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How To Prepare An eCommerce Email Marketing Budget

When you own a business, you always need to think of investments. These include employees, quality equipment, and marketing efforts. For e-commerce businesses, most investments are digital assets. These can be your website, a shopping cart system like Shopify, and online advertisements.

Most likely, your website and system are all set up and ready to go. Or you might have been operating already for quite some time!

So logically your next step is to invest in marketing. You want to drive more people to your website in hopes that they will buy your product or service. So you turn to the usual menu: social media, social ads, and digital media.

You’re also thinking of investing in email marketing because of the awesome benefits.  

But here’s the thing.

You have no idea how much it would cost, or how much of your finances you should set aside for it.

You’re feeling overwhelmed because unlike social media (sans the ads), email marketing does not come free.

So before you dive in, here are some of the things you need to know about preparing an email marketing budget for your e-commerce business.

How important is preparing an email marketing budget?

Crafting any kind of budget can be tedious and challenging, but it is always worth it. Here are some of the major reasons why preparing an email marketing budget is very important:

It will keep you focused on your goals and objectives

If you don’t have a budget, you will end up blindly paying for email marketing services without understanding the implications. You can incur more losses than returns!

Preparing an email marketing budget will keep your feet on the ground and your eyes on the goal. It will help you measure the money you have and make sure that it is spent on the proper assets.

Without a budget, your overall email marketing strategy will take a wrong turn. Marketing is related to your finances, you need to be familiar with your exact expenditure. Having a budget will keep your spending controlled as you study the results of your marketing efforts.

It will help you keep an eye on sales and ROI

Marketing is directly correlated to sales. As business owners, you should always know what your current revenue is. These figures tell you the current state of your business.

Having a budget will allow you to compare and contrast your sales before and with email marketing. This is so you can make better financial decisions in the future. You will also know if your email marketing strategy is effective or not.

It will help you become more strategic

A budget will encourage you to be more aware of where you’re putting your money. It will show you where you can increase spending or where you can save. This will also help you think of more creative strategies to let your email marketing efforts to pay for itself.

So what are the factors that affect an e-commerce email marketing budget?

Your email marketing budget can be as low as $9 to $1000 dollars depending on a number of factors.

The scope of your campaigns

Do you plan on sending out regular newsletters? Do you plan to set up various automation flows?

More complicated and detailed campaigns will require more time needed for analysis, development, design, and of course implementation. This will translate to a higher cost per email.

The quality of your list

If your email list is already of good quality, this means less work and less cost before you jumpstart your email marketing strategy. However, if your current list has many inactive subscribers, you will need to clean it up. If your list is not permission-based, this will also mean more work.

There are tools that can help you identify faulty and inactive email addresses, and these can cost around $0.008 per email.

Costing is also affected by the number of subscribers. There are some providers that charge higher if there are more people on your list.

The copy and templates

There are a lot of free email templates and copies. But what if you’re looking towards a custom template or custom designs for each email? This will entail additional costs whether you choose to buy designs or hire someone to produce them for you.

The email service provider

Remember that in email marketing, you want your emails to reach your customers’ inboxes. The right ESP will help you achieve this. The ESP of your choice should have a high deliverability rate and options for monitoring analytics.

There are a lot of ESPs to choose from. They offer various services, plans, and pricing options. Check which email service provider will help meet your goals while staying within your means.

The implementing team

You will probably need to hire an in-house email marketer, graphic artist, and copywriter. Aside from the hiring and training expenses, you need to consider their monthly salary and the resources they will use.

On the other hand, hiring an email marketing agency is a great solution for e-commerce business owners for a number of reasons. It’s more efficient because you no longer have to worry about hiring individuals. You can depend on an agency’s knowledge and experience.

How to prepare  an email marketing budget for your e-commerce business

Now that you’re fully equipped with the importance of preparing an email marketing budget for your e-commerce business, it’s time to dive in.

Here are the first steps that you should take when it comes to preparing your budget.

Align your budget with your marketing goals

A gap between your goals and the budget can result in failure and losses. After all, you won’t be able to implement the strategy without the right budget allocation for it.

When the budget is aligned with the business strategy and goals, it is easy to see their impact on one another. It allows you to analyze how close you are to reaching your goals.

So how do you do this? Here is a quick rundown of what you can to for budget-goal alignment:

  • Gather historical data
    Some of the most important data to have are your yearly expenses and your target revenue or ROI. This is what you will use as benchmark data when you set email marketing goals.
  • Establish your KPIs
    Key performance indicators  (KPIs) are a great way to help you monitor the current status of your business. It will let you know if your strategies are effective or not. Before you measure metrics to track your status, you should first identify them. Some examples of KPIs are the number of new list subscribers for every $10 dollar spent, monthly growth, annual growth, and new customers among others.
  • Set SMART goals
    Your goals must be specific, measurable, attainable, realistic, and time-bound. SMART goals will act as the foundation of your budget plan. Basically, your budget will be developed to make sure that your goals are met.

Base your budget on revenue

A number of businesses allow a percentage of actual or projected revenue for marketing. In general, most small businesses allocate around 7% to 12% of total revenue to marketing.

With this approach, your budget will grow and adjust according to your revenue. It will keep you from spending more than you are earning.

However, here is a word of caution from the US Small Business Association. They recommend using a percentage of your revenue for marketing only if your margins are at or above 10% to 12%. When we say ‘margin,’ it refers to your income after all other expenses.

New businesses without any sales or operations history yet will have a hard time with this. But if your e-commerce business has already been operating for a while, this business model is ideal for you.

Take note of the hidden costs of platforms

Always read the fine print. The same goes for email service providers. Sometimes, the pricing plans that they publicize are not yet “all in.”

Instead, there will be additional fees for every feature you are interested in. Make sure that you’re getting what you pay for.

Even the ‘free’ email service providers have hidden costs in a sense. Free providers are advertising using your emails. They also offer no support. Plus, they are most likely using low-cost technology which can mean low deliverability rates for your emails.

Understand pricing formulas

The price of email marketing is usually based on a combination of features, volume, and extras. Most email service providers base their pricing on the volume of contacts in your list. The downside to this is that you’ll end up paying more as your list continues to grow.

There are also ESPs that base their pricing on the volume of emails you plan to send. Klaviyo uses a combination of the number of contacts and emails to determine their pricing. They don’t skimp out on features either.

Allot a percentage of the budget for testing

Always set aside a separate portion for A/B testing. Set up two variations of one campaign and send them to a small percentage of your total list.

Whichever has the most opens or clicks is the most successful one. You can then send this to the rest of your subscribers.

It’s important to know what types of emails will generate more revenue. Changing a simple email subject line can increase web traffic by as much as 83%. Set aside a fixed budget for this and monitor the results to guide you in future decision making.


Your Checklist for Preparing Your Email Marketing Budget

To keep track of everything you need to do when preparing an e-commerce email marketing budget, we’ve put together a checklist for you!

  • Review your list of contacts. Only budget based on how many have opted in within the last two years.
  • Make a list of the types of emails you plan to send. Take note of how often you plan to send them.
  • List down the features that are essential to your SMART goals.
  • Set your email marketing goals for the year. How many new subscribers are you targeting?
  • Compare and contrast email service providers or agencies.
  • Find a provider or agency that can work with your needs and current level of experience.




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Ready to get started?

We’ve put together a handy-dandy eCommerce marketing calendar to help you forecast all the sale dates you’ll need to watch out for! It’s chock-full of major and minor holidays, perfect for your eCommerce brand!
Book a call

Ready to get started?

We’ve put together a handy-dandy eCommerce marketing calendar to help you forecast all the sale dates you’ll need to watch out for! It’s chock-full of major and minor holidays, perfect for your eCommerce brand!
Book a call