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Endertech Team

How Much Should You Spend On Email Marketing

An image depicting a dollar cost of email marketing

Email marketing is incredibly cost-effective, making it one of the most popular digital marketing channels.

It is an essential digital marketing strategy that you must consider if you want to maximize your business growth. Wander, why is that so? 81% of US online customers will more likely buy again if you send them emails based on previous shopping preferences and behavior.

Even better, 83% of customers say email is among their preferred methods of communicating with businesses.

However, determining the right budget for this strategy can be challenging. Just how much should you spend on email marketing?

In this article, we explore the cost for email marketing by breaking down the budget to show you where the money goes. We will also provide insights for optimizing your investment and cutting costs.

What is the appropriate budget for email marketing?

In The State of Marketing Budget and Strategy 2022, Gartner reports that businesses spend approximately 7.8% of their marketing allocation on email marketing.

This allocation can translate to various figures depending on the size of the business. SMBs (small and medium-sized businesses) spend between $0 and $99 monthly on email marketing software for an email list consisting of 5 000 contacts.

ESP (email service provider) charges are only part of the email marketing budget. Therefore you must understand the various components of the budget to get a precise idea of how much you are likely to spend on email marketing.

For instance, if you factor in other costs, a mid-sized business can spend anywhere from $10 to $1000 monthly on email marketing. This range applies to businesses that manage their own email campaigns. Those who hire an email marketing agency typically spend between $300 and $1500 per month, according to WebFX data.

While working with an agency may drive up the cost of email marketing, businesses that hire an agency to handle their email marketing tend to realize greater ROI than those that self-manage their campaigns.

What Email Marketing Budget Includes

Email marketing has many moving parts that cost money and ultimately make up the overall cost for email marketing.

Here is a detailed breakdown of the email marketing budget.

  1. Email Marketing Software Charges

    Email marketing software cost is a crucial component of your email marketing budget. You simply cannot run an email campaign without the platform, whose cost varies from one service provider (ESP) to another.

    MailerLite, for example, allows you to use the software free of charge for your first 1000 subscribers, with a 12,000 monthly email cap.

    If you wish to send more emails to a bigger contact list, you can upgrade to their $10-per-month plan, which allows you to send an unlimited number of emails to your 500 subscribers.

    This makes MailerLite the ideal option if you don’t have a lot of money to spend on email or if you are just starting out.

    Brevo has an attractive free plan allowing you to send 300 emails per day to unlimited contacts. If you want advanced features like workflow automation, unlimited segmentation, and A/B testing with your free plan, try Omnisend.

    It allows you to use these features free of charge for up to 250 contacts, sending out a maximum of 500 emails monthly. The free plan also includes 60 SMS and 500 web push messages.

    If you wish to grow your email list, you can upgrade to their $16-per-month plan supporting 500 contacts and a maximum of 6,000 monthly emails. The plan also comes with unlimited web push and up to 60 SMS.

    ESPs like Mailchimp also offer pay-as-you-go plans. These allow you to pay for individual emails sent instead of a monthly or yearly package. With a pay-as-you-go plan, you buy the number of credits you need, each corresponding to an email sent.

    While this plan can provide unparalleled flexibility, it can be expensive if you send a large volume of emails. Perhaps the main limitation of this plan is how expensive it gets to access advanced features.

    Clearly, your business’s specific email marketing needs will determine which offering suits you, which determines the ideal ESP for your brand.

  2. Email Template and Design Cost

    If you have looked up various ESPs, you must have come across terms like customizable email templates and drag-and-drop functionality. Both are terms frequently used to describe email templates that come with various email marketing software.

    Email templates are reusable HTML files embedded into the email software platform as part of the design. As the terms suggest, templates are editable to allow you to customize them to match your brand and message.

    While most of them come as free inclusions with the email software package, you may find them limiting or basic, depending on your preferred design.

    If you want a more complex design or one that is not present with your current software package, the option is to pay a designer to create one for you.

    Designing an email template can cost as little as $100 or as much as $2,000, depending on the design requirements and the designer’s pricing. In any case, you should be able to get a good email design for $500 to $1,000.

    Such a custom template should have valuable content and eye-catching visuals with your brand colors or logo. The more the deliverables, the higher the service is likely to cost.

  3. Email Content Charges

    Email content can make part of your email template and design when you outsource the service. However, there can be cases where you have a designer create the template and let someone else develop the content once the template is ready.

    Email content creation rates can vary significantly depending on your strategy and the complexity of the design.

    Even if you have drag-and-drop editable templates, someone must still create the email content. The content of your emails can include the marketing copy (text), images, and other graphic media contributing to the message you wish to put across.

    Expect to pay anywhere from $15 to $150 per hour for email content creation.

  4. Email List Acquisition Cost

    If you like stopping by the contact section of websites, you should be familiar with the contact form, allowing you to leave your details for further communication. This contact form is one standard way of building an email list.

    Companies use contact forms to collect contact information from their subscribers. But this is not the only way to build a contact list or the list of people subscribed to your emails. Yet running an email campaign requires an active email list.

    Here are some of the ways to build a contact list from scratch.

    1. Include a pop-up offer on your homepage.

    2. Collect people’s contacts and email addresses at an event.

    3. Have a signup button on your social media pages.

    4. Add an opt-in form to your website footer.

    5. Create custom landing pages that collect leads.

    6. Have a newsletter signup prompt at checkout.

    Alternatively, you can rent or buy an email list from third parties who have them. This option involves spending a lump sum. With this method, you can buy millions of email contacts for less than $100.

    Unfortunately, cheap can be costly. Email lists acquired this way can consist of tons of illegal or invalid emails. And if you are unlucky enough, your email service provider may not allow purchased email lists.

    Renting email lists is safer and often accepted. Email list brokers are typically vetted and provide limited-time access to their list for a fee. Such emails tend to generate higher response rates because they are usually segmented.

    Email lists can cost approximately $200 to $400 for 5,000 email addresses. For B2B email addresses, expect to pay more, often around $300 to $600 for 5,000 contacts.

  5. Cost of Growing an Email List

    Once you have an email list, you can grow it and scale. How much you spend in this process depends on the method(s) used, such as opt-in forms, acquisition campaigns, and sign up incentives.

    Expect to spend anything between $2.5 and $20 per contact added to your email list.

  6. Email List Cleaning Fees

    Over time, some of your email subscribers will opt out or stop using their emails. You can also get a ton of bad email addresses if you buy a list from a third-party vendor.

    Whichever the case, inactive or dead email directories reduce your open rates and overall email ROI (return on investment). You will be spending money on contacts that will never respond or convert.

    Consider using tools like NeverBounce and Kickbox to detect and weed out bad email addresses from your list. Doing so can help you reduce the wastage of your email marketing spend, allowing you to run a more efficient campaign.

    Based on BriteVerify pricing, each email should cost around $0.008 to $0.0045 to clean.

  7. Tracking and Reporting Costs

    You need to track the performance of your email marketing campaigns to discover ways of optimizing them. For this reason, you must use performance tracking and reporting tools.

    Some ESP membership packages have built-in reporting and performance monitoring tools, while others lack such tools.

    Whether your plan comes with the tools or not, you can use third-party solutions to track your performance. You can spend as little as $0.008 per email on NeverBounce if you have a smaller list or $100 monthly on for a longer one.

Factors That Determine Your Email Marketing Budget

While industry ranges exist for various email marketing charges, the cost for email marketing ultimately depends on factors specific to your business. Such factors include the following:

  • Your marketing objectives

  • Your business revenue and marketing budget

  • Your willingness to allocate funds to email marketing

How much should you spend on an email marketing agency?

Email marketing agency fees vary significantly depending on the level of service and the agency’s pricing model. For instance, an hourly charge can range from $120 to $250 per hour. Alternatively, you can pay about $2,500 monthly for a full-service agency on a retainer.

Notice that hiring an agency often consolidates most of the costs discussed above under one roof—the email marketing consultants.

Email Marketing Can Pay for Itself (Why It’s An Investment)

Rather than look at email marketing costs in isolation, consider how much it will cost not to include it in your digital marketing strategy.

In the introduction, we mentioned that 81% of your online customers in the US will more likely make further purchases if you send them emails based on previous shopping preferences and behavior, according to the report.

Additionally, connecting with customers through automated emails can drive up to 50% conversions.

Since every $1 dollar spent on email marketing is expected to yield an average ROI of $40, a well-executed email marketing strategy is likely to pay for itself.However, notice that the returns will vary based on the quality of your strategy. While formulating an effective strategy in-house can be overwhelming, an email specialist can help.

The Cost for Email Marketing: Parting Shot

In this article, we have discussed the various dynamics of email marketing and how they influence your budget. We have pointed out that various items constitute the email marketing budget, including ESP charges, design and content fees, and the cost of acquiring and managing your email list.

With the information provided in this post, you have the potential to plan and budget your email campaigns with finer precision. If you wish to further optimize your email marketing process, keep an eye on our subsequent posts for additional tips.

Alternatively, you can schedule a free call and discuss your options with a specialist today.