March 2, 2022
Reading Time: 6 minutes
If you think about the dozens (hundreds?) of texts you send to friends and family each day, pricing doesn’t really matter much. Most of us are on unlimited plans when it comes to personal texting, so we think nothing of sending and receiving a steady stream of messages.
But as a merchant, each text you send to your subscribers does cost you something. The frequency at which you send, your list size, and how you send those texts can affect how much you’re paying for your SMS program.
As a brand, there are three main ways you can send a text to your list:
You can have an individual person manually send them. This is time-consuming—and also way less professional.
You can build out your own integration with an aggregator like Twilio. This can be costly, as you have to build out the engineering and compliance on your own.
You can send through a marketing platform like Postscript, which is the preferred method for most brands. This means your monthly costs include software that installs within minutes, a team of engineers, built-in compliance, support, and cutting-edge features that are constantly being added to your provider’s ecosystem.
At Postscript, we are as transparent as possible with our merchants about how our pricing works. You can learn more about our pricing here, but the tl;dr is that based on feedback we’ve received from customers, usage-based plans have way more flexibility for merchants.
Here are some factors to consider when determining the best provider for your needs—as well as how to best assess the true cost of the texts you send.
The Most Common SMS Pricing Models
You don’t want your SMS marketing experience to be “choose-your-own-adventure” style—where every decision you make might lead you down a path filled with more unknowns.
These are the most common pricing models for SMS marketing plans. Keep in mind there are benefits and downfalls to both.
This model is based on cost per message sent. The idea behind a usage plan is that you pay for what you use—brands are charged for the messages they send plus carrier fees.
The reason why usage-based pricing can be especially helpful in SMS is that there is so much seasonality to SMS marketing. For example, your send volume during the holidays will be far higher than it will be in January. With usage-based billing, you don’t need to worry about constantly upgrading or downgrading your plan each month.
You’ll also won’t have to worry about automations not firing, since your messages will continue to run in the background no matter how many messages you’re sending or how much your subscriber list is growing. The downside to this is that you could potentially send without a cap, so it’s important to keep on eye on your marketing spend throughout the month.
Different platforms have different nuances to their usage pricing (for example, subscriper caps, site traffic, features, etc).
A credit system allows you to choose how many credits you can use in a month. The obvious downside to this plan is that if you run out of credits, you could risk automations not firing if you aren’t keeping an eye on your account. You might also find yourself constantly upgrading or downgrading your plan each month. It’s a super straightforward approach, but also a very manual one.
Keep in mind that not all plans let your unused credits rollover. If you aren’t using all your credits, your costs are likely higher than you think.
It’s also important to remember that regardless of the type of plan you’re on, different levels or providers will include different things (e.g., short codes, extra services, minimum spend amounts, etc.).
4 Questions for Determining the True Cost of a Text
Your SMS program can be a bit of a cost landmine if you don’t arm yourself with the right questions when you’re choosing a provider or simply reviewing your billing statement.
1. What is the cost for incoming messages?
SMS isn’t a one-way communication channel. If you’re optimizing your program, you’ll be receiving responses from subscribers regularly and should know how that affects your costs. Some providers do charge you for incoming messages (beyond the carrier fees).
Postscript does not charge message fees for incoming messages.
2. Does the platform charge for failed messages?
If a message goes out but fails to deliver to one or more recipients, that may or may not be a charge to you.
At Postscript, we do not charge for failed messages.
3. For platforms using a credit-based model, do they offer any rollover for unused credits?
This is a big one for merchants. There are delays that may come up or campaigns that don’t go out, and you could end up with credits you’ve paid for but can’t use.
At Postscript, we do offer a 30-day rollover for our merchants who are still on our credit system (we have since moved to usage-based for new customers).
4. Should I be concerned if a platform uses a non-standard number of characters for a message?
It’s important to know if a particular message costs more to send on your current platform versus another provider.
If you’re comparing providers or simply want a transparent breakdown of how much your messages cost, consider diving into an automation like your Welcome Series and figuring out the cost of each message in that series. If you include an MMS in the series, costs could vary depending on the platform you use.
At Postscript, each MMS message consists of 1,600 characters of text or emojis, plus one media file. So, customers can send up to 1,600 characters of text and emojis per MMS before additional credits would be necessary.
Factoring In Additional Fees and Costs
There are a few other costs that, depending on your plan, won’t be included in your monthly breakdown.
Dedicated Short Code Fees
Sometimes these are part of the platform fee, but they can also be an additional cost.
Every SMS marketing provider has carrier fees. These are fees that the carrier charges for the actual delivery of messages. Do you know the difference between the carrier fees and provider fees you are paying for? Some providers will break it out in a way that’s clear and transparent, while others fold those fees together. We found that transparency is important with fees, because brands really want to understand what they’re paying for.
Fees for Extra Services
If you’re looking to outsource your SMS through an agency or use a professional service like Postscript Plus, you’ll pay more than just the baseline send cost.
While unfortunate, there are some providers that are less transparent than others. Some providers handle character counts differently, especially when it comes to MMS. You want to make sure to understand whether these messages are being billed to you as one send or as multiple texts.
Getting the Most Value out of Your Texts
Now that we’ve established how you can figure out the cost of your SMS program, let’s talk about the value of it.
Even if you’ve managed to snag the most cost-effective and transparent SMS plan out there, you’ll want to think about the overall value of your SMS marketing program. When marketers first began to rely on email as a robust revenue channel, nurturing a quality list with segments and evaluating performance regularly was crucial to keeping that channel engaged. This same practice has to extend to SMS.
Subscriber Lifetime Value (LTV) considers the revenue potential of each individual who subscribes to your SMS marketing. This metric looks at the average dollar amount each subscriber spends over the life of their subscription (assuming that the life of their subscription begins the moment they opt-in to your SMS list and ends the moment they unsubscribe from that list).
To put it frankly, the longer you retain your subscribers—and the more purchases those subscribers make—the higher your Subscriber LTV.
We find this metric to be far more crucial than ROI or acquisition cost because it’s forward-looking. It is foundational to getting the most value out of your messaging in the long term. At Postscript we prioritize this metric and other forward-looking metrics including what we refer to as the ARM-U metrics: Acquisition, Revenue, Messages and Unsubscribes. You can learn more about why we consider this to be the north star for SMS marketing here.
There is so much more to healthy SMS performance than ROI. Using SMS can help build customer loyalty, engage your subscribers in a personal and meaningful way and communicate in ways that simply don't exist on other marketing channels. It’s why so many of our merchants have already made SMS their top revenue channel.
Senior Manager of Content and Community
Laura is the Senior Content Marketing Manager at Postscript. She has spent the past decade working in ecommerce. When she isn't writing about her favorite topic (marketing) or listening to podcasts about her other favorite topic (ecommerce), she's hanging out with her two sons on an island off the coast of Maine.