In email marketing, CPM (cost per mile) refers to the cost of sending a thousand email messages. Also referred to as CPT (cost per thousand), this pricing method is used by email service providers (ESPs) to cover the cost of the mail server, bandwidth, hosting images, deliverability services, and bounce management.
Most email service providers set their prices based on CPM. However, vendors who also offer creative and consultancy services may incorporate hourly or license fees.
How Is CPM Calculated?
The cost of CPM is based on sending 1,000 emails. Therefore, if a vendor’s CPM rate is $30, sending 10,000 emails would cost you $300.
Here’s how the math is done: (No. of Emails /1000) x CPM Rate
Most email service vendors offer their services on a tiered pricing structure. Usually, the CPM rate will go down as the number of emails sent goes up.
The total amount of emails sent is generally calculated over a time period (month or year). With some ESPs, customers can purchase credits, in which case the CPM would be calculated per purchase rather than per campaign.
Let’s look at an example of a tiered price structure:
- Sending 1 – 10,000 emails may cost $15 ($0.0015 per email)
- Sending 10,000 – 50,000 emails may cost $12 ($0.0012 per email)
- Sending 50,000 – 250,000 emails may cost $10 ($0.0010 per email)
Some ESPs may follow different pricing structures. For example, the CPM rate may be based on the number of contacts in the client’s database. Other popular pricing methods include subscriptions and flat fees.
Negotiating Your CPM Rate
Companies that send a lot of emails can negotiate the CPM rate with their ESP. In most cases, the CPM price quote is calculated based on the average amount of emails expected to be sent every year. However, the billing is usually done per campaign or on a monthly basis.
If a customer sends a higher or lower number of emails than is negotiated in the contract, the difference will be balanced out at the end of the contract.
Maximizing Your CPM Rate
When you know a vendor’s CPM rate, you can maximize your email marketing campaigns for the best ROI. To begin, ensure that you have a clean list. Also, review the performance of your campaigns and list engagement frequently, especially if you are being billed per campaign or per the number of contacts in your database.