No matter what business you’re in, an can be your most valuable asset. But how much is an email list worth?
It’s an asset just like a brick-and-mortar store has physical assets (such as a building and inventory), so it’s vital that you have at least a ballpark idea of what your is worth.
Fortunately, finding the of your isn’t too difficult. All you need is a few numbers that you already have on hand, and a calculator.
Why Should You Have an ?
For those that haven’t put together an yet though, doing so could be the best investment you ever make in your business.
Not “one of the best,” but the best.
Better than . Better than . And definitely better than billboards.
Why? Because according to at least one report, email generates $36 for every $1 you spend in building it. That’s a 3500% return on your investment. How many other assets in your business give you that kind of a return?
There’s also the issue of ownership. profiles are great, but most of us have heard horror stories of profiles being disabled or ad accounts getting suspended, which can destroy your communication with your audience overnight.
An , on the other hand, allows you to reboot in the event of a total catastrophe (as long as you’re creating regular backups of your list). If one service deletes your account — for any reason — you simply upload your list to a new service and you’re back in the game.
Email lists have the opportunity to drastically change the way you do business. Privy, an e-commerce application, claims that their BigCommerce clients generated $11.68 for every email address they captured. And Shopify Plus shop owners received nearly double — around $22.82 per email.
Now imagine if you have built up an email list of over 10,000 emails! That’s a ton of sales without spending a dime on paid ads (unless you used them to build the list in the first place).
Even more impressive than that is this case study involving a business in the technology sector that generated a whopping $625 per customer. Not per campaign. Per customer.
Now granted, not all email lists will be that lucrative, but the data clearly shows that having an email list — and maintaining it properly — is key to generating a fan base that will consistently open their wallets when you come out with a new product.
Why is Knowing Your “List ” Important?
So why should you go through the trouble of assigning a dollar amount to this list, especially since you can’t really sell it like you would any other asset?
The first — and arguably most important — reason to know the is so that you can factor it into your efforts. If you know your list generates X number of dollars every month, then you know you can spend up to Y number of dollars building it, and still stay in profit. If the numbers don’t add up, you’ll need to re-examine your list-building or strategy.
Remember, as Peter Drucker once said, “What gets measured, gets managed.”
Understanding your list also allows you to factor in a few other important variables; namely, seasonality and individual .
For businesses that have seasonal items, like camping outlets and travel agencies, you can adjust the timeframe of your formula to see how much your is worth in one month versus the other.
Then, you’ll know that during your most profitable months — when your list is considerably higher — you can pour more resources into your .
But determining individual is also important. This is primarily because you want to know the of the source of those subscribers.
For example, the ads is usually lower than those that organically find your website. In this case, you might be able to segment your list to put your higher-ticket offers to that group. That way, you’re not flushing your budget down the drain by advertising to a part of your list that isn’t really that engaged to begin with. of subscribers generated from
Cultivate all of your lists, to be sure, but put your focus on the activities that will generate the highest return.
Important Considerations to Determining Worth
Before we dive into the math on estimating the of your , there are a few other things we need to discuss first. The items below will change from person to person, but they have to at least be considered before arriving at the final number.
Since it is so personalized, keep in mind that your “final number” may change regularly. But as long as you’re being honest with the data, a little bit of wiggle room here and there is fine.
What are the Overhead Costs?
Every business has expenses, and a mailing list is no different. As you’ll see below, you’ll need to find all of the relevant expenses to your list-building efforts so that you can subtract them from your your net number.
Examples of email overhead costs can include:
- The subscription cost of email services
- Paid ads (to find subscribers)
- Landing page and funnel software
- Automation software (like Zapier)
- Writers (to create the email copy)
You might have more, but those are the most basic ones that most business owners run into. Go through all your receipts and tally up the relevant expenses to find your true number.
Alternatively, it’s a good idea to take into account variations in the prices. If your list crossed a plan threshold, for instance, and now you need to pay more to the email service to host your list, take the most recent number.
Remember, you’re looking for the current expenses, not what they were six months ago.
What is the Optimal Time Span?
This is totally up to you, but most people calculate their list based on a 12-month time span. If you’re trying to see the number for a specific product (and associated campaigns), you’ll want to extend or shorten the time based on the product life.
In extreme cases, you can even estimate the of really short timespans such as two weeks. These are usually reserved for launch campaigns, such as for a course, where you need to store that data for future launches.
Longer timeframes are OK too (like 3-5 years, or more), but remember that A LOT can change during that time, so I wouldn’t necessarily rely on those numbers as ironclad. Use them for a guide, but be willing to give weight to the most recent data, first.
What is Your Time Worth?
Are you paying yourself for your time in managing the ?
If not, then you’re definitely paying someone else, but either way, it needs to be taken into account.
Writers were mentioned in the “overhead expenses” section earlier, but if you have any digital graphics people, email managers, consultants, or anyone else that is taking an active part in your list management, tally up that number too.
And if you’re managing it all yourself (go you!), then estimate a fair market based on your time and experience. Assign a number, multiply it by how many hours you actually work on your lump that number in with the expenses above.
What About “Passive” Email Sales?
The one area where gets fuzzy is in determining the indirect sales that come from your .
A person may land on your (thus impacting your click-through rate), decide not to buy the product on the page, but then wander over to another page on your site and buy that item instead.
Infuriating, isn’t it?
While all sales are nice, it can be hard to come to a hard and fast number for your worth when people are acting like … well, people. Unpredictability can be a nightmare for accounting purposes.
The best thing to do is to estimate, as much as you can, a baseline prior to your email efforts. If everything else stays the same, but you saw a 50% increase in overall sales on your website when you were only product A, then you may choose to factor that into your final number.
Be warned though, that’s a dangerous game. If accuracy is what’s most important, then toying with the numbers to improve the list is risky. In the end, you may only end up hurting yourself, since the of your list may not match up with real life.
That’s why it’s advisable to only stick with what you know came from your list. This is far better than guesstimating a bunch of numbers you think came from an email. You’ll get a much truer picture of your then.
How to Calculate Your List
Let’s get down to business, shall we?
If you’ve taken the previous items into consideration, and are confident as to how you’ll approach this number, then finding your is a piece of cake. All it takes is a simple equation: ( – Costs)/Subscribers.
It’s that simple.
Other people have more elaborate formulas to take this or that into account, but this is the most reliable (and easiest) way. This simple method will give you a quick rundown of your list , and will allow you to assign a to each .
And if you’re having to do several different calculations to determine seasonality and individual , you’ll be thankful for its simplicity.
Ready to get started?
Step One: Determine Twelve-Month List
For most of us, twelve months is a nice, round number with which to start. You can always add to or take away from this timespan, but start with twelve months to get a touchstone for all the other numbers you’ll create later.
If you have Google Analytics set up, then finding this number will take approximately eight seconds. All you need to do is go to your goals and find out how many people clicked on your website from one of your Once you’ve got this number, multiply it by your average per lead.
Another easy way is by checking the tracking info on the links inside your email (assuming that you’ve set that up as well). This will probably give you a much closer number than using Google Analytics, but it also has the disadvantage of not taking lag sales into consideration (a who gets interrupted and comes back later through another means to purchase, for example).
A third way is by tracking coupons that were redeemed exclusively through . This may not give you the complete picture, but it’ll be a great start.
Utilize one or all of these ways to find the final number of sales from your list over the last twelve months. This is the most important data you need to find your list .
Step Two: Subtract Costs From to Find the Net
Once you’ve got your number from above (twelve months or otherwise), take your total overhead costs from above and subtract it from your total list . That will give you your net number, or the actual amount of money that you’re putting in your pocket from your .
It’s an important number, especially as you weigh it against the generated from other areas such as , referrals, and organic traffic.
Step Three: Find the Total Number of Active Subscribers
“Active” is the key word here.
A lot of people boast about the fact that they have 30,000 subscribers on their mailing list, but how many of those are actually engaged? How many of them ever realize they’re even on your mailing list to begin with?
By “engaged” or “active,” what I really mean is that they’ve clicked on at least one of your in the last twelve months (or whatever time span you’re calculating). If they haven’t even done that, and instead, have completely ignored every single one of your , then that person definitely is not an active and shouldn’t be counted as a .
That will most likely take your list size down significantly, but you’re not alone. Most lists only have an open rate of 20-30%, so don’t feel bad if it seems like no one is reading your emails.
After all, how many lists are you a part of that you’ve completely forgotten about?
It should also be noted that this “active list” represents the specific segment that you’re interested in analyzing. If that’s everyone on your list, then great, but if it’s a part of your list that’s only for a specific campaign, then separate those from everyone else.
Step Four: Divide Net by Active Subscribers
Now that we have the above numbers finalized, here’s where we arrive — finally! — at the of our list. Take the formula mentioned previously ( – Costs)/Subscribers), and plug in the values in steps 1-3.
What’s your number?
Are you disappointed? Enthused? Apathetic?
Hopefully, you’re able to look at that number objectively, but also with a bit of optimism. It may feel deflating, for example, to see that each one of your subscribers is only worth $2.30, but if it only costs you $1 to acquire each one, that’s still a $1.30 profit!
Not a bad return, depending on the business.
Plus, there are lots of other things you can do to engage that list further, such as offering additional products, launching an affiliate program, or even “renting” your paid sponsorship by someone else. I guarantee you, someone out there appreciates your , so look for those kinds of opportunities. for a
The possibilities are endless. Now that you have your baseline though, you can look to improve on it.
How Much is An Email List Worth?
Understanding the of your list can be daunting at first, but look at it as another important metric by which you can your business. It will certainly fluctuate over time, but by tracking it now, you can watch the progress as your business grows over time.
Just as important, when it comes time to sell your business, you’ll have a numerical to that list that you can list in your offer. They won’t be inheriting a random list of email addresses that have forgotten about you, but a group of that are anxiously awaiting your next email.
And for a buyer that is about to fork over a huge amount of money for your business, understanding that potential can be the difference in a few extra zeroes on the end of your sale price.