SMS Reseller Providers that give everything away FREE
Posted 11-29-2011 at 07:19 PM by tjkirgin
I continue to be amazed by established SMS Reseller providers that GIVE AWAY the use of they're software with the purchase of BULK SMS CREDITS.
These programs look attractive to a start up mobile marketing company because of the low cost of entry. These mobile startups fail to look long term. They fail to ask the question: "What if I am succesfull?"
They also fail to see the mindset of the SMS Reseller Vendor that they choose until it is too late.
Let me explain.
If a SMS Reseller Software as a Service provider is GIVING AWAY the use of it's platform in exchange for the purchase of say 100k or 125k SMS Credits, THEY ARE BETTING ON YOUR FAILURE!
Think about it, there is NO SUCH THING AS FREE SMS (unless it is web to phone, which is just stupid. 60% fail rate and no confirmation of delivery)
Every Short Code holder pays something for MT (outbound) messages. Even if that provider is only paying a fraction of a penny to certain carriers, it is still a hard cost.
So if they are GIVING AWAY the platform in exchange for the purchase of a large amount of credits, THE ONLY WAY THEY MAKE MONEY, IS IF YOU DON'T SEND THE MAJORITY OF THE MESSAGES
Lets do the math.
125k SMS credits at .029 = $2900
You get the system FREE
You get 1 or 2 keywords FREE (additional keywords are ONLY $3 ea
If the provider pays .0175 per MT, their cost if you send all the messages is $1750
Their profit = $1150
Divide that over the length of your time in the business and the monthly revenue they generate from you is much less than $100 per month, IF YOU SEND ALL THE MESSAGES
But you probably won't, most SMS Reseller fail to get off the ground and eventually fail sometime around the 6th - 8th month for various reasons. Even more NEVER send 10k messages much less 100k.
The only way they make money is if you don't send the messages. Is this how you want your provider to think? Where is the motivation for them to HELP YOU SUCCEED?
I'll tell you where. It is in the $3 per keyword per month.
If you are successful, you will probably have 200-500 keywords in use in the first 18 months.
When you get to 500 keywords active, you will be paying $1500 per month!
Holy ****, you could have your own short code for that kind of money.
So they make a killing on the ones that fail (about 40%) and they make 2-3 times revenue on the ones that are succesfull.
This is a bad formula. Don't fall for the short term CHEAP deal. If you are successful, the keyword fees will eat your profits and if you are not, the SMS credits are not refundable and you bought a boatload.
You should look for an SMS Reseller provider that is invested in your success. One that is making money each month on your account service fee is more likely to provide added value training, support and strategy assistance.
Also look for providers that offer more than SMS. SMS is only one revenue stream in Mobile Marketing. Don't forget mobile apps, mobile sites, QR Codes, Augmented Reality, Location Based Services and Carrier Lookup.
Diversify your mobile offerings and choose a vendor partner wisely looking down the road and anticipating success. It is the only way you will achieve it.
- TJ Kirgin
These programs look attractive to a start up mobile marketing company because of the low cost of entry. These mobile startups fail to look long term. They fail to ask the question: "What if I am succesfull?"
They also fail to see the mindset of the SMS Reseller Vendor that they choose until it is too late.
Let me explain.
If a SMS Reseller Software as a Service provider is GIVING AWAY the use of it's platform in exchange for the purchase of say 100k or 125k SMS Credits, THEY ARE BETTING ON YOUR FAILURE!
Think about it, there is NO SUCH THING AS FREE SMS (unless it is web to phone, which is just stupid. 60% fail rate and no confirmation of delivery)
Every Short Code holder pays something for MT (outbound) messages. Even if that provider is only paying a fraction of a penny to certain carriers, it is still a hard cost.
So if they are GIVING AWAY the platform in exchange for the purchase of a large amount of credits, THE ONLY WAY THEY MAKE MONEY, IS IF YOU DON'T SEND THE MAJORITY OF THE MESSAGES
Lets do the math.
125k SMS credits at .029 = $2900
You get the system FREE
You get 1 or 2 keywords FREE (additional keywords are ONLY $3 ea
If the provider pays .0175 per MT, their cost if you send all the messages is $1750
Their profit = $1150
Divide that over the length of your time in the business and the monthly revenue they generate from you is much less than $100 per month, IF YOU SEND ALL THE MESSAGES
But you probably won't, most SMS Reseller fail to get off the ground and eventually fail sometime around the 6th - 8th month for various reasons. Even more NEVER send 10k messages much less 100k.
The only way they make money is if you don't send the messages. Is this how you want your provider to think? Where is the motivation for them to HELP YOU SUCCEED?
I'll tell you where. It is in the $3 per keyword per month.
If you are successful, you will probably have 200-500 keywords in use in the first 18 months.
When you get to 500 keywords active, you will be paying $1500 per month!
Holy ****, you could have your own short code for that kind of money.
So they make a killing on the ones that fail (about 40%) and they make 2-3 times revenue on the ones that are succesfull.
This is a bad formula. Don't fall for the short term CHEAP deal. If you are successful, the keyword fees will eat your profits and if you are not, the SMS credits are not refundable and you bought a boatload.
You should look for an SMS Reseller provider that is invested in your success. One that is making money each month on your account service fee is more likely to provide added value training, support and strategy assistance.
Also look for providers that offer more than SMS. SMS is only one revenue stream in Mobile Marketing. Don't forget mobile apps, mobile sites, QR Codes, Augmented Reality, Location Based Services and Carrier Lookup.
Diversify your mobile offerings and choose a vendor partner wisely looking down the road and anticipating success. It is the only way you will achieve it.
- TJ Kirgin
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