SMS has long been a go-to marketing channel for many businesses for conducting effective eCommerce marketing. It is widely used and ultra-accessible, making it a very effective platform with endless possibilities.
But it too, like all good channels for marketing, comes with a cost.
If you don’t plan out your SMS marketing expenditures and track your budget well, there is a chance that you might burn out your resources without hitting the desired results. How do you prevent that? The first step would be to be informed.
In this post, we will help you better understand SMS marketing costs. Let’s begin!
How Much Does SMS Marketing Cost?
SMS marketing is undoubtedly a very fruitful marketing technique and the numbers speak volumes about its effectiveness. SMS campaigns see an average open rate of around 98% showing how reliable a channel SMS is.
However, knowing and considering the costs is a crucial prerequisite for any small business to eliminate any chance of avoidable losses. You must take into account cost per message, international SMS rates and keywords, to together determine the range of your SMS marketing costs.
There are various factors like country-based SMS rates and length, that determine individual SMS marketing message costs. Some countries also require the business to have a dedicated business number for conducting SMS marketing. Such 10DLC or toll-free numbers are more suited for conducting business or any sort of enterprise. For these numbers, unlike individual phone numbers, SMS marketing costs can be a bit higher.
Added to this, there might also be optional costs for each carrier validation. Carrier validation payment validates your number before you send your SMS, to help you keep your SMS marketing cost lower. Usually, the career validation fee remains around $0.04 per validation.
We have listed the major factors to take into consideration when you calculate your SMS marketing cost.
1. Cost per Text Message
The cost per text message is basically the price of sending a single SMS. This usually varies according to the country you are in or your carrier. So based on the charges of a carrier and the specific country, the outbound SMS messages and MMS charges will be different. Typically, MMS charges will be slightly higher than SMS cost, as MMS contains around 1600 characters, i.e., more data to handle for carriers than an average SMS.
2. SMS Campaign Costs
An SMS campaign is different from a normal SMS message, primarily because campaigns are usually more personalized and are sent to multiple people to promote or notify something. It is used by businesses and enterprises to get to audiences with updates, offers, news and promotions.
Live individual SMS marketing message cost, SMS marketing campaign cost can also vary based on the country and the carrier, but the pricing will be similar as campaigns are nothing but text messages sent to multiple users. SMS campaigns however target a larger audience while the scope of individual messages is limited.
In order to calculate your SMS campaign cost, simply multiply the cost per SMS by the number of texts you want to send. Also remember to consider the platform and length of your messages, for an accurate estimation of SMS marketing cost.
3. Cost per Keyword
Keywords are nothing but specific, short words or phrases that are sent via SMS to specific shortcodes (shortened phone numbers usually used for SMS campaigns). Keywords are important as they provide a means for easier interactions.
For example, if a customer wants to subscribe to a newsletter of your brand, they could send a keyword like NEWSLTR to a shortcode 12345. In short, the keyword lets customers conduct an action easily in the SMS flow. By setting up unique keywords and adding customers to your contact list, you can boost your SMS marketing campaign greatly.
4. International SMS Marketing Cost
International SMS marketing costs can vary for each country as the kind of business number being used and the particular carrier rates in that country. Some countries use toll-free or 10-digit numbers as dedicated business numbers and the costs can vary accordingly. The SMS marketing price for 10-digit long numbers in the US is around $10 per month.
5. Monthly fee
Many platforms have a tiered system for pricing, with a monthly fee that allows you to send a certain number of messages and keywords.
If you want to send more than what’s included in your plan, you will have to pay an additional fee or scale up and move to a higher tier that provides a greater number of SMS capabilities. Some of these providers will also have free tiers or free trials or provide a scale-as-you-grow plan.
How to Calculate SMS Marketing ROI?
ROI or Return on Investment is the measure of the profitability of an investment for a business, in the long-term perspective.
In simple terms, it calculates the gains from investing in a particular strategy. For SMS marketing, you can calculate it by dividing the net profits by the cost of investment and then multiplying it by 100.
Here the net profit is the total amount made from SMS marketing while the cost of investment is the total amount invested in the SMS marketing strategy.
There is no fixed method to calculate SMS marketing ROI, as each brand’s campaign goals and business goals behind their SMS marketing tactics can vary greatly. These are a few factors that should be taken into consideration when a business calculates their SMS marketing ROI:
1. Clickthrough Rate
Clickthrough rate is the amount of clicks on a link in an SMS in a given campaign. This is a very straightforward way of knowing how well your SMS campaign is doing and how successful it is at engaging customers with your promotions, offers and other content.
By calculating your clickthrough rate you can better assess the performance of your SMS marketing strategy and hence have a better grasp of your SMS marketing cost.
2. Conversion Rate
Usually for eCommerce brands, conversion rates directly relate to sales but it can mean different things as well. SMS conversion rate is the percentage of your audience in a campaign that carries out an action via your SMS after receiving the SMS.
You can calculate it by dividing the number of conversions by the total number of delivered messages and then multiplying it by 100. This, like clickthrough rate, is a way to measure how successful or profitable your SMS campaign would be, making it crucial in calculating the ROI.
3. Cost per Lead
Cost per lead or CPL, is the measure of the cost of generating a lead for your business, that is, the cost of gaining a potential customer. You can calculate it by dividing the total cost of your SMS lead generation by the total number of customers you have.
This cost ultimately contributes to making up your total SMS marketing cost and subsequently in calculating your ROI.
4. Cost per Subscriber
Cost per subscriber is the amount you are paying to acquire a customer for your SMS marketing campaigns.
Here you will also have to consider your opt-out rates as well while considering how many customers you are gaining to get an accurate assessment of the performance of your SMS marketing strategies.
5. Cost per click
Some of your SMS campaign messages will most likely have a URL embedded into it, which will lead to an action or a website. The cost per click on these directly influences your final net profit and is a key factor in your potential ROI. CPC or cost per click in SMS marketing is nothing but the cost for each click your customer makes on the link in your marketing message.
You can calculate your CPC by dividing the total cost of your SMS marketing campaign by the amount of clicks on the messages in your campaign. Your cost per click finally adds to the total SMS marketing cost and hence is a crucial element in calculating the ROI for your marketing campaign.
Conclusion
SMS marketing is a highly efficient way of marketing, considering its reach and usability. SMS has come to be a popular medium of communication and its huge count of users isn’t the only benefit.
With pro points like high delivery rates, high open and click-through rates and comparatively lower costs, it is an ideal medium for most marketers. And with a good track on SMS costs and budgets, it can yield great returns for minimal costs.
Thinking of starting up your SMS marketing journey?
