SMS Pricing Question from my client

by Bruha
18 replies
A new potential client is wanting to know how much it would be for him to send out 10,000 messages per month. When I initially told him $800 he seemed a bit put off by the price.

I explained the value of the direct contact he is getting by using SMS, but still seemed put off by the price.

I'm paying $0.03 / message with my provider now. So to send 10,000 messages it is going to cost me $300. Is it too cheap to let him do this for $450 plus the cost of keywords. That is about $0.05 / message. I'm going to charge him $10 per keyword and he wants 6 keywords.

So, I'd be charging $510 / month and profiting $198 / month.

Any thoughts on how to setup the initial charge as well? Should I tell him it is that price from the start? Or put out guidelines on when the price jumps based on the number of messages he is sending?
#client #pricing #question #sms
  • Profile picture of the author Kevin Z
    Hi Burha,

    An alternative way to approach this situation is to get the budget for the campaign before you give numbers. Once you have a general idea you can lower your cost per message but charge a 1 time setup fee per campaign run that is blended into the price. Even in yrou example above you could have said $510/month but that also includes setup, support, reporting etc...

    Good luck on the deal!
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  • Profile picture of the author laird
    Were you presenting price (cost) before ROI? I know that's not the question you're posing to us, but questions centered around a client's perception of affordability is generally due to their lack of understanding the value of the service.

    For example...

    Using a baseline ROI calculator during a presentation helps:

    List Size x Redemption Rate Percentage x Average Ticket = ROI

    Wherein a List Size of 2500, 10% redemption rate and $35 average ticket...

    2500 x 10% = 250 redemptions x $35 = $8,750 PER WEEK.

    He mails 4 x per month: $8,750 x 4 = $35,000 ROI per month ($420,000/year)

    ...and then you let him know your SMS Broadcasting service costs only $800 for 10,000 messages per month.

    $800 to earn $35,000. No brainer. Try getting that redemption level with direct mail AND for $800. Not going to happen.

    You preserve your $.08 per text price point and profit $500/month.
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    • Profile picture of the author mickmorris
      do you have a spreadsheet
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      • Profile picture of the author Rymico
        I think in this case I would just give him a graduated rate plan. Start around $300 for 4,000 texts. Maybe $500 for 7,000 and $800 for the 10,000. By the time you get to the $800, he would be convinced it was worth it. But give him a smaller investment at first.

        $300 is a lot easier sell than $800, when the customer does not understand the value.. And you can use HIS numbers for ROI when you get to the higher plans.

        Also, you might want to look around at where you might find a cheaper price for your cost on texts. That seems a little high to me at $0.03.
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  • Profile picture of the author xlfutur1
    Sounds this client is just yanking your chain a bit. First off, where is he going to get 10,000 subscribers? He doesn't even have 1 subscriber yet and he is asking about sending to 10K? Laird is right on with this, the ROI would be off the charts if he sent a terrific offer to 10K opt in subscribers. What niche is this guy in?
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  • Profile picture of the author WillR
    It's all about the ROI. A business owners would be mad not to spend $800 if it were going to return double that. Remind him of the advertising budgets of some of the biggest companies in the world such as Apple, Coke, McDonalds. They spend millions and millions of dollars every year but they have no problem doing so because they know the return will be far greater.
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  • Profile picture of the author Bruha
    YEs, I thought about the ROI aspect of the deal after I posted this. He has 6 stores he is going to push this at, 1 keyword per store to start. So really he needs to look at it as $100 or a little more per month per store. I think once I approach it from the ROI standpoint, the $800 I originally quoted him will seem like a deal. Then if he still balks at the price, I'll go down to $510, but that will only include technical support.
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    • Profile picture of the author WillR
      Originally Posted by Bruha View Post

      YEs, I thought about the ROI aspect of the deal after I posted this. He has 6 stores he is going to push this at, 1 keyword per store to start. So really he needs to look at it as $100 or a little more per month per store. I think once I approach it from the ROI standpoint, the $800 I originally quoted him will seem like a deal. Then if he still balks at the price, I'll go down to $510, but that will only include technical support.
      You know what, I don't blame the guy for being skeptical in this day and age and you shouldn't either. Running a bricks and mortar business has been made so much more difficult over the last few years because of the increase in competition through the Internet. It's understandable that businesses are feeling the sting and money is tight.

      I would even be inclined to say something along those lines to the business owner. Relate to him and get on his same wave-length. You need to look at things through his eyes. Try and imagine what you would be saying if you were in his position and you had absolutely no idea about how the whole SMS thing works. You would probably be fairly reluctant to hand over $800 also.

      I'm sure you would much rather risk a little less money and do a test campaign and that's the kind of thing I would offer him. I would say exactly what I said above and then say because I understand things are tight, I don't want you spending that money right away if you are not comfortable, so let's implement a small scale campaign for only one or two of your stores. We can start with those, monitor the results and then when you see how successful it is, we can roll out the other stores also.

      I don't think he could turn down an offer like that.
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  • Profile picture of the author Bruha
    Will, Thanks for the advice man. That is basically what I did. I didn't suggest the small scale event, but I did show him the ROI once he got to the level of 10000 messages per month. It is really a no brainer at that point.

    One thing it did get me thinking was it would be nice to have an ROI calculator on my website that I could send people to, so they could play around with their numbers and see themselves how it worked. Some business owners just aren't going to tell me how much they are making on transactions, which is fine, but then they can go in and see if the system is really going to work for them or not.

    I'm finding some small businesses are going to need very large lists in order for them to be able to justify paying for my service. Which is fine, I'm here to help them do that as well.

    Anyone know of an ROI calculator script that I can use? I'm open to purchasing one if there isn't a free one available.
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    • Profile picture of the author WillR
      Originally Posted by Bruha View Post

      Will, Thanks for the advice man. That is basically what I did. I didn't suggest the small scale event, but I did show him the ROI once he got to the level of 10000 messages per month. It is really a no brainer at that point.

      One thing it did get me thinking was it would be nice to have an ROI calculator on my website that I could send people to, so they could play around with their numbers and see themselves how it worked. Some business owners just aren't going to tell me how much they are making on transactions, which is fine, but then they can go in and see if the system is really going to work for them or not.

      I'm finding some small businesses are going to need very large lists in order for them to be able to justify paying for my service. Which is fine, I'm here to help them do that as well.

      Anyone know of an ROI calculator script that I can use? I'm open to purchasing one if there isn't a free one available.
      An ROI calculator or estimate is great but it's not a guarantee that a business will make that amount of money by implementing an SMS campaign. The business owner knows this. It's like going to the WSO section of this forum and believing half of the income claims that are made there. Sure, the person who created the WSO may have made that amount of money so it is possible, but it's not to say you are going to earn that exact amount.

      You need to be very careful when giving ROI estimates. If you don't come close to those figures then your client is going to look at you as a failure.

      That's why the small scale implementation is a great idea for both you and the client. It allows the client to see what is possible and it also allows YOU to gauge a much more realistic and accurate ROI outlook based on those initial numbers.
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    • Profile picture of the author TheLocalCoach
      Originally Posted by Bruha View Post

      Will, Thanks for the advice man. That is basically what I did. I didn't suggest the small scale event, but I did show him the ROI once he got to the level of 10000 messages per month. It is really a no brainer at that point.

      One thing it did get me thinking was it would be nice to have an ROI calculator on my website that I could send people to, so they could play around with their numbers and see themselves how it worked. Some business owners just aren't going to tell me how much they are making on transactions, which is fine, but then they can go in and see if the system is really going to work for them or not.

      I'm finding some small businesses are going to need very large lists in order for them to be able to justify paying for my service. Which is fine, I'm here to help them do that as well.

      Anyone know of an ROI calculator script that I can use? I'm open to purchasing one if there isn't a free one available.
      Bruha,
      I recently launched a WSO Plugin that does exactly what you're looking for. Link in Signature below.

      I concur with Will R, that you should always be conservative in your ROI projections, and always show Net Results after costs, not just Gross Sales. This helps earn trust.
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      • Profile picture of the author xlfutur1
        Originally Posted by TheLocalCoach View Post

        Bruha,
        I recently launched a WSO Plugin that does exactly what you're looking for. Link in Signature below.
        Link doesn't seem to work. Says page not found.
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      • Profile picture of the author Rymico
        Originally Posted by TheLocalCoach View Post

        Bruha,
        I recently launched a WSO Plugin that does exactly what you're looking for. Link in Signature below.

        I concur with Will R, that you should always be conservative in your ROI projections, and always show Net Results after costs, not just Gross Sales. This helps earn trust.
        I took a course from The Local Coach in which he gave us his ROI calculator. It has been very helpful in my selling. I am guessing that his WSO is the same or very similar to the one I have. I have not seen the plugin itself.
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  • Profile picture of the author HypeText
    This is a perfect example of a Client putting the Cart before the Horse.

    Sounds like you need to sit him down and provide him with a "Reality check", such as time to build an Opt In List, how many of his customers might ACTUALLY opt in, and how customers he ACTUALLY has.
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  • Profile picture of the author dennism70
    Just do startup costs, managemant fee and a flat fee per message (x times your costs).
    If the ROI (after a trail) comes out, he will know what to do. Set a split trail where you do different approaches instead of trying to sell right away.

    Build that WANTED business relationship first
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  • Profile picture of the author ZNICK
    TheLocalCoach's calculator rox... get it.

    Z
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