What does it cost to Build an Email List?

This is a very loaded question. It’s important not to chase the myth of ‘promotion without spending money’ as it doesn’t exist. Nor does there exist any ‘building channels to readers without spending money’

Your email list is one of the most important ‘direct channels to your readers’ you will build. Perhaps the 2nd most important after your books

You basically have three options

1. Spend nothing and do terrible book promotion and terrible building of direct channels to your readers
   1. This applies to email lists too. If you don’t spend anything you are not going to effectively build a promotion list
2. Spend the least possible amount of money and do mediocre to decent book promotion and mediocre to decent building of direct channels to readers
   1. We are not going to lie to you and pretend that you can do great promotion and great list building without spending a significant amount of money
   2. If you spend the ‘least amount of money on promotion and list building’, then you are going to get mediocre promotion and mediocre list building
   3. This post will look at how you can make the most of your limited budget, to build an effective email list
3. Spend well and do very good book promotion and very good list building
   1. That will be covered in a different blog post
   2. Do keep in mind that Marketing and Promotion and List Building is just like any other business area – the more you spend, and the more efficiently you spend, the better the results

In this post we will look at –

1. What are the costs involved in Building an Email List
2. Each of the costs involved, and what they are
3. Is there a way to build an email list while spending the least amount of money?

First, let’s understand the costs involved

The Costs involved in Building an Email List

There are 5 main costs involved in building an email list

1. The opportunity cost of your time and energy and money i.e. could this be put into something else, which would net you better results?
2. The cost of your time
3. The cost of an email newsletter service
4. The cost of acquiring readers for your email list
5. The cost of maintenance and sending out emails

Often, when authors say – Can you build an email list without spending any money? They are only looking at #4

However, any exercise in understanding email lists, the benefits and the costs, should cover all 5. Your time is not free. It is not free to maintain an email list. The email newsletter service will cost money (sooner or later). Even crafting and sending out email lists takes time and money

The Opportunity Cost of Your Time and Energy and Money – If you Devote all three to Building an Email List

In an ideal world

1. The book stores would give authors a fair chance without double dipping (charging you one cut of 30% to have your book in the store, and charging you again to advertise)
   1. If you think about it, why are they taking that first 30% cut, if you have to pay them again to advertise?
   2. However, we are not in an ideal world and you have to do marketing yourself
2. All or most promotion channels would have positive Return on Investment i.e. you would make back more than you spend
   1. Unfortunately, due to high demand and due to ‘adjustments’ by the book stores, most promotion channels are now negative Return on Investment
3. You could devote all your time and energy to writing great books and some of your time and energy and money to buying effective marketing
   1. You would not have to specialize in marketing
   2. Most importantly, you would not have to build your own marketing channels
   3. That really is an indictment of how bad the bookstores are – when authors are being forced to build their own direct marketing channels to readers

We do not live in an ideal world and the Book Stores almost seem to be making it tougher to sell books. It is particularly annoying that they want to charge authors and publishers twice – once to list the books in the book stores, and a second time to do marketing for the books

What does all this mean?

It means that instead of focusing on writing great books, and writing more and more great books, authors have to spend time on

1. Learning marketing
2. Tweaking marketing to constantly keep up with ‘adjustments’ by the book stores that make marketing less effective
3. Dealing with store ‘errors’ and ‘roadblocks’
4. Building their own marketing channels
5. Building direct channels to readers

One way to bypass a lot of the ‘tolls and taxes’ the book stores are charging you, is to build your own email lists and your own direct channels to readers. That way, you reach your readers directly and for very cheap

This greatly reduces your dependence on the book store. It also greatly reduces your marketing costs, as it is easier to sell to existing customers, than it is to find new customers

From an Opportunity Cost perspective, devoting time and energy and money to building your own email lists (and other DIRECT channels to your readers) is one of the best investments you can make

So, on this front – it’s completely fine to prioritize building email lists

1. In theory, the opportunity cost is that you are giving less time to writing, and writing less books
2. In reality, because of how the book stores are behaving, building your own direct channels to readers has become just as important as writing great books and just as important as writing more and more great books

Next, let’s look at the Cost of Your Time

The Cost of Your Time

A lot of people assume their time is ‘free’. This is an especially common mindset among creators and entrepreneurs. They always think ‘why pay someone $200 to make my cover when I could spend 10 hours to do it myself’. This is a very big mistake, and not just because you are not going to be able to make as good a cover as a professional cover designer

The equally big reason it is a mistake is that your time is not ‘free’

1. Let’s say your day job (or some other job you could get) would pay you between $20 to $100 an hour
2. Let’s say that it is actually quite possible for you to get such a job and get 10 to 20 hours a week
3. We’re then talking about $200 to $2,000 a week in earnings, you could potentially make from this 10 to 20 hours a week of additional work

Giving 10 to 20 hours to ‘doing something myself’ is not ‘free’. The cost is this $200 to $2,000 a week in earnings those 10 to 20 hours a week could make you

People always assume their time is free. It’s not. If you give 10 to 20 hours a week of your time to email list building, you have to decide what is more valuable for you

1. Giving this 10 to 20 hours of your own time
2. Using this 10 to 20 hours of your own time for additional work time, making $200 to $2,000 in earnings from this time, and then hiring someone to do 10 to 20 hours of email list building work for $100 to $200 (yes, people will do a good job for that much)
3. With the latter option you are pocketing between $0 to $1,800 a week, depending on how much your time is worth
   1. You are also getting an expert to do your list building, instead of doing it yourself

What you will find is

1. In the majority of cases, the author would actually prefer doing 10 to 20 hours of work that they are good in, rather than struggling with email list building which they know very little about
2. In the majority of cases, you would get only a few hours of actual work done in the 10 to 20 hours of email list building work that you do. Because you have to learn a lot of things from scratch
   1. It will take you a few months to a few years to become good at email list building
3. In the majority of cases, hiring someone who specializes in email list building, will get you much better results than doing it yourself

We basically have a combination of three factors

1. The Cost of Your Time. What is your time worth? Is it even worth it for you to do email list building yourself
   1. You cannot think of your time as ‘free’
   2. Same for your energy and psychic energy. If 10 to 20 hours of email list building work leaves you frustrated and mentally drained, then your writing will suffer
2. Importance of Focusing on Your Core Competency. Should you focus on what you are good at, and leave list building to someone who has that as their core competency
   1. If, as an author, you are trying to specialize in multiple things, you are sacrificing what you should really specialize in (writing very good books, finding very good markets, marketing very well to the right markets)
3. Division of Labor. There is a very good reason we live in a modern society where different people specialize in different jobs
   1. If, as an author, you are trying to do everything yourself, then you are going against this very critical aspect of civilization (and common sense)

You should only be devoting a lot of time to email list building yourself, if you do not have a way to make much better use of that time. In most cases, finding some company or some expert to do email list building and marketing on your behalf is a much better choice

Next, let’s look at what the email newsletter service provider charges you

The Cost of the Email Newsletter Service

There are three basic models for email newsletter services

1. Email Newsletter Services which charge you a monthly fee, based on how many email subscribers you have
2. Email Newsletter Services which charge you based on number of emails you send out
3. Email Newsletter Services which don’t charge you if you have less than a certain number of email subscribers (say 2,000), and after that start charging you

The third is a very good choice if you do not think your email list will get to 2,000+ email subscribers any time soon. However, please do note that after reaching 2,000 email subscribers, the costs for this model are almost exactly the same as the other two models. So, what you are buying, is a few months to a year of free email newsletter services

The first model is very good if you plan on sending frequent emails

The second model is much better if you plan on sending out only 1 or 2 emails a month. However, most email newsletter service providers go with a monthly fee based on the number of email subscribers you have. Even some of the ones claiming to charge you based on number of emails, will still charge you a monthly fee if you don’t send out emails during a particular month

Next, let’s look at costs of each model

Your costs will be

1. With the first model (a monthly fee), roughly $5 to $10 per 1,000 email subscribers
   1. So having 10,000 email subscribers will cost you $50 to $100 a month
   2. Having 50,000 email subscribers will cost you $250 to $500 a month
2. With the second model (fee based on number of emails you send out), you will end up paying
   1.  $5 to $25 per email if you have a small email list
   2. $25 to $100 per email if you have a larger email list
   3. This option is definitely better if you send out just 1 or 2 emails a month
3. With the third model (charges a monthly fee, but only after you cross 2,000 email subscribers)
   1. Up to 2,000 email subscribers you pay nothing
   2. After 2,000 email subscribers you pay almost exactly the same as in the first model

Basically, with larger email lists, the first and third model are exactly the same

If you are sending out emails only once or twice a month, you definitely want to find a good email service provider that offers the second option i.e. pay only when sending out emails, and pay nothing for the number of email subscribers. If you send only once or twice a month, then optimize for the second model

If you plan on never having an email list over 2,000 subscribers then go with the free option there

For email lists over 2,000 email subscribers, the costs of the first model and the third model end up being almost the same regardless of what email newsletter service provider you go with. Therefore, you should prioritize for other things (as costs will be the same whoever you choose) –

1. Deliverability. How good is the email newsletter service at delivering emails to the reader’s Inbox. We use Aweber and we strongly recommend them
2. How long they have been in business. You definitely want to go with a long established company such as Aweber, ConstantContact, MailChimp and not with some new unproven company
3. Quality of their User Interface
4. Features
5. How Easy it is to Use the Service. This is especially important if you are not tech savvy

Choose your email newsletter service provider very carefully. Have at least a 10 year window in mind. It is like a marriage, except that getting a divorce is almost impossible

People will claim it is ‘easy to switch’. However, who is going to go through all your books and pages and social media profiles and update everything to use the new sign up links for the new email service. You are wedded to the first email newsletter service provider you choose (unless your email list never takes off). So choose very, very carefully

For Technical Authors – Setting up Your Own Email Service or using Sendy or Amazon Simple Email Service or SendGrid

These are options but deceptively bad ones in terms of how much of a time sink they are. We have never found any use case for an author where it is worth it to invest so much time and effort. However, for lists of above 200,000 email subscribers this is a good option if you are tech savvy

1. Code a basic email newsletter service yourself, or have a coder do it for you. Use it with Amazon Simple Email Service
2. Use a service like SendGrid or Sendy that works with Amazon SES
3. Set up your own service using your own server

These are all options where the amount of time and maintenance is just not worth it, in our opinion. We very strongly recommend reading up on it first, before jumping into it. It is an entire product in itself. It is not an easy thing to build

In some rare cases, an author can ‘build a justification in their head’. However, until and unless you have an email list of over 200,000 email subscribers, it is painful and counter productive to build a custom solution

Next, let’s look at what authors often perceive as the ‘only’ cost of building an email list – The cost of acquiring readers for your email list

The Cost of Acquiring Readers for Your Email Lists

It is very important to understand that this is Customer Acquisition and Customer Retention. It is even tougher than Marketing and Sales (and those two areas are very difficult to begin with)

1. Marketing – making people aware your product exists, making it clear which of their needs your product will serve, easing them into the ‘want it and want to buy it’ state of mind
2. Sales – getting people to actually buy your product
3. Customer Acquisition – acquiring a customer and having some means to keep selling them your products. Same as Marketing and Sales, with the added requirement that you turn them into a customer you can reach when you need to. Includes building a relationship with them
4. Customer Retention – keeping that customer a customer for the long term. Perhaps the toughest of all

It is actually much easier to sell a book, than it is to get a customer on to your email list

Of course, once that customer on your email list, it is much easier to reach that customer and sell that customer your other products

Please also note that we will focus on ‘Customer Acquisition’, and not ‘Lead Acquisition’

It can often be easy to get a reader on to your email list by offering them a free book, or a giveaway. However, they are not a ‘customer’ until and unless they buy one or more of your books. They are ‘leads’ – readers who may or may not turn into customers. They are often low quality leads that will convert at a low percentage into actual paying customers

We will focus only on Customer Acquisition. There are a multitude of ways you can acquire customers. A few are

1. Gather Leads by offering them a free book. Convert some percentage of these Leads into Customers via offering them book deals
2. Gather Customers for your email list from the customers who are buying your books
3. Gather customers for your email list from the customers who are reading your books (who actually get to the end of your books)
4. Gather readers without selling them your book, based purely on their interest in your books. Then convert some percentage of them into Customers
5. Share customers and leads with other authors. Get their customers and leads in return. Then convert some percentage of these into your actual Customers

In each case there are several costs

1. Your time to do all the work to set things up
2. Your marketing costs. If your marketing is leading to both sales and customer acquisition, then you can split up the costs accordingly
3. Your time to review and understand what is happening
4. If offering a book free, then assume that 10% of those are readers who would have bought your book. You are losing that amount of money in sales, though with the huge benefit of getting them on to your email list
5. Your time to make tweaks and adjustments
6. Your time to learn about Customer Acquisition and Customer Retention
7. Your time to learn about marketing and sales

While acquiring customers is one of the most valuable things you can do, it is also time intensive and costly

Finally, let’s look at the cost of maintenance and sending out emails

The Cost of Maintenance and Sending out Emails

The newsletter service provider costs are already discussed above. Those cover the technical costs of email list maintenance and the cost of sending out the emails. These are covered by your email newsletter service provider, from the monthly payments you make to them

What we are discussing in this section, are your personal costs in terms of maintaining your email list and crafting emails to send to them

1. As you are paying based on the number of email subscribers (in some cases, on number of emails sent), you have to constantly tweak your email list and make sure you are not paying for people who never read the emails
2. You have to craft emails that will work – will get your customers and potential customers to open them, will get them to buy your books
3. You have to review what worked and what didn’t work. This can be a lot of work as you have to check sales figures at the store, and figure out which of your emails worked in terms of getting sales, and which didn’t
4. You have to learn about email marketing
5. You have to learn about copywriting (so that you can write persuasive emails)
6. You have to, in some cases, search for powerful and beautiful images and content for your emails
7. You have to do a lot of analysis and thinking and research – how often to email, do you divide your email list into actual customers and potential customers, what works in what book category, etc

Every email you send out is a mix of marketing and sales and customer retention. After building a valuable email list, you have to also put time into extracting value out of it in a win-win manner

Which of the 5 Areas can you do well, while spending very little

If you are spending very little

1. The opportunity cost of your time and energy and money i.e. could this be put into something else, which would net you better results?
   1. For most authors, there is nothing else that would give a similar amount of benefit (apart from writing great books, and writing more and more great books)
2. The cost of your time
   1. If you don’t spend money, then you have to give a lot of time
   2. Just make sure you are not spending far more in time than you would if you just paid in money instead
3. The cost of an email newsletter service
   1. No way to ‘spend very little’ here
   2. If you have a large email list, you have to pay
4. The cost of acquiring readers for your email list
   1. Customer Acquisition and Customer Retention are expensive
   2. No way to do this while spending very little
5. The cost of maintenance and sending out emails
   1. You have to pay in ‘your time’ if you don’t want to spend money
   2. You have to pay with your time even if you spend money

Basically, you cannot do any of the 5 areas, while ‘spending very little’. You either pay with your time, or you pay in money

Additionally, your time would also have to include ‘time to learn what works and what doesn’t’

What is the Biggest Takeaway?

We  would say the biggest takeaway is

1. Building your own email list, which is your own direct channel to readers, is absolutely critical
2. There might be no better use of your time and energy and money
   1. Apart from writing great books, and writing more and more great books
3. To build an email list properly, you will have to pay either with your time, or with your money
4. To efficiently use your time, make sure you are not paying a lot more ‘with your time’, than you would be paying with your money
5. Focus on Customer Retention and Customer Acquisition