How to Price your SMS Packages for Maximum Profits

As a matter of fact, when you do a competitive analysis of the pricing that is out there, you will find that it is all over the place. The one common denominator seems to be that every SMS Reseller is trying to sell on SMS Rates, and in doing so, only fueling the commoditization of the product which hurts everyone involved.

Our sms resellers don’t normally sell on sms rates. They sell packages with apparent value and using our model, they earn profit margins of over 400%. Most SMS Resellers look at what they are paying per SMS and double, or triple, that rate to create a retail cost. THIS IS NOT HOW TO PRICE SMS MARKETING.

My suggestion is that you start with a set-up fee. The set-up fee should be small, but include the apparent value that you will be earning by developing the campaign to be optimized for effectiveness. The set-up fee should include things like creating a mobile landing page, a GR code, SMS Keywords, auto-responder, and scheduled alerts.

Most set-up fees are between $99 and $400, but can be more depending on the scope of the project. The set-up fee is a COMPLETE PROFIT sicne you should not be paying a set-up fee to your SMS Platform Provider per account! Second, you should look at SMS KEYWORDS as a commodity that has a value for monthly billing.

SMS KEYWORD is synonymous with two things:

– Trigger: a keyword triggers an action at the application layer, typically an Auto-Responder.

– Database: each person that texts the keyword will be added to a HOSTED DATABASE.

I say hosted database for a reason. To justify keyword fees monthly, all you need to do is explain that it is a hosted database. If anyone owns a web site, they have heard that it costs extra fees to host a mysql or sql database.

Now as for pricing, we advise that the keyword be valued at about $35 per month retail with discounts for volume. So for example, if a hair salon needs 10 keywords, one for each stylist, you may discount these to $15 each. If a car dealer needs 300 keywords, one for every car on the lot, you may discount these to $3 each, per month.

Now for the SMS- your SMS Marketing Platform should allow you many SMS billing options including:

– One time Bulk SMS Purchase

– Monthly Rollover SMS

– “Use them or lose them” SMS credits

With a one time Bulk SMS Purchase, your client just buys a block of SMS and uses them until they’re gone, at which time they will buy more from you.

With Rollover credits, they get a fresh block of credits added tllldlddldo their account each month on the renewal date. So, if they are not using the full credits each month, they are actually accruing credits monthly.

With “Use them or lose them” credits, they get UP TO XXXX SMS per month.

THIS IS THE PATH TO 400% MARGINS! I will now explain how to get there.

So let’s take a simple SMS Marketing Plan, say with 1 keyword and UP TO 1000 SMS per month*.

Set-up fee: $299
Keyword monthly fee: $35
Credits monthly: $90 (based on .09 per SMS when you pay .03 or less*)

*I suggest buying larger blocks of 100K messages to buy down your rate to .019

Complete package:

1 Keyword and UP TO 1000 SMS per month:
Set-up: $299
Monthly: $125

Require your client to engage in a 6-month agreement. Yeah, I know there are companies offering no contract but that is a fail waiting to happen. Explain that if they are not committed for at least 6-months, then it is not worth doing for them or for you.

At the end of the 6-month term, you have generated $1049 in Gross Revenue. If they sent every message, WHICH THEY WON’T, your cost at .019 is a whopping $114.

Your profit is $935 and your profit margin is 920%!!

DO NOT TELL ME THAT THIS WON’T WORK, I HAVE HUNDREDS OF CLIENTS WITH THE SAME BILLING MODEL.

With that being said, this billing model is BASED ON MANAGED MARKETING SERVICES, which means you are doing all the work for the client.

If you want to just give the client a user account and let them do everything, that is fine. But your churn will be terrible as they will not succeed because they either don’t have a clue what they are doing, or they won’t even use it. If you choose to go this direction for some clients, the following Do-It-Yourself Pricing is recommended:

DIY Package:

1 Keyword and UP TO 1000 SMS per month
Set-up: $99
Monthly: $89

Again, require your client to engage in a 6-month agreement. Remember, if they are not committed for at least 6-months, it is not worth doing for them, or you.

So at the end of the 6-month term, you have generated $633 in Gross Revenue. If they sent every message, WHICH THEY WON’T, your cost at a .019 is a whopping $114!

Your profit is $519 and your profit margin is 555%.

Not bad for doing nothing…