In email marketing, CPM is the price for sending a thousand email messages. Email service providers commonly use CPM as the variable part of their pricing. The CPM rate may cover costs made by the ESP for the mail server, bounce management, deliverability services, hosting of images and bandwidth. A CPM rate is often combined with other pricing forms like license fees or hourly rates for creative services and consultancy. CPM also can be referred to as cost per thousand (CPT).
Example of a CPM calculation:
With a CPM rate of $20, sending 10.000 emails would cost you $200 ($20 x 10)
With a CPM of $15, sending 20.000 emails would cost you $300 ($15 x 20)
CPM rates are often tiered, meaning that as the total amount of emails sent goes up, the CPM rate will go down. The total amount of emails sent is often calculated per time period (month or year) or per purchase (if you buy prepaid credits) and not per email campaign.
Below you can find an example of a tiered rate:
|Number of emails sent:||CPM rate||Price per email sent|
|1 – 10,000||$12||$ 0.012|
|10,000 – 50,000||$10||$ 0.01|
|50,000 – 250,000||$8||$ 0.008|
Negotiation and the bill
A CPM rate can be negotiated in your contract with an ESP. Usually a CPM price quote is calculated based on an estimated amount of emails sent per year, but billing might be per month or per campaign. If the actual amount sent reached a lower or higher tier than negotiated, the difference will be balanced out in an end-of-year payment/refund.
Other pricing methods
Some ESPs base pricing on the number of contacts in your database (instead of emails sent), a flat fee or a subscription fee.
More articles on CPM and vendor pricing:
- What is the cheapest ESP? Don't fall for the cheap trap
- A Low Cost SMTP vs. a Full Featured ESP: Which Should I Choose?
- 5 telltale signs an ESP will rip you off (just by glancing at their website)
- The Iceberg Effect – How to compare ESP pricing
- The death of Email Marketing CPM and why that is great for you