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 and impact our business’s marketing budget. By understanding the costs, we can more easily ensure that we are getting appropriate ROI and make adjustments as needed.

Breakdown of Common Email Marketing Costs 

Email campaigns are frequently regarded as one of the most valuable marketing methods out there, but the cost of email marketing is less often the focus of informational posts and education efforts. I have put together a quick summary of the different costs you might find, from email marketing agencies to content design services, to make sure that your email marketing strategy is showing a decent ROI (return on investment), and to make sure that your mailing lists are doing their job rather than further dragging down your content and marketing budget.  

Email Service Providers (ESPs)

Email service providers vary in terms of both scope covered and amount charged, but your email marketing budget is not truly complete without a clear number for the ESP you intend to use. For advanced features, you will pay a higher premium; although many ESPs offer free subscriptions, these kinds of transactional emails frequently do not pack the bunch you are hoping to see conversion rates soar. 

Mailchimp is one of the most well-known ESPs out there. Like most of their competitors, Mailchimp offers a free (but extremely limited version). For 500 contacts and customized templates, you can expect to pay $17 per month. As your contacts increase, so will your price, and someone with an audience of 100,000 can expect to spend $800 per month. 

Hubspot is another popular option, for those looking for a multi-purpose CRM. You can expect to start out at $800/mo for this comprehensive suite of tools, and extend upward to $3,600/mo for 2,000 contacts and 1,200 lists or 10,000 contacts and 2,000 lists, respectively. 

Content Creation and Design

Email design can come as part of a series of drag-and-drop templates through your email campaign software, but can also come from outside of your email marketing platform. Services like Grammarly can be utilized to develop content for your email marketing efforts, or you can consider utilizing the hourly rate of a marketing professional you can hire to tend to your marketing needs. Hourly rates can be as low as minimum wage, but can reach well into the $100s per hour as you reach higher-level professionals. 

List Building and Management

Lists are a great way to reach your target audience, but they are often not built by hand–especially if you are sending out dozens or hundreds of emails per month–so you may need to look into purchasing tools for list creation, list verification, and list segmentation. 

List management also frequently involves lead magnets and paid media utilized with the specific intention of growing your email subscriber list. Develop the right email templates to address these needs and make sure you have the management tools to consistently deliver your emails on time. This is a cornerstone of social media marketing, and a higher than average cost per email can make your proverbial ship sink or stay afloat. 

Expect to spend somewhere in the market of $20/mo on the low end for management tools like Mailchimp, or several $100s for larger CRMs with a larger suite of tools. 

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. Most of the costs associated with this marketing type are necessary, making it essential to understand email marketing agency pricing, the cost of compelling content, and the cost of general management for your email strategy.

1. 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. Most free email providers place a limit on how many emails you can send within a given time period, making email list management feel almost impossible. 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.

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 how you spend money on email marketing. 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.

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 without sacrificing email engagement or gouging either side on their email marketing pricing.

3. 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. These emails then need to be scheduled at the appropriate times and sent off to each of your high-quality email lists.

In this case, you’re pretty much looking at staff time. Depending on what level of employee you need, these costs can vary widely.You never know when metaphorical 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 set up 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 and the cheapest email marketing service may not quite cut it.

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, there will be production costs. These costs can include a professional for email copywriting, as well as some type of graphics specialist.

Depending on the size of your business and marketing budget, there are a few options for purchasing these services. You can decide to do everything in house, for instance. 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 and roll it into email marketing campaign costs. A third option is to pay freelancers for content creation, while sending the emails yourself. Remember: the more you do yourself, the less you’ll usually pay.

5. 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 emails.” 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 called a lead magnet, which I will go over below. Some email marketing service providers have this functionality built into their system, but for others or in order to use advanced technology you might have to subscribe to an outside service.

Unfortunately, most opting in methods add to your email marketing cost. Typical of tech companies, the fee for ensuring that all your email list additions are legit is charged monthly. 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 to create a healthy email list.

Take note: some 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

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.

7 Ways 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.

1. Utilize free tools and templates 

Gmass and Quickmail are two examples of ways to limit the costs of email marketing; social media marketing as a whole can have a high average cost of operations, but using free tools and templates like those offered by GMass and Quickmail can help cut down on the costs associated with sending unlimited emails or massive email blasts. 

Email marketers pay a premium for email management tools, so it can be highly valuable to pare down additional costs associated with developing email content and email automation. Seek out free tools that can limit your average monthly spend for your promotional emails without hampering click-through rates and general engagement. 

2. Optimize sending frequency 

Every email you write comes at a cost. From the costs associated with SMS marketing to the costs associated with content development, email marketing providers frequently pay a pretty penny for their efforts. Sending emails, themselves, can literally come at a cost. Optimizing your send frequency can help control costs, reduce bounce rates, and trim down bulk emails that are not showing a high enough ROI. 

Often, this requires some investigation into your engagement rates and audience segments: to know at what time to send your emails, you need to know what email subject lines perform best, which times those subject lines seem to be most effective, and even which days seem to produce the largest number of click-throughs. 

3. 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 quickly pay for itself in reduced subscriber number-based fees.

4. 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.

5. 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.

6. 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.

7. 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 fresh for each piece of marketing communication, 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 social media posts and web pages. This will reduce your overall content costs–including email marketing.

Next Steps 

Email marketing has a high (if not the highest) ROI of any marketing channel, but that does not mean that you should ignore the legitimate costs associated with developing signup forms, sending out monthly emails, and even developing different types of emails to manage through your CRM.

Make sure that you are making the most of your email marketing ROI by paying attention to any insights offered by your campaign monitor software, regularly auditing your email platform and management software, and cutting costs wherever possible, from limiting your list sizes to regularly auditing your successful email marketing campaigns to identify the source of your success. 

Do you have any effective ways you limit the cost of your email strategy? Let me know in the comments! 

Hero photo by Igal Ness on Unsplash