If you buy traffic for your store, the most useful way to judge what an email agency costs is to hold the price up against what you already spend on visitors. Our own prices start at €4,000 a month for a retainer and range from €3,000 to €15,000 for a one-time setup.

The price on its own tells you little. What decides whether it is expensive is what you compare it with, and on our sales calls we see two very different comparisons.

The salary comparison

The comparison we hear most often on sales calls is with doing the work in-house. One person told us his colleague spends a day or two a month on newsletters, and that this doesn't add up to an agency's monthly price in salary. Another worked out a price per email: if a retainer covers ten emails a month, each email costs a set amount, and he compared that with other agencies. He ended up preferring an agency abroad at less than half the price, because wages there are lower.

Both calculations are correct on their own terms, and both measure the wrong thing. They treat email as a number of hours or a number of emails. On that comparison, a cheaper pair of hands always wins.

The traffic comparison

The other comparison starts from what the store already spends to get visitors. Someone we spoke with put it this way: "With 10,000 a month, you need to bring in two or three conversions a month for it to have paid for itself. It could just as well have been 50,000, and then you bring us a million more a month."

The size of the price next to the ad budget says a lot. Three stores we spoke with show the range:

• One retailer spends more than a million kroner a month on traffic. The retainer we discussed came to about 2% of that.

• Another spends around 200,000 to 250,000 kroner a month. There the retainer came to around 6%.

• A third spends about 50,000 kroner a month. The retainer would have been 30% of its ad budget, and we advised that store against hiring us.

For the first two, the agency is a small addition to a large spend and only needs to lift customer value a little to pay for itself. For the third, the same retainer would take a large share of the marketing budget before email had a chance to work.

Work out the payback on your own numbers

Take the monthly price and divide it by your contribution margin per order. That is the number of extra orders a month the agency needs to bring in to cover its cost.

With an average order of €80 and a contribution margin of 40%, each order leaves €32. A retainer of €4,000 needs 125 extra orders a month to pay for itself. For a store with a few hundred orders a month, that is a lot to ask. For a store with thousands of orders, it is a small share of the total.

That is why an agency like ours makes most sense for stores that already buy a meaningful amount of traffic. The more visitors you pay for, the more there is to win back with email. For the full calculation of what a customer is worth, read What you can afford to pay for a customer, and how to raise it.

What to ask about the price

Ask what is included, how long the commitment is, and what the agency needs to achieve to cover its own cost in your store. An agency that can answer the last question with your own numbers is pricing against your traffic. One that answers with a number of emails is pricing hours.

Where Markeity comes in

If you want to see what a retainer would need to deliver in your store before you decide anything, book a free 15-minute call and bring your ad spend, order value and margin.