Business Reality: Email Newsletter Delivery and Economies of Scale

Recently, I’ve had a couple of clients express a desire to purchase/create their own email newsletter delivery software to run on their own hosting account. I’ve also had more than one client pass through my practice having pursued that path previously, with disastrous results.

In college, I picked up a second major in economics because I discovered that I had taken most of the courses required for a major without trying. I just really loved both micro and macro economics and what I learned in those courses have served me well, even two decades later.

In my course of study, one of the concepts covered was that of economies of scale. According to Investopedia:

Economies of Scale: The increase in efficiency of production as the number of goods being produced increases. Typically, a company that achieves economies of scale lowers the average cost per unit through increased production since fixed costs are shared over an increased number of goods.

It’s this economic principle that comes to mind when solo entrepreneurs decide to launch their own newsletter delivery/email broadcast service.

Quite simply, Marketer’s Choice (a.k.a. 1 Shopping Cart/Professional Cart Solutions/Kickstart Cart, etc.) is able to leverage economies of scale in their favor. For only $29 per month, you can subscribe to their service AND let them handle all the headaches that come with managing your own email newsletter list.

OR you can pay several hundred or even thousands of dollars (one client reported a quote of $3000) to have a custom application built for you.

The problem, as one client of mine discovered, is that the initial creation/launch of the software is just the tip of the iceberg.  Today’s effective email newsletter software is tomorrow’s invitation to hackers to find the security holes in your system.

Some of the biggest names in the internet marketing use either a version of 1Shopping Cart or Aweber to deliver their email newsletters.  Hopefully, some day, newsletter email will be a thing of the past thanks to RSS feeds.  Until then,  most web site owners would be better served to use the above mentioned services than try to develop their own.