your product and customer needs. If your company uses an email newsletter, then there will be production costs. These costs can include a copywriter, as well as some type of graphics specialist.

Depending on the size of your business and the marketing budget, there are a few options for purchasing these services. For instance, you can decide to do everything in house. This option is inexpensive, but at some point, you might find it detracts from your ability to do everything else. Other companies hire marketing agencies to do everything. A third option is to pay freelancers for content creation, while sending the emails yourself. Remember, the more you yourself do the less you’ll pay.

5. Web Opt-in Technology

Web Opt-in Technology

No matter which email marketing service you use, they all require some form of opt-in. This is the process whereby a consumer gives you their email and says it’s OK to send marketing messages. One of the simplest forms of opting in can be seen when you place an order for goods and services online. Typically, the checkout page will have a checkbox that says something to the effect of “I’d like to get marketing email.” Checking the box adds you to the email list.

A more sophisticated type of web opt-in technology is using various pop-ups, bars, or forms on your website to receive an email address opt-in in exchange for providing them something I will detail further below called a lead magnet. Some email marketing service providers have this functionality built in to their system, but for others or in order to use advanced technology you might have to subscribe to an outside service.

Unfortunately, most methods of people opting in add to your overall email marketing cost. And typical of tech companies, the fee for ensuring that all your email list additions are legit is charged monthly. So, even though you don’t need that opt-in to be compliant with the CAN-SPAM act in every case, you’ll still have to pay for this service. Plus, some other countries are mandating opt-in technologies. It’s just a good idea to use this type of tool.

Recommended Reading: How to Grow Your Email List: 10 Best Practices to Follow

6. Lead Magnet Creation

Not all industry types have an easy time getting people to sign up for emails. Ecommerce customers might be convinced with a coupon or the promise of sales, but B2B industries need to get more creative. For that reason, most B2B companies have some form of “freebie” they offer up in exchange for email permission. Chances are that you found one of these when you logged onto my website!

Most lead magnets are fairly simple, but they do cost money to produce. For instance, whitepapers and ebooks need someone to write them. Likewise, webinars and video content don’t come out of thin air. Just make sure this kind of content is of higher value than other forms of content marketing material. As with other types of content creation, lead magnets can be produced in-house or through some form of outsourcing. At least you can use them for a long time.

7. Lead Magnet Promotional Assets

Lead Magnet Promotional Assets

Finally, lead magnets aren’t much good if nobody finds them. To that end, you should be promoting your lead magnets. An easy way to do this is through paid search or social media. You can also use various forms of traditional or web-based advertising that targets people who might be interested in your products and services. Examples include trade magazines or industry forums.

Promoting your lead magnets has two types of expenses. The first one is producing the advertisements, such as landing pages or display ads. Then, you must pay to distribute them through whichever channels you’ve chosen. Don’t neglect your website, though. That’s almost free.

How to Lower Your Email Marketing Cost

How to Lower Your Email Marketing Cost

While there’s no question that these fees can add up, there are ways to keep your email marketing cost manageable. Even with the high ROI of email marketing, cost control can make it even easier to reap the rewards. To that end, here are some tips.

Prune your list to reduce subscriber numbers

Several times a year, it’s a good idea to determine which subscribers should stay on the list. Fortunately, this can be a relatively easy task, even if you have a lot of subscribers. One way is to record which subscribers are bouncing their emails back. In this situation, the person behind that email address has often changed jobs, or the address no longer exists for some other reason. Deleting these people from your list is an easy and efficient way to reduce costs. Who wants a bunch of “invalid email” notifications, anyway?

Another method of pruning a list involves analytics. If your email software is showing that someone never opens your emails, then it’s probably time for them to go. Finally, there are services which validate emails. As invalid ones are flagged, they should be removed. This last technique can temporarily add to email marketing cost through a use fee, but it’ll quicky pay for itself in reduced subscriber number-based fees.

Use email verification services to ensure your email subscribers are real

Although I mentioned these in the last paragraph, the original purpose of email verification is to keep junk email addresses off your list in the first place. Some junk addresses become that way over time, but others were always fake. Unfortunately, some people use privacy email addresses that aren’t real with the purpose of avoiding marketing activity. Or, they might mistype an otherwise valid email address. Either way, your email marketing cost will ultimately be lower if you aren’t paying for zombie accounts.

Change email service providers to find one with more competitive pricing

Do you ever get tired of those mailers boasting about how much you can save on car insurance? Well, they illustrate an important principle: sometimes you can save on email marketing cost by switching email service providers. Sometimes you’re paying too much because your provider has more bells and whistles than you need. In this case, switching to something that is more bare bones pays dividends. In other situations, you’re simply able to save money by switching. Either way, you win.

Switch from monthly to annual contracts with your technology providers

This goes on the same principle as buying in bulk. Many SaaS companies and other tech providers charge an annual subscription fee that’s lower than what you’d pay monthly for a year. This way, they get money in the bank to fund operations. In turn, you save money and have fewer invoices over the course of the year. The only major concern is to ensure that you have the right provider for your business before making that commitment.

Find email service providers that include web opt-in technology

This method of reducing email marketing cost centers on efficiency. While some email service providers are bare-bones services, others offer a host of related features. A few even have different levels of service, for which they charge a different subscription rate. If you can find a service provider that fits your needs and includes opt-in technology, it will likely be cheaper than buying those services separately. Bonus: it’s fewer software programs to master and maintain, too.

Repurpose content for your lead magnets and newsletters

Over the years, I’ve seen a lot of clients fail to reuse content, which increases their email marketing cost. Rather than starting over for each piece of marketing communications, you can easily repurpose much of it for different formats. One way to do this is by sending out emails with summaries of recent blog posts. Another is producing a customer education piece, then turning it into not just an email but also social media posts and web pages. This will reduce your overall content costs.

Recent events have put a lot of pressure on advertising budgets at the same time that it has become more difficult to maintain human relationships due to social distancing. However, even today most marketers agree that overall email marketing cost is quite reasonable. This is true, even though it seems like we get nickeled and dimed for everything. However, even considering the individual charges, email marketing is cheaper than many other items in our toolbox. Finally, we can turn an excellent ROI into an outstanding one by controlling costs. All it takes is some creativity and system maintenance.

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Neal Schaffer
Neal Schaffer

Neal Schaffer is a leading authority on helping businesses through their digital transformation of sales and marketing through consulting, training, and helping enterprises large and small develop and execute on social media marketing strategy, influencer marketing, and social selling initiatives. President of the social media agency PDCA Social, Neal also teaches digital media to executives at Rutgers University, the Irish Management Institute (Ireland), and the University of Jyvaskyla (Finland). Fluent in Japanese and Mandarin Chinese, Neal is a popular keynote speaker and has been invited to speak about digital media on four continents in a dozen countries. He is also the author of 3 books on social media, including Maximize Your Social (Wiley), and in late 2019 will publish his 4th book, The Business of Influence (HarperCollins), on educating the market on the why and how every business should leverage the potential of influencer marketing. Neal resides in Irvine, California but also frequently travels to Japan.

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