Email marketing cost and ROI

If you’re just starting to use email marketing for your business, you are probably wondering ‘how much will email marketing cost me, actually?’ and ‘what will be my return on investment from email marketing?’

In this post, we are going to discuss:

• What are the different costs involved in doing email marketing 
• What is the ROI of email marketing 
• How much should you spend on email marketing – and how much do successful companies spend on their newsletters on average; 

Email marketing cost – What are the different costs involved in doing email marketing?

There are a few factors that affect the cost of your email marketing campaigns per month:

• your email marketing tool subscription price
• the number of contacts (subscribers) you have on your email list
• the number of emails you send per month
• the cost of creating your newsletter copy 

Email marketing tool subscription price

In order to use email marketing in your business, you need an email marketing tool that will allow you to send emails to several contacts safely at the same time, while still personalizing e.g. the greeting and email subject line.

Also – as opposed to using Email Service Providers such as Gmail for sending your marketing emails, you will be able to design templates with images, your logo, links, and brand color – aka do much more than when you just send a ‘simple’ email:

Hence, getting an email marketing tool is a necessary investment if you want to do email marketing.

Luckily, most email marketing tools won’t cost you much – especially if you have a small email list for starters.

• An email marketing tool for a list of under 5,000 contacts won’t cost you more than $ 50 on average.
• An email marketing tool for a bigger list – of up to 10,000 contacts – will still be within  $100 on average.

As you can see – email marketing tool cost is a fairly insignificant expense compared to what you can make back from your newsletters (see the next paragraph).

The pricing of your email marketing tool subscription depends mostly on the number of contacts you have on your email list – aka the number of your subscribers. The cheapest plans start from only $10 per month. 

Luckily, you can test if email marketing works for you before you start paying for it – as most email marketing tools offer a free plan.

Get a Newsletter offers you a free forever account for up to 100 subscribers! 

Does it make sense to send newsletters if you only have a small list?

Absolutely! Small lists are actually a lot more engaged and intimate – it’s as if the subscribers knew you themselves. Thus, small lists tend to have much higher open rates and click-through rates than industry standards.

Does the number of emails you send affect your email marketing cost?

Most email marketing tools offer to send unlimited emails in their paid plans – so the number of emails you send (which can quickly add up – say, if you have 5000 subscribers and send 1 email per week – that’s already 20,000 emails per month!) doesn’t affect your email marketing cost. 

The cost of writing your newsletters

Finally, a lot of businesses beginning their adventure with email marketing forgets about the ‘hidden’ cost of actually writing your newsletters.

If you’re writing them in-house – writing 2-4 newsletters per month will cost you 2-3 hours of your or your employee’s time. So – if you’re paying your marketing manager $ 50 per hour, writing newsletters in-house will add only about $100-150 to your email marketing cost.

If you outsource email marketing to an agency – your monthly newsletters will cost you around $ 300 – 500. 

So, let’s sum things up:

Total email marketing cost per month (on average):

• up to 5,000 contacts, in-house: $150-200
• up to 5,000 contacts, agency: $350 – 550
• 5,000 – 10,000 contacts, in-house: $200-250
• 5,000 – 10,000 contacts, agency: $ 400-650

What is the ROI of email marketing

OK – now we’ve discussed how much email marketing will cost you – let’s see what you can make in return.

According to Campaign Monitor  – as of 2019, email marketing could yield you up to 4300% Return on Investment. 

That means that – for every $1 you spend on email marketing, you can get $44 back.

Of course – the amount of money you can make off email marketing per month depends on your conversion rate (how many say, 100 potential leads – actually end up buying something from you), your margins, and how many newsletters you actually send.

Read more email marketing stats here!

How much should you spend on email marketing?

Well, I can’t give you an absolute number – because how much you should spend depends on the size of your business and your marketing budget. But if you want some guidelines as to what successful marketers do, here’s a bunch of stats you can use as guidelines:

• According to Web Strategies Inc. – to achieve the top ROI from your email marketing efforts, you should spend around 16% of your total marketing budget on emails. 
• According to smart insights – 82% of marketers spend between 16 and 20% of their total marketing budget on email marketing.
• Moreover, clients who end up buying after reading your newsletters spend 138% more than those that don’t receive email offers. (Source: JeffBullas)

How much do successful companies spend on their newsletters on average?

While businesses are not readily bragging about this online, it’s been estimated that companies in the U.S. alone spent over 350 million dollars on email marketing in 2019 (Source: Backlinko)

Conclusion

As you can see from our calculations and stats above: email marketing is a cheap and scarily effective marketing channel. The value for money is so good that we’re surprised not everyone actually does it (how many times has a restaurant owner sent you a newsletter, for example?)