Mailchimp, Pt. 2

In this series, we’re looking into various tech platforms for artists, within the context of how artist friendly they are. Last time, we talked about some of the pros of an email service like Mailchimp.

Today, we’re delving deeper into Mailchimp’s pricing structure, to uncover a bit of a dangerous trap that you’ll want to avoid.

Mailchimp Cons

• Mailchimp is not a scalable service long-term, especially if you’re selling lower cost items (like a band t-shirt, stickers, etc).

Email list services usually charge you by the number of subscribers. The more people on your list, the more expensive the service. Unlike on social media, followers aren’t free. I pay for every single person reading my email list, out of my own pocket.

To earn any meaningful revenue from an email list while selling lower-priced items like independent band merchandise, most people would need at least 1,000 email subscribers, if not more. And, there’s our problem:

Once you get past about 500 subscribers using Mailchimp, the price of simply using the service balloons up so quickly that it can become difficult to afford. That $15 plan you started with can quickly increase in cost to $30, $50, $80, $100, $200+ per month as more people join your list. And those are fees that you have to pay out every single month, regardless of whether you actually make any money using your list.

That level of ongoing cost is a difficult value proposition for the small independent artist.

Mailchimp’s pricing bloat

Check out the Mailchimp pricing page. I’d call it bloated and confusing.

First, you have to decide if you want a marketing plan or a commerce plan. Then, how many contacts you’ll need on that plan. Then, you need to research any additional features you need and can afford. And, there’s overage fees and payment processing fees for all of these to consider as well.

Mailchimp’s scaling issues

And, there’s another Mailchimp issue that’s even more concerning:

As your creative work brings more people onto the Mailchimp platform, the deal becomes less and less equitable between both parties.

That’s because managing a list of 10,000 email addresses for an individual user account incurs no meaningful additional costs to Mailchimp, compared to managing 100 email addresses for that same user account.

Remember, Mailchimp isn’t physically hand-mailing letters out to your list here. Whether you're sending emails out to 100 or 10,000 people, the backend process for the platform is much the same.

Yet, as your list grows, the platform demands a lot more money from you, while providing minimal additional work in exchange. The bigger your list becomes, the more the overall deal gets stacked in favor of the platform and against you.

When value based pricing breaks down

Mailchimp is attempting to price their services by value here, which they’re absolutely allowed to do. Their argument might be: isn’t a bigger list more valuable to you than a smaller one?

Well, maybe, but maybe not: it depends.

That’s the big problem: the value Mailchimp is attempting to charge more for is something abstract, highly variable, and impossible to define precisely.

The value of any email list is something that varies widely by individual user, not simply by the size of the list. Some Mailchimp users will end up making just a little money off of a huge list, while others can make a lot of money off a very small list.

That makes your list size not a very good candidate for applying value-based pricing. If a business can’t prove exactly how the value of their service increases by referencing real-world evidence that’s clear and straightforward, it shouldn’t charge more for it.

Solutions

A better pricing structure might involve including a commission rate in the Mailchimp pricing model.

That would mean that for every real-world sale you make which is facilitated directly by the Mailchimp service, the platform gets paid extra. Otherwise, it’s always very cheap or free to use.

The user is doing the work to make cool things and show them to people, and the platform is doing the work to help you get those things out there. Both of those things are important.

But, the value the platform provides is only expressed in a concrete way when someone actually buys the thing that you’re making.

So, until the platform can conclusively prove their own worth through facilitating that direct sale, no extra money changes hands.

Hybrid Pricing Model Solutions

I like the idea of taking a hybrid approach. Maybe you’d pay Mailchimp a very affordable monthly rate (say $5-10/month), in combination with a commission rate that’s paid once the platform facilitates a sale for you.

That would give the platform regular money coming in to keep their end up and running. It would also make using the platform more affordable for a wider variety of users, likely increasing Mailchimp’s user base.

A commission structure would incentivize Mailchimp to build useful, practical tools that actually drive concrete sales conversions over simply driving abstract “reach”. And, as you do better using Mailchimp, both you and the platform would share in those benefits together.

Maybe you could put it all on a simple pricing slider that lets the user adjust the balance of commission vs. monthly rate on their individual account. Users could adjust this balance as they like, with a certain amount of notice given to the platform before the change goes into effect:

Those just getting started with email marketing might choose a smaller monthly fee to make the service more affordable while they experiment.

Then, as your email list grows and you start selling more things, you could choose a higher monthly fee with a lower commission, to keep your marketing costs reasonable.

Why pricing minutia matters

Why bother talking about all of this pricing minutia within an email service provider?

Because the type of bloated, complex pricing structure Mailchimp currently employs are one reason why some email lists aren’t super great places to be.

Their owners have fallen into a position where they’re forced to constantly spam their own list with dumb 10% off sales, just to try and break even on their own overpriced email service provider.

That’s not a place you want to be, especially working as a smaller independent artist. It’s not a good look for any tech platform to be associated with such spammy behavior, either.

Mailchimp conclusions

Even with all of their pricing bloat, Mailchimp is not actively unfriendly to artists and smaller businesses. The company was founded with a mission statement of helping small businesses and independents, before recently being acquired by the large financial conglomerate Intuit.

I think Mailchimp can be a great place to start out with email, and I do recommend considering this platform.

But, the highly aggressive price ballooning they currently employ can also make it a pretty dangerous place in the long-term, if you’re not very careful with how you use the service. I would not consider Mailchimp a sustainable place to grow into, in the long-term.

Luckily, there’s some recent competitors in the email space that have also caught onto this, so you’ve got some new options, and we’ll get into those next time.