Email marketing can be a cost-effective way for businesses to reach customers and prospects. However, there are costs associated with email campaigns that businesses should factor in. This article will provide an overview of the main costs of email marketing, including server and hosting expenses, design and creation fees, list acquisition and management costs, deliverability optimization services, software and automation tools, analytics and reporting, testing and optimization, as well as staffing and labor.
Understanding these costs can help businesses create an email marketing budget and determine if this marketing channel offers a suitable return on investment. While expenses can vary greatly based on the size and scope of email campaigns, benchmarks and averages provide a useful starting point for estimating costs. With careful planning and testing, many companies find email generates significant revenue and customer engagement relative to the investment required.
Server and Hosting Costs
The main cost for sending emails is the monthly fees charged by email service providers for hosting your email accounts and sending your email campaigns. Most email providers charge per email user account, with basic plans starting around $3-6 per user per month according to HostAdvice. More advanced plans with more features can cost $15-20 or more per user monthly.
Popular email service providers like Zoho and Bluehost offer basic email plans for as little as $1.99 per user per month according to this review from HostingAdvice. However, lower cost plans typically have tighter limits on the number of emails you can send per month before incurring additional fees.
The monthly cost will depend on the number of email users you need to support, the email sending limits, and the features included like email marketing tools. But in general, expect to budget $3-20 per active email user per month for a fully managed email hosting service.
Email Design & Creation
The cost to design professional email templates can vary widely depending on the designer or agency you work with. According to Oyolloo, pricing for designing an email template can range from $50-$75 for 2-3 hours of work at an hourly rate around $25. Other sources like Unlayer note that newsletter designers typically charge between $15-$150 per hour, with an average around $25 per hour. So for a basic email template design, you may expect to pay $100 or more when working with a freelancer or agency.
The exact cost depends on the complexity of the design, number of templates needed, and the level of customization. More advanced designs with lots of visuals or interactivity will take more time and therefore cost more. Some email service providers like EmailVendorSelection report email template design fees starting around $100 per template and ranging up to $1,000 or more for highly customized, branded templates.
When budgeting for email design, keep in mind you may need multiple templates for different campaigns, segments, or time periods. Building a small library of templates will provide visual variety and keep your emails engaging over time. Though the upfront investment may seem high, a well-designed template can be reused indefinitely and provide an excellent ROI long-term.
List Acquisition & Management
One of the biggest costs associated with email marketing is acquiring and maintaining your email list. There are a few options when it comes to list acquisition:
Buying email lists – You can purchase email lists from list brokers and aggregators. The cost ranges from $100-400 per thousand consumer emails to $600-$1000+ per thousand for business emails (Source). Purchased lists are risky though, as they may have low engagement and high complaint rates.
Renting email lists – Some providers allow you to rent lists for a flat fee or cost per use. This can be more affordable than buying, but rented lists also run into engagement issues.
Organic list building – You can grow your own list over time by offering opt-in forms, promotions, etc. This takes more effort but leads to higher quality subscribers.
List maintenance – Proper list hygiene is crucial, so costs also include cleaning invalid emails, removing unsubscribes, and keeping data compliant. Expect to spend at least $100 per thousand emails for professional list cleaning.
Deliverability Optimization
Optimizing email deliverability is crucial for getting your messages past spam filters and into subscriber inboxes. According to Mailgun, some key deliverability services include IP warming, domain authentication, inbox monitoring, and blacklist monitoring.
IP warming is the process of slowly increasing the number of emails sent from a new IP address to build a good sender reputation. This involves gradually ramping up email volume over several weeks before sending full-scale campaigns. Most email service providers offer IP warming services starting around $500 per IP address. This helps authenticate the IP and improve deliverability before high-volume email sends.
Domain authentication, such as SPF, DKIM, and DMARC setup, is also essential for maximizing inbox placement. Domain keys verify the sender and integrity of email from a domain, reducing spoofing risk. Authentication typically costs around $300 per domain depending on the email service provider and level of configuration required. Ongoing domain verification and authentication helps build sender reputation with major ISPs.
Software & Automation Tools
Email marketing automation platforms that help with workflows like onboarding, segmentation, personalization, and campaigns typically charge monthly fees based on the number of contacts you have on your list. Basic automation platforms like Mailchimp start at around $9/month for under 500 contacts. More advanced platforms like HubSpot start at $45/month for under 2,000 contacts. The monthly cost scales up as your list size grows into the thousands or millions of contacts. According to WebFX, you may pay around $1,000-$2,500/month for list sizes of 50,000-100,000 contacts on platforms like HubSpot or Pardot.
These monthly fees often include:
- Contact management and list segmentation tools
- Pre-built email templates and customizable design options
- Drag-and-drop email builders
- Workflow automation for onboarding, segmentation, personalization
- A/B testing capabilities
- Email deliverability tools
- Stats and analytics on opens, clicks, unsubscribes
So while the base monthly fee may start low, costs scale up considerably for advanced features, larger list sizes, and additional professional services. Still, the automation can drive higher deliverability, open rates, and ROI compared to manual email blasts.
Analytics & Reporting
Understanding the effectiveness and performance of email campaigns requires robust analytics and reporting. Many email service providers offer built-in analytics, while others integrate with third-party solutions. According to Nutshell, AWeber charges between $20-$70 per month for basic analytics on emails sent, opens, clicks, and bounces. More advanced providers like Mailchimp and HubSpot bundle more detailed analytics into their packages at $9.99-$299 per month. Third-party analytics like Google Analytics or ClickDimensions offer enterprise-level email tracking for approximately $150-$250 per month.
The costs for email analytics and reporting can vary greatly based on the depth of data analysis provided. Basic email stats like send volume, open rate, and clicks may be inexpensive or included, while more complex attribution, multi-touch analysis, and predictive analytics command premium fees. Marketers must weigh the value of actionable insights from advanced analytics versus the monthly expense when selecting an email reporting solution.
Testing & Optimization
A/B testing tools and services help optimize email marketing campaigns by allowing marketers to test different email variants and determine which one leads to the highest engagement or conversion rates. Popular A/B testing tools like Optimizely, VWO, and AB Tasty typically range in price from $50 to $1,995 per month depending on features, number of users, and annual contracts. The cost varies based on factors like:
- Number of email variants tested
- Size of email list
- Advanced segmentation and targeting
- Analytics and reporting
While the cost may seem high, the potential increase in conversions and revenue from optimized email campaigns usually outweighs the expense of A/B testing tools. Marketers should calculate the potential lift in revenue from improved email performance to determine if the cost is justified.
Staffing & Labor
One of the biggest costs of email marketing is having dedicated staff to manage the campaigns. According to Salary: Email Marketing Specialist in United States 2024, the average salary for an email marketing specialist in the US is $61,332 per year. This can be a significant ongoing expense for companies investing in email marketing.
Other sources like Salary: Email Marketing Specialist (Jan, 2024) United States show similar average salaries in the mid $60,000s for email marketing specialists. This covers not just creating and sending campaigns, but also list management, analytics, A/B testing, and optimization.
Additional staff such as designers, copywriters, and developers may be needed too, depending on the size and scope of email marketing activities. Their salaries would also need to be factored into the overall staffing costs.
While automation and AI can streamline some email marketing tasks, human expertise is still required for strategic planning, creative messaging, and relationship building. Staff costs are likely to remain a significant portion of any email marketing budget.
Conclusion
In summary, the cost of sending emails can vary greatly depending on your email volume, list size, design needs, automation tools, and more. Some of the main costs include:
- Email service provider fees for hosting and sending emails which can range from $10 to $1,000+ per month depending on email volume.
- Design and creation of email templates and content – this may be a one time upfront cost or ongoing as part of a content calendar.
- List acquisition through paid channels or incentivized opt-ins.
- Deliverability tools and services to improve open and clickthrough rates.
- Email marketing software and automation platforms which often charge per subscriber.
- Analytics and reporting to track campaign performance.
- Testing and optimization of content, design, timing, etc.
- Staffing expenses if you have dedicated email marketers.
To budget for email marketing, begin by analyzing your business’ specific needs in each of these areas. Monitor your return on investment and email performance metrics regularly. Leverage free deliverability best practices before investing in paid services. Start small and grow your budgets over time as you prove the value of email to your business. With some strategic planning, email marketing can be a very cost-effective channel.
