The Real Cost of Email Marketing: Understanding Your Budget

Image of a laptop open on a desk, showing an email icon on the screen; concept for cost of email marketing.

CopyPress

February 27, 2023 (Updated: March 8, 2023)

Email marketing is one of the most cost-effective marketing methods available. It has one of the highest return potentials of any strategy and continues to grow, with an average $45 return for every dollar you spend on marketing and advertising, according to Statista. Gartner’s 2022 report even shows that companies have been spending around 7.8% of their budgets on email marketing, putting the average between $10 and $1,500 per month. Today, we’re breaking down a typical email marketing budget to help you determine the real cost of email marketing for your brand:

What’s Included in an Email Marketing Budget?
Strategies To Keep Your Email Marketing Budget Under Control

What’s Included in an Email Marketing Budget?

A typical email marketing budget can include the following expenses:

Email Service Provider Fees

The first component of the typical email marketing budget is email service provider fees. An email service provider (ESP) allows users to send email campaigns to a list of subscribers. On a basic level, an ESP will perform two key functions: maintain an email list and send emails to it. A more advanced ESP will also offer flashy extra services such as dynamic content, lead capture forms, tracking, A/B testing, and automation.

A great ESP is the backbone of your email marketing campaign. It facilitates the distribution of your messaging and stores all your customer data. Of course, a service that’s as vital as this comes at a cost. This cost varies per your company’s size, email volume, and specific needs. You also have a choice of either a paid plan, or a per-email fee structure, which will work better for different types of business.

Paid plans increase in price with your email volume. For example, Mailchimp offers a basic level of service for $9.99 per month for 5,000 to three million emails. If you had a larger email volume, you could opt for HubSpot, which handles between 5,000 and 20 million emails for $50 per month. If that’s still not enough, Campaigner offers an unlimited email volume for $59 per month.

Some ESPs offer pay-as-you-go plans, which allow you to pay individually by email. This is often more expensive but gives you more flexibility, so it works well if you’re doing a one-off campaign. Mailchimp, for instance, uses a credit structure, where each credit gives you one email to send.

The price also increases if you want access to the most advanced features. For example, automation features can mean an extra $14.99 per month—which is more than the entire cost of a basic plan. If you want to add automation to HubSpot, you’ll have to pay an extra $800 per month. As you can see, the amount of your email marketing budget you spend on your ESP depends on your brand’s specific needs.

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Design and Content Creation

A successful email campaign needs writers, designers, and developers. These people help you create content that engages your readers and leads to conversions. Content creation is usually the most expensive component of an email marketing budget because it’s the hardest to automate. Even if you automate, optimize, and digitally integrate your entire campaign, you still need quality content. And this means paying writers to create effective email marketing copy that appeals to your audience.

Graphic design and visual content—especially branded graphics—for your email marketing can also require some of your budget. Visual content can include your brand color scheme, fonts, design layouts, and call-to-action (CTA) buttons. Some graphic designers may charge $15 to $150 per hour, but more expertise costs more money.

As for coding and formatting, an agency might be the easiest way to get the creative input you need. Some marketing agencies may charge a flat rate to create an email newsletter. These packages can cost more than just copywriting, as they account for design, coding, and testing. But you usually have to provide the written content and graphics. You can work with full-service design agencies, too, but these types of services can be expensive.

List Acquisition and Management

List acquisition and management make up another key component of a typical email marketing budget. Your email list is the collection of addresses your business gathers from potential customers. Through this email list, you can engage customers who are interested in your product or service and draw them back to your site on a continuous basis.

List acquisition is one of the most powerful ways to drive customer conversions. In fact, emails are 40 times more effective at converting customers than Facebook or Twitter. So, your email marketing costs may also include several list acquisition and management expenses:

Data Appending

You also need to maintain your list with data appending. Database decay simulations show the average email marketing list degrades by about 22.5% every year. This downgrade often happens because customers change, fake, mistype, or abandon their addresses. Data appending ensures you have the most valid address to reach each email recipient, increasing deliverability and engagement. The costs for data appending services can range between $0.15 and $0.18 per address, or as low as $0.08 to $0.10 as the volume increases.

List Cleaning

List cleaning is another cost of email acquisition and management. A good rule of thumb to keep costs down is to clean your email list every quarter. Tools like Kickbox, NeverBounce, and BriteVerify identify faulty email addresses and inactive subscribers, so you don’t waste resources sending emails to dead inboxes. On average, list cleaning services can cost around $0.008 to $0.0045 per email, depending on the volume you need to clean.

Paid Email Lists

If you want a high-quality email list, you can build it from scratch, work with a sponsor for access to their list, or buy or rent a list from a third party. The companies that offer paid email lists are email list brokers. Some seemingly legit brokers may offer you thousands of email addresses for a low fixed price. But you need to be careful with list brokers. Your ESP might not even let you send to emails you buy from a broker, causing your campaign to land in your customers’ spam folders.

Instead, you always want to rent from accredited brokers if you opt for paid email lists. This way, you’ll only gain access to this information for a limited time, and everyone on those lists will have consented to receive third-party emails. But what are these costs? Renting quality addresses depends on the demographics and size of the list and can vary between B2B and B2C. Typically, though, a brokered list of 2,500 to 5,000 emails can range from $200 to $600.

Measurement and Reporting

Of all the costs of email marketing, the one you can’t scrimp on is tracking performance. Email analytics and reporting tools can be crucial for monitoring the performance of your email campaigns over time. Without them, you won’t know what works and what doesn’t. And you this information is vital for improving on each campaign. You can analyze the audiences who engage with your content and use this data to improve your open rates, click-through rates, and conversions.

ESPs like Mailchimp and HubSpot offer reporting tools as part of their membership packages. But if you truly want to understand your email marketing campaigns—and where your email marketing costs are going—you can invest in third-party services. Most third-party services come as a monthly plan, costing anywhere between $13 and $150 per month. If you have a large email marketing budget, you might spend some of it on more advanced analytics tools. These work alongside your ESP and third-party analytics and can give you a comprehensive analytics dashboard.

The 250ok Analytics tool, for instance, allows you to track your campaigns in real-time with a tracking pixel. This tracking pixel measures open rates, click-through rates, and reading time. You can even collect customer data, like device types and geolocation. The drawback to ESPs like 250ok is that they’re often expensive. Like a menu in a decadent restaurant, they don’t offer you a price list. But you can expect to spend a bit of your budget on these types of ESPs.

Related reading: Email Marketing Do’s and Don’ts

Strategies To Keep Your Email Marketing Budget Under Control

With so many different elements, it can be hard to stop your spending from spiraling. Luckily, there are several strategies you can use to keep your email marketing budget under control:

Audience Segmentation

Audience segmentation allows you to conserve resources by targeting different groups with different email messages. Usually, marketers send generic emails to all their subscribers. This is “unsegmented” email marketing and can regularly lead to high volumes of unopened mail. If you’re selective with who receives your marketing emails, you can increase engagement by only offering relevant content to each audience segment you create.

Hybrid List Building

You can also keep your email marketing costs down by using a hybrid approach to list building. Combine rented and manual acquisition to create a dependable mailing list that your brand actually owns. Although renting addresses is an easy way to gain volume, they won’t be as tailored to your business as the ones you get yourself. To build your list manually, start with a subscription popup to collect email addresses on your website or link to a landing page on your social platforms. These CTAs can attract potential customers and stimulate organic signups alongside the addresses you’re renting.

Free Email Marketing Tools

Most email marketing platforms offer free trials. Depending on the provider, free trials can be anywhere from 14 days to one month long. The advantage of the free trial is the opportunity to try out different services. You can keep your email marketing budget down by sampling a handful of different services before you buy. This way, when you do spend, you know you’ll be committing to the right platform for your business’s needs.

Overall, email marketing makes up one part of your budget. It can have a huge impact for a low cost, providing a small but powerful strategy for a wider content marketing plan. With a deeper understanding of the costs of email marketing, you can make more informed decisions when outlining budgets and estimating your marketing costs for future campaigns.