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 email.
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.
Jump right to:
- Direct text message marketing costs
- A real-world cost breakdown of SMS marketing
- How to calculate SMS marketing cost
- How profitable is SMS marketing?
<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.
SMS marketing platform fees
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:
- Subscription pricing. This pricing model requires businesses to pay a monthly or annual subscription fee to use the platform. SMS platforms often use various pricing tiers, which offer different features, user counts, or messaging volumes.
- Text credits. This pricing structure typically involves a business purchasing a batch of text message credits. A credit equates to one SMS segment of 160 characters. Once you use up your allotted credits, you need to buy more.
- Pay-as-you-go per text. Another pricing strategy is to pay per text. This involves businesses paying per text sent and received.
- Hybrid pricing model. Most text message marketing tools use a mixture of these pricing strategies. Hybrid pricing models typically charge a monthly subscription price and a text message fee.
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
Messaging fees greatly impact the cost of text message marketing. Let’s examine some factors that influence messaging costs.
- Message type. Text messages cost money to send and receive. In the U.S., a standard SMS message costs just over $0.01, and MMS messages cost just over $0.04 per message. MMS is more expensive because it lets businesses send an attached file, such as a photo, video, website link, or audio clip. If you send more MMS messages, you can expect to spend more.
- Message length. A standard text message length is 160 characters. If your message is over that length, it will count as two separate messages.
- The geographic location of your text recipients. International SMS rates are typically higher. This means where you’re sending a text message affects its cost.
- Number of contacts. The more people you send a text to, the higher your messaging cost. It will cost more to send a text to 1,000 people vs. 100.
- Number of replies. The number of replies you get to your marketing texts can also impact cost. It costs just over $0.01 to receive each message.
- Message frequency. Another major factor is the frequency of your text messaging campaigns. Are you sending a text blast once a week or once a month?
As you can see, the average messaging cost can differ depending on your business, use case, and SMS campaign goals.
Phone number type
Another factor affecting SMS marketing costs is the phone number type your business selects. Three phone number types are approved for SMS marketing: 10DLC, toll-free, and shortcode numbers. We’ll break down the costs for each below.
- 10DLC. 10-digit-long-code numbers are your traditional 10-digit numbers. Brands often choose a phone number with their local area code.
These numbers are a cost-effective option for brands wanting to text as they don’t often cost an additional fee. Most SMS providers include at least one phone number in their pricing plans. However, if you choose a 10DLC, you must pay a registration fee for The Campaign Registry. - Toll-free. Toll-free numbers are national numbers with popular 800 or 833 prefixes. This phone number type is often the most cost-effective option for brands as it doesn’t require an additional monthly fee or registration fee.
- Shortcode. Shortcodes are five or six-digit numbers. These are the most expensive phone number types. Leasing one of these numbers often costs $500 to $1,000 per month.
Do you need a more in-depth breakdown of the phone number types to decide which is right for your business? We have you covered.
Other fees
In addition to the standard costs listed above, there can be additional add-on fees. Here are some to keep in mind.
- User add-ons. Some platforms charge an add-on fee to add more users to your account.
- Phone number add-ons. You will likely need to pay an additional fee to add multiple phone numbers.
- Keyword fees. SMS keywords are words or phrases people text to a business phone number. Marketers often use them to increase text message opt-ins. Some SMS platforms charge companies to use keywords or set them up.
<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.
- Standard plan SMS platform charge: $89.97
- Message cost: $0.0154 x 10,000: $154
- One toll-free number: $0
- No additional users: $0
- Registration fees: $0
- Monthly total: $243.97
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.
- Standard plan SMS platform charge: $89.97
- Message cost: $0.0154 x 1,000: $15.40
- One toll-free number: $0
- No additional users: $0
- Registration fees: $0
- Monthly total: $105.37
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.
- Standard plan SMS platform charge: $89.97
- Message cost: $0.0154 x 10,000: $154
- One 10DLC number: $0
- No additional users: $0
- Campaign Registry fee: $15
- Monthly total: $258.97
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:
- Limited plan SMS platform charge: $59.97
- Message cost: $0.0154 x 1,000: $15.40
- One 10DLC number: $0
- No additional users: $0
- Registration fees: $0
- Monthly total: $75.37
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:
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:
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.
Drive revenue with Textline’s SMS marketing platform
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.
