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Email marketing cost: all you need to know

When you evaluate email marketing software for your website or store, two elements are fundamental: features and costs.

Besides that, emotions play a relevant role. For example, when I received an amazing pair of socks by Mailchimp to thank me for activating my first automation campaign, well, it played a relevant role in the choice.

It was not for the socks themselves, but because the present was packed in a perfect journey with enjoyable storytelling.

Anyway, I will leave emotions apart and stay focused on the first two elements.

Evaluating carefully the features is a key point. The software you choose should allow you to run smoothly the operations and help you drive, ultimately, sales.

The other key point in your evaluation concerns the cost of doing email marketing to your audience. And this is my focus in this article.

Why? Because a complete picture of the email marketing cost is not just considering the monthly price of the email marketing software. Instead, it’s a full set of costs you should take all into account before making your choice.

Let’s go through all of them.

#1 The monthly email marketing software cost

You are right. The monthly email marketing software cost is for sure the main cost to consider.

It’s important because it should be affordable, both the next month and in the long run.

Why do I say that? Because, if you are just starting and have a few hundred subscribers to your email marketing lists, sooner or later you’ll hopefully grow.

Even though at this stage many services are comparable in terms of cost, their pricing might grow with different behaviours.

This is, for example, the case of Klaviyo. You can see that clearly in the chart crafted for the related research on Shopify email marketing cost.

 

The pricing structure is a key topic because you do not want to switch software sooner than needed just because you didn’t consider carefully the pricing structure from day one.

But, to compute the monthly email marketing cost, you should consider other than just the monthly cost of the email marketing software.

In fact, the monthly email marketing cost is generally made of two components. The first is the monthly cost of the software itself, while the second is the monthly cost (if present) of the software integration with your website.

The latter is not always present, but it might be. I have investigated the cases of BigCommerce, Prestashop and Shopify and, in most of the cases, it doesn’t apply.

In general, the monthly email marketing cost is one of the costs you should be able to sustain using your sales margins. Hence, it concurs in determining whether your business is economically profitable.

#2 Sunk costs

It’s now time to spot a light on another cost type.

This is typically a one-time cost you better be conscious that it won’t give you any future value in case you change your plans. Let me show you with an example.

You decide to adopt an email marketing software which has a setup fee to be configured and deployed.

Even though you can’t do without paying the setup fee, you already know that such amount of money will lose completely value in case you decide to use, in the future, another email marketing software or another website/e-commerce platform.

This is typically called a sunk cost.

All setup and installation fees can be considered a sunk, hence unrecoverable, cost.

Besides having a setup fee for the software itself, which is anyway a rare case for prosumer software, you might incur in an installation fee of the module for integrating the software into your website.

This is a typical scenario, for example, in case you run a store on Prestashop since almost every module in the store has a setup fee.

 

#3 Switching costs

Last, but not least, switching costs.

Switching costs are a huge topic when you refer to them in a general business case. But, since we are discussing email marketing, we can simplify the investigation.

Switching costs are direct and non-direct costs you pay in case you switch from your actual email marketing software to another.

Non-direct costs can include your precious time spent in understanding how the new software works and recovering productivity, as well as administrative tasks for the switch, to be effective.

I do not want to investigate the non-direct switching costs since they are too subject to interpretations.

But, I will cover the direct switching costs. About these, the only scenario I see is when you have paid upfront annual contracts.

In this case, when you decide to switch before the end of the contract, the cost you have already paid results in an additional cost economically applied to rest part of the year for something you are not using.

Annual contracts usually come with discounts respect to monthly subscriptions, so it’s up to you the choice. When the choice is not up to you, like in Mailup case, which offers just the annual plan, consider carefully the choice.

 

My final personal touch

In my opinion, when you have just started to implement your digital project, it’s better to stay away from sunk and switching costs, even if you need to compromise on features and performances.

For established or scaling business, you may decide to bear sunk costs since you expect them to provide value for some years. They are a capital expenditure, after all.

Switching costs deriving from annual contracts, in my opinion, are an enterprise affair. Not only because of the loss of value but because of the impact they have on your project’s treasury.