Text message marketing gives businesses a direct way to promote products, services, and events to their customers. This digital marketing tool is growing in popularity because SMS offers higher open and click-through rates than .
While the stats back its popularity, one question remains: how much does SMS marketing cost a business? In this blog, we'll break down how much you can expect to spend.
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<h2 id="Direct">Direct text message marketing costs</h2>
The cost of text message marketing depends on several factors. Below, we break down those factors into buckets. Each one will influence the overall cost of your SMS marketing strategy.
Businesses need an SMS platform to deploy marketing texts. These platforms have the proper SMS compliance controls and offer tools like mass texting, scheduled messages, metrics, and automation. These tools protect your business while making campaign launches and tracking easier.
Each SMS platform's base price differs and is often unique to your business needs. Some platforms charge per user, while others charge by text message volume. These are the typical pricing structures you can expect to encounter:
To give two examples of a hybrid pricing model, Textline uses a subscription pricing model and a pay-per-text fee. The perk of this model is that it is flexible and only charges customers for the texts they use without needing to plan for credit usage.
Textedly charges a monthly subscription fee with a set number of text credits. If you want more texts, you pay $25 for 500 texts. The perk of that model is you have more standardized costs per month.
Messaging fees greatly impact the cost of text message marketing. Let's examine some factors that influence messaging costs.
As you can see, the average messaging cost can differ depending on your business, use case, and SMS campaign goals.
Another factor affecting SMS marketing costs is the number type your business selects. Three number types are approved for SMS marketing: 10DLC, toll-free, and shortcode numbers. We'll break down the costs for each below.
Do you need a more in-depth breakdown of the number types to decide which is right for your business? We have you covered.
In addition to the standard costs listed above, there can be additional add-on fees. Here are some to keep in mind.
<h2 id="Real">A real-world cost breakdown of SMS marketing</h2>
Let's walk through a real-world example. Textline offers three different pricing plans and a pay-as-you-go message charge. This means customers pay a monthly (or annual) price to use our platform and only pay for the text messages they send and receive in a given month.
Textline's standard pricing tier starts at $89.97 per month and includes all the essentials a growing business needs. It includes three users, top messaging features and integrations, and a dedicated support manager.
Let's break down the monthly cost for a business on the standard pricing plan with one toll-free number and a monthly message volume of 10,000.
Now, let's look at the cost for a business that sends fewer messages per month. The business is on the standard pricing plan with one toll-free number but sends only 1,000 monthly messages.
Here is the monthly cost for a business on the standard pricing plan with the same monthly message volume but wanting to use a 10DLC number instead.
Say your business doesn't need all the features in the standard pricing tier. You can opt for the limited plan. With a limited plan, a toll-free number, and 1,000 messages, here's how the cost would break down:
The great thing about Textline is you can choose an annual plan to save money. Contact our sales team today to get a quote for your business needs.
<h2 id="Calculate">How to calculate SMS marketing ROI</h2>
SMS marketing return on investment is a key performance indicator for marketing teams, but how can you calculate it? The most straightforward way to calculate SMS marketing ROI is to determine the difference between the sales your campaign drove and what you spent. This number is multiplied by 100 to get a percentage.
Here's the ROI calculation:
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Here's the calculation with real numbers. Let's say you earned $500 in sales from your promotional texts in one month and spent $75. The ROI would be:
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In this example, the SMS marketing ROI would be 566%. Remember, the ROI for each specific marketing campaign can be significantly different.
<h2 id="Profitable">How profitable is SMS marketing?</h2>
Ecommerce brands across industries are seeing significant success with SMS marketing. An industry report found that 73 percent of marketers say SMS drives incremental revenue.
The profitability of SMS marketing depends on a business's product, use case, and campaign goals. For example, an abandoned cart recovery text typically drives more conversions than a low inventory alert.
For apparel companies, the average revenue per message for an abandoned cart is between $4 and $11. A low inventory alert is between $1.50 and $3.20.
Overall, many factors contribute to the profitability of SMS marketing. But the consensus is that it can drive up to $71 per $1 spent.
Are you looking for a reliable SMS marketing platform that drives revenue and is priced for your specific needs? Textline's expert team will work with you to determine the best pricing plan for your business.
Contact us today to learn more.
For the last few years, the SMS channel has been promoted as one of the most cost-effective ways for marketers to reach their audience and generate higher sales opportunities and ROI at lower costs. But does it actually do so?
Though SMS has one of the highest open rates, does it guarantee higher returns for each buck you spend? How much does SMS marketing cost for your business?
Well, it's easy to speculate that SMS is taking the marketing world by storm without concrete data. However, SMS marketing has one key advantage and that is the ubiquity of SMS-enabled phones as more than 90% of the world population owns a today.
Often compared with marketing which gives an ROI between $32 to $45 per dollar spent, SMS marketing, on the other hand, is believed to give an ROI of around $5+ for each dollar spent. However, this does not paint the whole picture.
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Once reserved for private conversations with family and friends, SMS has a significant role to play in brand marketing today. Introduced in the early 90s, SMS has lately been a ridiculously popular channel that is said to generate seven times more than Instagram ads ' said a report by Forbes.
Moreover, the same report explains that text messaging drives around 15% or more revenue for companies that utilize the channel effectively. Whereas, emails have become too easy to ignore as most people receive an average of 100+ emails daily while the same for SMS is around 30+.
Thus, many retailers and businesses are turning to text message marketing to use it as an additional promotional channel. Furthermore, the exceptional deliverability, open rate, response rate, CTR, and others make it hard to overlook this modern mobile marketing channel.
The popularity of SMS sees no bounds as it presents a much better and more effective way to get in touch with customers. However, how much does text message marketing cost? How much does an SMS campaign cost? And what returns can a business expect from these campaigns?
Answers to these questions are not going to be straightforward, but I'll try to come up with as easy explanation as possible.
The cost of SMS marketing for businesses depends on two factors: The price of the A2P tool used for text messaging and the number of messages sent per campaign. Let's explore the pricing factor first:
As I explained earlier, most A2P SMS marketing software use pay-as-you-go or subscription-based pricing models. Pay-as-you-go or flexible pricing is where you'd pay the cost based on the number of text messages sent.
There's no cap or limit to how many messages you can send, however, tools with this pricing structure can cost around $0.024 to $0.049 per message. This type of pricing structure is best suited for industries that don't have predictable messaging requirements.
Subscription-based pricing, on the other hand, requires you to pay an upfront monthly/annual fee and provides you with a fixed quota of messages to send in a month. For instance, it can cost you around $20 to $ to send 500 to 50,000 texts per month respectively, while additional message credits cost around $0.02 to $0.055.
Both of these costing structures are often on the pricier side, which makes the tools with hybrid SMS pricing your best bet. For example, Textdrip offers hybrid pricing where you pay a small subscription fee while retaining the benefits of the pay-as-you-go model.
It only costs you around $0.012 per text message, which is somewhere 2 to 4 times more affordable than the rest of the tools. Additionally, you can avail 20% discount on the purchase value of over $100, which effectively reduces the price per text to $0..
In general, SMS marketing costs you around $0.01 to $0.055 per text or more depending on your choice of A2P text messaging software.
The second important factor to consider while calculating the cost of SMS marketing is the number of text messages you send per campaign. Let's say, you want to do SMS for real estate and have approx subscribers, which are divided into two drip campaigns each consisting of an equal number of subscribers. Thus, per campaign.
Now let's say, you are required to send 2 texts of 160 characters per week to subscribers in one campaign and 1 SMS and 1 MMS to subscribers in the 2nd campaign.
This would require you to purchase (*2) + (*1 + *5) = 23,160 credits that cost around $222.34 (with 20% off from Textdrip). This seems straightforward. Right?
Well, what if you have to send multiple MMS messages to each group or additional messages when your users reply to your previous message?
In such cases, you'd be required to purchase additional credits. Let's say you send 1 normal text and 1 MMS message to one group and 2 MMS messages to the other group per week. This would require, (*1) + (*5) + (*2*5) = 46,320 credits.
Additionally, say 580 users have replied to your message and you want to send a follow-up message to each. Thus, your total credit requirements would be 46,320+580 = 46,900. With Textdrip, it would cost you around $450.24 to purchase 46,900 credits.
However, purchasing the same amount of credits with other tools would cost you anywhere between $938 and $.1.
Mind you, this is just for a week. Now imagine how much would it cost you to send the same amount of messages for the next four weeks. Let me answer that too. With Textdrip, it'd cost you around $.96, and $ to $.4 with other tools.
Your text message marketing cost would almost double or quadruple depending on your choice of business text messaging tool other than Textdrip. Now let's see how it impacts your ROI.
Continuing from the above example, let's imagine that out of 580 users, who replied to your texts, around 120+ booked a visit to your real estate properties and 2 subscribers made a purchase within the next 30 days that amounts to 250,000 in total value.
Now, calculate the ROI using the following formula,
ROI = [(Total revenue generated - Total costs/investment) / Total costs/investment] * 100
Your SMS marketing ROI with Textdrip would become .48% or $137.81 per dollar spent. This essentially means for each dollar you spend on real estate SMS marketing, you earn around $137.8 in return. The same with other tools with high SMS charges would generate anywhere from $65.63 to $26.2 in returns per dollar spent.
Now the decision is yours, would you want to choose a tool that costs more and offers lower text message ROI or a tool like Textdrip that costs less to send each text message and helps you generate higher ROI opportunities?
The key thing to remember is that the actual data may vary from the example I presented here, however, the basic process of calculating the cost and ROI of your text message campaigns will remain the same.
Also, keep in mind that the SMS marketing ROI for your specific industry may differ depending on the average purchase value of your industry. Since real estate has a higher purchase value, the ROI may seem higher.
Additionally, there are several forces that can influence your outcomes such as your messaging copy, CTA, tone, frequency, etc. Try to optimize your SMS marketing strategy with the best practices to see higher returns. In some cases, you may even get higher ROI with SMS marketing than with marketing.
While SMS marketing is considered a modern tool for marketers to generate high returns, there's a fine line between being promotional and spamming customers with offers they haven't signed up for. And as they say, with great marketing channels, comes the great responsibility to use it wisely.
Want to start your journey with SMS marketing? Textdrip is one of the most cost-effective text message automation tools available in the market to start your journey. As explained, there's a high probability that you'd gain high returns compared to other tools depending on your credit consumption rate.
Book a demo now or Start a free trial to get upto 30 days and complimentary credits to experience the magic of Textdrip yourself.
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