Email:
Hi there,
Mailgun is adjusting our plans and pricing to more accurately reflect the value users get from the service and to make room for some great new deliverability features we just released.
Throughout 2019, we were hard at work adding and improving our email capabilities and optimizing our support to help your business grow. While many of these updates were made behind the scenes, the truth is that Mailgun can do a lot more than it could two years ago when we last updated our plans.
What does this mean for you?
On March 1, 2020, we will automatically transition your account to the new Flex plan, a pay-as-you-go plan comparable to the Concept plan you’re currently on. You’ll receive your first invoice under the new plan on April 1 if your amount due is greater than $0.50. According to your usage last month, your invoice under the new price per message of $0.0008 would have been $0 for December. It’s a modest change, but we wanted to be transparent about it.
What’s changing with the Flex plan?
Flex offers you the same pay-per-use model you were used to on the Concept plan. The main differences are that we are no longer offering 10,000 free emails or 100 free validations per month, and our support options now include limited ticket support as well as enhanced self-service Q&As so you can find answers faster. Additionally, while your existing routes will still be functional, new routes will not be supported on this plan.
What other options do I have?
We have several other plans available with additional features and service levels, including a new subscription plan called Foundation that starts at $35 per month. This plan provides access to new deliverability tools like Inbox Placement so you can effortlessly increase your deliverability and email ROI.
Looking for validations, inbound routing, or more support? Foundation is a great starter plan. If this is something you’re interested in, check out your plan options.
In their S-1, SendGrid disclosed that it earned about 73% gross margins, spending roughly $18M in cost-of-goods-sold to earn $52M in revenue (six months ending June 30, 2017). Around that time, we estimate that they were sending roughly 30 billion messages a month, suggesting that they were spending $18M to send 30 billion messages - that's about $0.60 for every thousand messages.
If SendGrid's costs are universal in the industry, then that 10,000-message free tier, therefore, is costing Mailgun perhaps as much as $0.60 x 10 = $6.00 a month. If you have thousands of free accounts, the cost adds up rapidly on the P&L statement. I could be off by an order of magnitude about the sending cost, but you get the point.