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How Much Does Email Marketing Cost?

When everything is said and done, a larger company can expect to pay anywhere from $300 to $2,000 per month for email marketing services. However, the cost varies based on a variety of factors.

Email marketing is good for your business. In fact, you can get $36 back for every $1 spent, according to a survey of 2,000 marketers. And you don’t need to be a marketing expert to see these kinds of results.

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About 64% of small businesses choose email marketing to reach customers. It’s a great strategy for customer acquisition and retention. In fact, roughly 80% of marketers report they’d rather lose social media than email marketing.

With many marketing channels phasing out as trends shift toward other media, the number of email users is increasing. Four billion people use email daily, and that number is projected to reach 4.6 billion by 2025.

That’s why businesses of all sizes should consider email marketing to improve their reach and their return on marketing spend.

In this post, we’ll break down email marketing costs, as they can vary widely. You’ll also learn how to measure success and ROI from email marketing campaigns.

Email Marketing FAQs

First, here are answers to some of the frequently asked questions about email marketing.

1. How many subscribers do you need for a successful email campaign?

Brands saw an ROI of 33:1 when running a campaign with less than 500K subscribers. Those with more than 500K subscribers generated an ROI of 42:1, but they saw diminishing returns at 5 million subscribers with an ROI of only 37:1.

2. How many emails should you send per month per subscriber?

Sending too few emails or not enough to a subscriber can hurt ROI. Research shows sending 9-16 emails per month is most effective, with a 46:1 ROI.

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3. Do people actually open marketing emails?

Yes! The average email open rate is 30.35%, the click-through rate (recipient clicked on a link in the email) is 1.11%, and the bounce rate (email returned by the recipient’s email server) is 9.96%. And 78% of marketers report they’ve had more email engagement over the past year.

Factors That Affect the Cost of Email Marketing

Factors that play a crucial role in the cost of email marketing campaigns include:

  • Email marketing software 
  • Number of subscribers 
  • Features of email marketing tools 
  • Email frequency

1. Email Marketing Software 

To get started with email marketing, first you need a tool. These tools help businesses streamline their entire email marketing process. While there is a variety of email marketing software available in the market, no platforms are the same. And neither are their prices.

If you don’t have many subscribers at the moment, you might be thinking about starting with ISP tools like Gmail and Yahoo. But that’s a bad idea! If you use platforms like Gmail or Yahoo, a high unsubscribe rate might ruin your reputation.

Instead, start with email marketing software to prevent your emails from landing in the spam folder.

The true cost of these services can be tricky to determine, as they’re based on various functionalities and facilities they offer. Here’s our analysis of the most popular email marketing tools to give you a clear idea about their prices.

Moosend and Constant Contact 

They offer affordable plans starting at $9 and $9.99, respectively. These are best for you if you run a small business and want to explore email marketing options for a low price.

Both platforms have plans for enterprises as well. Constant Contact charges $45 monthly while Moosend offers a custom plan for bigger businesses. Moosend also has a 30-day free trial.

Mailchimp and HubSpot

These email service providers (ESPs) come with much more expensive and sophisticated plans, so typically they’re more suitable for larger businesses. Mailchimp and HubSpot offer many tools to provide solutions for your CRM and lead generation as well.

Mailchimp’s basic plan starts at $11 a month. This platform also has Standard and Premium packages for marketers, starting at $17 and $299 per month, respectively. Mailchimp also offers a Free Plan with a monthly email sending limit of 10,000.

Hubspot’s Standard package starts at $45 per month. This platform also offers Professional and Enterprise plans, which begin at $800 and $3,200 per month.

SendPulse

SendPulse is another reasonably priced solution that offers plans as low as $6.40 per month, and their enterprise plan is only $10.75/month.

Tools like SendPulse, Mailchimp, and SendinBlue also have free plans with limited features.

Pro tip: Always use professional email marketing software for your campaigns that allow you to maintain all data privacy rules.

2. Number of Subscribers 

The more subscribers you get, the more money you need to spend on email marketing. This is because most platforms charge higher for a more extensive email list. To start your marketing on these platforms, you might need a minimum of 500 to 1000 subscribers.

If you’re a startup, pay attention to the pricing plans to see how many subscribers they allow for a basic plan. SendPulse’s basic $6.40 monthly plans let you have an email list of 500 subscribers. For the same number of subscribers, Moosend charges $9 per month.

However, both plans offer different functionalities.

Make sure you have good-quality email leads on your list. There’s no value in putting your money on campaigns where your emails will go straight to spam.

Pro tip: Get a list of high-quality active email subscribers to lower the bounce rate. 

3. Features of Email Marketing Tools

The features you want in your email marketing tool also impact the cost. Many features will be included when you purchase an email marketing plan for your company, but others will cost extra.

Features commonly included at no extra cost are:

  • List segmentation
  • Email templates and editor
  • Automation workflows
  • Real-time analytics
  • Compliance with CAN-SPAM (Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003)
  • A/B testing
  • Integrations

Some platforms offer additional services like custom reporting and transactional emails, and outreach-boosting features like SMS transactions and pop-ups. However, they often charge an extra fee to include them in your plan.

Before selecting any platform, consider which one offers all the functionalities you want.

Pro tip: Make a list of all features you’re looking for. Find the platforms that offer all the capabilities and choose the one that ticks most boxes under your budget.

4. Email Frequency 

Not all email marketing platforms will allow you to send unlimited emails. That’s why the number of emails you want to send daily and monthly is essential.

Some platforms will let you send unlimited emails in their premium plans. But others may have a pay-as-you-go pricing policy.

Knowing exactly how many emails you’re going to send per month, makes it easier to choose a plan and estimate your cost. If you need to send a higher number of emails than the limit allows, you need to choose a better plan.

Pro tip: If you’re still figuring out how many emails will go to individual subscribers, you can select a flexible plan based on your email list size and not your email sending frequency.

How to Measure ROI 

Calculating your ROI is important for measuring your campaign performance, and it’s easy to do. You can calculate the ROI in minutes when you know how much email marketing is making for you and how much you spend on it. 

Use this formula:

Source: Moosend

Simply put, if you subtract your total spent from total gained and divide the value by total spent, you get your ROI.

Let’s look at some examples.

Suppose you spend $300 per month on your email marketing platform services. Yearly that amount will be $3,600. If you hire marketers to work on your campaign, more costs will be added. Let’s say you hire professionals for $8,000 a year.

That makes your total yearly spend $3,600 + $8,000 = $11,600.

If a single lead generates $100 for you, and you can bring in 300 leads in a year with email marketing campaigns, your total revenue becomes $30,000.

Now it’s time for the ROI calculation: 

ROI = ( $30,000 – $11,600 ) / $11,600 

ROI = 158.62%

To run a successful campaign, you must know the revenue figures. They tell you whether your campaign is profitable and worth paying for.

How to Measure the Success of Email Marketing 

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Tracking vital metrics can reveal what works best for your campaigns.

They are:

  1. Open rate
  2. Click-through rate
  3. Conversion rate
  4. List growth rate
  5. Unsubscribe rate

Here is how to calculate each of them. 

1. Open Rate

By measuring the open rate, you can determine how effective your email subject lines are. The first thing your readers see is the subject line, which is why it makes a difference in the open rate performance.

An open rate of 17-28% is considered good.

If your subject lines are engaging and click-worthy, your open rate should fall within that range. But if the open rate is lower, try A/B testing your subject lines.

Test different subject lines and see which one gives your higher open rate. That’s how you can figure out which subject lines are working better for your audience.

Note: Divide the total number of opens by the total number of emails sent to calculate an open rate.

2. Click-Through Rate

The body text and CTAs of an email play a huge role in converting readers into leads. You can check how well your email body copy and link anchor texts perform by analyzing the click-through rate.

A good click-through rate is 2-5%.

When you have a high open-rate but a low click-through rate, it says that your email copy or CTA needs improvement.

Note: Divide the total number of click-throughs by the total number of emails sent to calculate the click-through rate. 

3. Conversion Rate

How many of your email recipients are converting? A conversion rate gives you a clear idea. You can easily calculate the conversion rate and measure the performance of your campaign.

A conversion rate of 2-5% is considered good.

If your conversion rates are low, understand that it lacks something and needs improvement.

Note: Divide the total number of conversions by the total number of emails sent to calculate the conversion rate.

4. List Growth Rate

Statistically, your email marketing database will degrade by 22.5% each year, so it’s important to always be seeking new subscribers.

Your list growth rate directly depends on new subscribers, and this metric tells you if you need to change your email list-building strategy. You might be getting good conversions, but if there isn’t a good buffer between your list growth rate and that rate of decay, you should work to improve it.

Note: Subtract the total number of unsubscribes from new subscribers and divide the subtracted value by the total number of subscriptions to calculate the list growth rate.

5. Unsubscribe Rate

If your audience is not finding your messages valuable, you might see the unsubscribe rate increasing — or recipients might simply stop opening your emails rather than unsubscribing.

A normal unsubscribe rate is less than 2%.

If this rate increases, do your market research again. This will help you find out how you can adjust your messaging to cut down your unsubscribe rate.

Note: Divide the number of unsubscribes by the total number of emails sent to calculate the unsubscribe rate.

How to Better Plan Your Email Marketing Strategy

A successful email marketing strategy requires some trial and error. Do some research before jumping into email marketing and investing hours of effort and hard-earned money.

To get the most out of your campaigns, identify your goals and understand how they align with your business.

Answering these questions will help you get clarity:

  1. How many emails do you plan to send per month?
  2. What kind of emails do you plan to send (promotional, newsletters, e-commerce)?
  3. What’s your subscriber acquisition strategy?
  4. What business goals do you want to accomplish with email marketing?
  5. What are you missing out on if you don’t invest in email marketing?
  6. Do you need an ESP with templates?
  7. What kind of branding and design do you want for emails? 

Is Email Marketing Worth Your Time?

Email marketing becomes a highly effective strategy when done right. It’s important to watch key metrics to ensure your campaign is working, and make adjustments where needed to optimize your efforts.

Plus, you should always avoid sending spam emails. Instead, create content that shows value to your audience and sends clear messages.

We at EBS Agency can help you stand out and achieve success with email marketing. Our team will help you achieve the maximum ROI using cutting-edge marketing solutions.

Contact us today to find out how we can turn your email marketing campaigns into a lead-generating machine.