Internally, there is debate on how we price our email software. For Aprimo Marketing Studio, for our email marketing software, we charge an aggregate fee for the amount of email you send (the more you send, the higher the fee). Some of our competitors charge by “CER” or customer equivalent records. The issue is, which model is better for the customer?
Our competitors like to point out (I am sure they are just being helpful) that charging for emails sent, penalizes the customer for success. In essence, the more you send email (or use the system), the more you pay. Wouldn’t it be better to just go to an “all you can eat” model instead for email marketing? It just so happens, they believe they represent such a model.
This argument brings me back to the lure of the all inclusive resort. The idea is, pay one fee, and you can eat and drink, as much as you want, anywhere on the resort for “free.” It does not matter if you are a big eater or a small eater. The ultimate “all you can eat” setup. The “free” in this case, being covered by the fee included in your resort charge (just like our competitors seem to forget where their “free” is located - this fee is often more expensive than the per meal plan – but lets set that point aside).
The problem with this setup from the vendor side is that there is real cost to serving food. Given the real costs in purchasing and serving food, and by including all such items outside of a direct fee, the resort becomes challenged in justifying spending too much money on food. They have taken what should be aligned to revenue (food) and make it a pure cost center. The result, all that “free food” on the resort starts to taste like it, as the company seeks creative ways to cut costs and improve margins on what is now managed by the concept of “what can we get away with for food and still sell resort fees.”
There is also real cost in managing email deliverability. There are real investments in people and technology that are directly related to the volume of email being sent. Once you take away any direct revenue tied to these expenses and move them to a pure cost model, the same issue occurs. The email software company continues to find ways to “cut cost” from their email deliverability services and it becomes a “what is the minimum we need to do to cover deliverability and still get away with charging our software fees.” The result, all the “free” email starts to taste (I mean bounce) like it.
So, will we always have the same revenue model for email? I am not sure. If the customer ultimately demands the all you can eat resort and can tolerate a “cost center” approach to deliverability, we might eventually need to change to market demand. I believe you are always best served when your vendor’s costs & revenue are aligned to your end goals. I am not sure how many email marketers really want to invest in email software that is not fully aligned to the reliable delivery of their email.