How much does SMS marketing cost and is it worth the investment

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Text message marketing is one of the most effective marketing techniques, famous for its cost-effectiveness and accessibility. Unsurprisingly, it has taken the world by storm as more and more businesses and individuals adopt it.

Before you join the train and adopt text message marketing, you might want to consider the costs first. This guide describes SMS marketing pricing and how to calculate the ROI for your SMS campaigns.

How much does SMS marketing cost?

SMS marketing is, without a doubt, one of the most successful and effective marketing techniques today. Statistically, the average open rate for SMS campaigns is 98%, which only demonstrates how widely adopted SMS marketing really is.

As a small business, before going into SMS marketing, it is always best to consider the price. This means you must consider the cost per message, keyword, and international SMS rates. Together, they determine SMS marketing pricing ranges.

Individual text message marketing cost depends on various factors, including country-based SMS rates and length. However, aside from individual numbers, some countries also require dedicated business numbers.

These toll-free or 10DLC numbers are suited for a specific business or enterprise. SMS marketing for these numbers differs from individual numbers because they cost slightly more. Different SMS providers charge different monthly rates for both individual and dedicated business numbers.

Additionally, you might pay optional fees like carrier validation, which is $0.04 per validation. This payment validates your numbers before you send texts and ensures that the price for your SMS marketing stays low.

Below, we will discuss the various factors to consider when calculating the cost of SMS marketing:

Cost per text message

This is the price of sending a single SMS. Typically, it varies according to your carrier and country. For Textmagic users in the US, outbound SMS messages cost $0.049 per SMS, while outbound MMS messages cost $0.080.

Our inbound SMS messages cost $0.02, while inbound MMS messages cost $0.080. So, if you send 1000 text messages, the total cost would be $49.

As you might have observed, MMS messages cost slightly more than SMS messages. This is because MMS typically contains about 1600 characters, which requires carriers to handle more data than SMS.

SMS campaign costs

An SMS campaign differs from a simple SMS message in that campaigns are more personalized and generally sent to multiple contacts. Businesses use SMS campaigns to reach customers, sending updates, news, and offers.

Like individual text message marketing costs, SMS campaign prices depend on your country and carrier. Their prices are also similar since, at the end of the day, SMS campaigns are a form of text messages.

However, note that SMS campaigns target a larger audience than individual messages. So, to get your SMS campaign cost, multiply the cost per SMS by how many texts you want to send. You should also consider how long the messages are and the platform for cost estimation.

For instance, for a campaign of 1000 texts in the US, here’s how much it would cost using Textmagic:

$0.049 x 1000 = $49

Textmagic also offers a real-time calculator on our pricing page for SMS costs as you compose the messages.

Cost per keyword

Fundamentally, keywords are short, specific words or phrases that people send via SMS to a specific shortcode, which is a shortened phone number typically used for SMS campaigns. These keywords have their significance. For example, customers can subscribe to a service like news on your platform by sending NEWS to 12345.

In our example, “NEWS” is the keyword, and “12345” is the shortcode. So, in essence, the keyword leads up to an action in the SMS flow.

Textmagic features an opportunity to set up unique keywords your customers can use to subscribe to your contact list. This can boost your reach and, eventually, your business’ success.

International SMS marketing

International SMS marketing pricing differs from country to country. This is due to carrier rates and the kind of business number you use. For example, some countries use 10-digit long or toll-free lines as dedicated business numbers.

Textmagic supports international messaging across various countries. The SMS marketing price for toll-free numbers is $10 monthly, and the cost for SMS messaging to 10-digit long numbers in the US is $10 monthly.

Benefits that can come without a cost

After paying for SMS marketing on Textmagic, you get additional premium features for free. One of these features is scheduled automated text messages. By scheduling your SMS messages, you ensure to update your customers on time and maintain their interest.

In addition, you can send text messages to your preferred email client using Textmagic. This feature is handy when forwarding messages to your email distribution lists through SMS.

How to calculate SMS marketing ROI

ROI stands for Return on Investment. It measures the profitability of a particular investment in a business in the long run. So, basically, your ROI tells you what you gain by investing in a strategy.

When it comes to SMS marketing, calculating your ROI is easy. You can do so by dividing the net profit by the investment cost. Then, multiply the result by 100. In mathematical terms:

In SMS marketing, the investment cost is the total amount you invested in the strategy. The net profit is the total amount you made from the SMS marketing strategy.

Let’s say you ran an SMS campaign of 3000 messages monthly using Textmagic. Going at the rate of $0.049 per text, the total cost of investment would be:

$0.049 x 3000 = $147

Now, If you had a total profit of $1000 from those campaigns, your ROI would be:

($1000/$147) x 100 = 680.27%

Therefore, the SMS ROI for that month would be about 680%. However, a few factors ultimately affect your ROI. Below, we will explain how to calculate these factors.

Calculate SMS cost per click

If your campaign has a URL embedded, the cost per click on the URL would directly affect your net profit. Cost per click (CPC) in SMS marketing refers to the price you pay for each click your customers make on a link in the SMS message.

To calculate CPC, you divide the total cost of the SMS campaign by the number of clicks on the campaign. The formula is as follows:

For example, if you spent $49 on an SMS campaign and received 30 clicks on the link in the SMS message:

CPC = $49 / 30 clicks = $1.63 per click

The cost per click adds to the total investment cost in SMS marketing. Thus, you should consider it while calculating your ROI.

Calculate SMS conversion rate

Your SMS conversion rate is the percentage of customers that perform the action you want after receiving your message. To calculate it, divide the number of conversions by the number of messages delivered. Then, multiply the result by 100 to get a percentage.

For example, if you sent 1,000 SMS messages, 900 were delivered, and 50 people converted, the calculation would be as follows:

SMS Conversion Rate = (50 / 900) x 100 = 5.56%

So, the SMS conversion rate in this example would be 5.56%.

Your SMS conversion rate determines how much profit you will gain from the SMS campaign. Therefore, it is a critical factor to consider when calculating ROI.

Calculate cost per lead

The cost per lead (CPL) measures the cost of generating a potential customer for a business. To calculate it, you divide the total cost of SMS lead generation by the total number of customers. Essentially:

For example, if you spent $300 on lead generation and got 20 leads, the CPL would be:

$300 / 30 = $10

So, the cost per lead for this business is $10. This price contributes to the cost of investment, which directly influences your SMS ROI.

Set up your first SMS campaign with Textmagic

SMS campaigns aim to secure customers, and with a good SMS marketing agency, you can achieve it. So, if you want to apply text message marketing to your business, Textmagic is the ideal choice for you.

With Textmagic, you gain access to features that help boost your conversion rate and ROI. Our competitive SMS broadcast pricing comes with added bonuses, like email-to-text features, to further increase your ROI.

Setting up an SMS campaign is easy, but our platform makes it even easier and more effective, allowing you to reach your target audience with your message. Sign up today and enjoy personalized, productive SMS marketing to grab your customers’ attention.