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What Should You Charge for SMS Services?

Posted by Daniel McFarland on March 10, 2016 at 1:36 PM
Daniel McFarland

text.jpgSo, you’ve been in the VoIP game for a while. You have a whole slew of VoIP features: E911, 411, caller ID and so on. Now, you want to jump into the world of SMS and offer a full stack of features in your service portfolio.

As exciting as adding a new offering to your customers can be, choosing how much you want to charge for this service can be tricky. Today, we’re going to give you some tips when deciding how much you should charge for your SMS service.

First, pick your billing plan

When it comes to choosing how much you should charge for most of your VoIP services, you need to be familiar with billing and rates. Remember: rates are not the same as a billing plan. Think of your billing plan as a scheduled payment for your service, while rates are the actual price for your services.

Choosing your billing plan comes first. When it comes to SMS, the most popular billing plans are per message or per month as a flat rate.

When you choose per message, you schedule payments for, naturally, each message that is sent on a DID. Heed this advice: If you choose this method, be sure to know if you will be charged for both inbound and outbound messages, or only for outgoing messages.

Flat rate billing allows you to schedule a set amount per month per DID. This method is easier to track than per message billing. Just be sure to understand your provider’s terms of usage, which may cap the amount of outbound messages in order to limit those who abuse the flat rate system.

Now, decide your rate

Once, you’ve chosen your billing plan, it’s time to talk dollars…or cents. You see, if you decide to bill per message, the price purchasing SMS services from a VoIP provider typically falls between .0085¢ to 1.2¢ per message. As for flat rate billing, you’ll usually find the monthly recurring rate to land between $1.00-$1.50.

As with any market, you’ll find providers who will fall either higher or lower than these ranges. Our advice to you is to be selective in purchasing your services in a way that you’ll turn over as much profit as possible. We find that choosing to bill per message leaves more room to strategically price your services, while flat rates are easier to track.

We hope this advice will help you put your foot in the door for offering SMS services. To wrap it up here are some key points:

Choosing Per Message Billing:

  • Costs will normally fall between .0085¢ to 1.2¢ per message
  • Better to strategically charge for greater profit
  • Harder to track cost and revenue

Choosing Flat Rate Billing:

  • Costs normally fall between $1.00-$1.50 per month
  • Easier to track cost and revenue
  • Creating a strategy to create profit can be more challenging
  • Some users may abuse the “all you can eat” style of flat rate billing

For more advice on operating your VoIP business, be sure to subscribe! Thanks for reading!

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Tags: Entrepreneurship

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