The invoice was three times what they expected. The email service charged per recipient, not per email. Their campaign to 100,000 subscribers with three emails each wasn't 300,000 emails at $0.001—it was 100,000 recipients at $0.01 each, times three campaigns. The pricing page had been clear; they just hadn't read it carefully.
Email service pricing is surprisingly complex. Per-email, per-recipient, per-contact, tiered, usage-based, feature-gated—providers use different models that make direct comparison difficult. Understanding these models helps you predict costs and choose the right provider for your usage pattern.
Per-email pricing
The simplest model: you pay for each email sent. Send 100,000 emails, pay for 100,000 emails.
How it works. Providers charge a flat rate per email, often with volume discounts. Rates typically range from $0.0001 to $0.001 per email depending on volume and provider.
Advantages. Predictable and directly tied to usage. You only pay for what you send. Easy to calculate costs for any campaign.
Disadvantages. Costs scale linearly with volume. No benefit from having a large list if you don't email them. High-frequency senders pay more.
Best for. Transactional email where volume is variable and tied to user activity. Senders who email infrequently but to large lists.
Watch out for. Some providers count each recipient separately for emails with multiple recipients. A single email to 100 people might count as 100 emails.
Per-contact pricing
You pay based on how many contacts are in your system, regardless of how often you email them.
How it works. Providers charge monthly based on your total contact count. Tiers might be 0-1,000 contacts, 1,001-5,000, etc., with prices increasing at each tier.
Advantages. Unlimited sending to your contacts. Email frequently without cost increases. Predictable monthly costs if your list size is stable.
Disadvantages. You pay for contacts you don't email. List growth increases costs even if engagement doesn't. Inactive contacts cost as much as active ones.
Best for. Marketing email where you send frequently to the same audience. Senders with high email frequency per contact.
Watch out for. Duplicate contacts might count multiple times. Unsubscribed contacts might still count toward your limit. Clean your list regularly to avoid paying for dead weight.
Tiered pricing
Pricing changes at volume thresholds, with lower per-unit costs at higher volumes.
How it works. The first 10,000 emails might cost $0.001 each, the next 90,000 cost $0.0008, the next 900,000 cost $0.0005. Your total cost is the sum across tiers.
Advantages. Rewards growth with lower unit costs. More predictable than pure usage-based at high volumes.
Disadvantages. Complex to calculate. Costs can jump unexpectedly when crossing tier boundaries. Comparing providers requires spreadsheet math.
Best for. Growing senders who want costs to scale sub-linearly with volume.
Watch out for. Some providers reset tiers monthly; others are cumulative. Understand whether unused volume carries over or expires.
Flat monthly pricing
Fixed monthly fee for a set of features and limits.
How it works. Pay $99/month for up to 50,000 emails and certain features. Overages charged separately or service limited.
Advantages. Completely predictable costs. Easy budgeting. Often includes features that would cost extra on usage-based plans.
Disadvantages. You pay the same whether you use 1,000 or 50,000 emails. Overages can be expensive. Might pay for capacity you don't need.
Best for. Senders with consistent, predictable volume who value budget certainty.
Watch out for. Overage rates are often much higher than the effective per-email rate of your plan. Monitor usage to avoid surprises.
Freemium models
Free tier with limited features or volume, paid tiers for more.
How it works. Send up to 10,000 emails/month free. Pay for higher volumes or advanced features like dedicated IPs, advanced analytics, or priority support.
Advantages. Low barrier to start. Good for testing and low-volume senders. Often generous free tiers.
Disadvantages. Free tiers may have limitations (branding, reduced deliverability, limited support). Costs can jump significantly when exceeding free limits.
Best for. Startups, side projects, and low-volume senders. Testing providers before committing.
Watch out for. Free tier limitations might not be obvious. Check for sending speed limits, feature restrictions, and support availability.
Feature-based pricing
Base price plus additional charges for specific features.
How it works. Basic sending is one price. Dedicated IP is extra. Advanced analytics is extra. Priority support is extra. Your total cost is base plus selected add-ons.
Advantages. Pay only for features you need. Flexibility to add capabilities as requirements grow.
Disadvantages. Difficult to compare total costs across providers. Features you assume are included might cost extra. Costs can creep up as you add features.
Best for. Senders with specific feature requirements who want to optimize costs.
Watch out for. Essential features (like dedicated IPs for high-volume senders) might be expensive add-ons. Calculate total cost including necessary features.
Comparing providers
Direct comparison is difficult because providers use different models and define terms differently. To compare effectively:
Normalize to your usage. Calculate what you'd actually pay with each provider based on your specific volume, contact count, and feature needs. Don't compare list prices—compare your actual costs.
Include all costs. Add-ons, overages, dedicated IPs, support tiers—include everything you'll actually need.
Consider growth. How do costs change as you grow? A provider that's cheapest today might be expensive at 10x volume.
Factor in hidden costs. Migration effort, integration time, learning curve—switching providers has costs beyond the invoice.
Negotiation and contracts
At higher volumes, pricing is often negotiable.
Annual contracts. Committing to a year typically gets 10-20% discount over monthly pricing.
Volume commitments. Guaranteeing minimum volume can unlock better rates.
Custom pricing. Enterprise volumes often get custom quotes not reflected in public pricing.
Startup programs. Many providers offer discounts or credits for early-stage startups.
Don't assume list prices are final. If you're a significant customer, ask for better terms.
Frequently asked questions
Which pricing model is cheapest?
It depends entirely on your usage pattern. Per-email is cheapest for infrequent senders with large lists. Per-contact is cheapest for frequent senders with smaller lists. Do the math with your actual numbers.
How do I estimate my email costs?
Track your current sending: emails per month, unique contacts, frequency per contact. Apply each provider's pricing model to your actual usage. Include features you need. Compare total costs, not unit prices.
Should I commit to annual pricing?
If you're confident in the provider and your volume is predictable, annual pricing saves money. If you're uncertain or growing rapidly, monthly pricing provides flexibility. The discount (typically 10-20%) should be weighed against the commitment risk.
What happens if I exceed my plan limits?
Varies by provider. Some charge overage rates (often expensive). Some throttle or pause sending. Some automatically upgrade you to the next tier. Understand the policy before you hit limits unexpectedly.