Choosing a Broadcast E-Mail Vendor, Part 2: Pricing
How to shop for an e-mail vendor. Second in a series.
How to shop for an e-mail vendor. Second in a series.
In part one of this series, I talked about the initial process of finding a broadcast email vendor. Today, I’ll cover evaluating different vendors’ pricing.
I admit it. I usually do the price analysis first. Why? I think it’s because I’m a bit of a spreadsheet geek. Also, I want to get a feel for where vendors are, pricewise, before I review the rest of their proposals. If one vendor is twice the price of its competitors, I’ll expect more from the qualitative portion of its proposal.
Here’s another reason: It can be especially challenging to come up with an apples-to-apples pricing comparison. I try to tackle this before the (somewhat) easier evaluation of qualitative stuff.
Below, an overview of pricing structures I’ve seen lately along with recommendations for evaluating them.
Lower-end, self-serve solutions tend to have very straight-forward pricing. Typically, there’s no set-up fee, no long-term commitment, just a flat monthly fee. I’ve come across two pricing models among lower-tier providers: cost by email messages sent and cost by list size.
The former is by far the more common model. You estimate your monthly send quantity and pay based on that. Instead of a CPM figure (which the higher-end services use), lower-end solutions usually have flat monthly fees based on ranges of send quantities. If your send frequency is low (once or maybe twice a month), chances are this will be a good pricing model for you.
The latter model can be a good structure for those who mail more frequently than twice a month (the more you mail, the lower the effective cost per email sent). In this instance, ranges concern your list size. You pay a flat fee (not a CPM) based on the number of subscribers you have.
When you move to higher-end solutions, pricing becomes exponentially more complicated.
One reason: Clear lines used to exist between self- and full-service solutions. In many cases, the lines have blurred. Vendors now often offer “blended” services, in which the client pays for a self-service model, then adds à la carte services at an hourly or project-based rate. Although great in practice, it can make budgeting more difficult. Some additional services:
Recommendation: Factor all the vendors’ costs into your analysis. A vendor with no set-up fee could be more expensive over the long run than a vendor that charges a large set-up fee.
Here’s the rub: In most cases, the CPM figure alone isn’t an effective way to evaluate price. As the market has become more competitive, vendors have lowered their CPM figures and added on fees, such as campaign fees, fees for multiple cells/versions, and service bureau fees. Many also have monthly minimums. When I’ve factored these in, I’ve found effective CPMs as high as $32.
Recommendation: Ask vendors to outline all their various fees, so you can calculate your own effective CPM, in addition to having the sales reps provide estimates. You’ll better understand the pricing structure and confirm the cost estimate covers all your needs. You’ll also have a better chance of heading off problems, such as finding out the cost estimate was for one campaign to 500,000 people, not the five campaigns to 100,000 people each you intend to send (the latter could cost more).
Recommendation: Factor the ancillaries into your cost analysis to avoid being blindsided later on. I’ve found registration pages to be an especially dicey area. Development costs range from free to nearly $7,000, and hosting costs from nothing to $500 per month. When you have multiple brands and want a unique registration page for each, as some of my clients do, these costs add up quickly. That’s why it’s important to include these in your analysis.
Recommendation: Once you find a vendor you want to work with based on its qualitative abilities, negotiate. Although it’s unlikely you’ll get a vendor to come down by 50 percent or more, it’s quite likely it’ll be willing to negotiate. A lower CPM is almost always doable; decreasing or cutting out other fees is somewhat less likely but still worth a try.
Though this column’s focus is pricing, it’s important to consider the qualitative portions of vendor proposals. Differences in capabilities are less dramatic than they used to be, but they’re still there.
Recommendation: Don’t choose a vendor on price alone.
One key area of differentiation is deliverability. Some vendors have better records than others. Often, those with the highest deliverability ratios charge more for their services — because they can.
I work with my clients to define needs and set priorities before we speak to vendors. This helps us target our efforts and determine which bells and whistles are worth paying for, and which aren’t.
Recommendation: Remember, no vendor is perfect for everyone.
There are good email vendors at every price point, you just need to find them. A vendor that’s a perfect fit for one isn’t such a good match for another. Doing a thorough evaluation of a few vendors takes time (and money, if you bring in an independent outside consultant like myself to do it for you), but it pays off in the long run. You’ll have fewer surprises on the cost side and get a vendor that’s just right for you.
Next month we’ll cover qualitative evaluation. E-mail me with questions or thoughts.
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