SMS API Pricing, I just don’t get it

sms api pricingThe information shown below on SMS API pricing is easily accessible from the companies’ websites. I’ve used all their services. My clients use their services at a range of volumes. I’ve run hackathons where people are innovating on most of these companies, where we experience firsthand the ease of use and flexibility. I have a relatively unique position of seeing these services being used in many scenarios; that’s the reality of SMS API consumption, its diverse.

Once upon a time the differences in performance and management consoles were significant, today the differences are smaller as the market matures. The comparison between suppliers needs more careful consideration to your immediate and anticipated needs. One thing that has surprised me is Twilio’s pricing remains out of step with most competitors. They have one of the largest volumes of traffic, and definitely pass on those savings to the likes of Uber, yet apparently not to all their customers.

I’m showing just low volume pricing in this weblog. Telnyx nicely lists out their volume discounts, which makes it easy to understand how the pricing changes as your business grows. In the US, long code SMS wholesale pricing can be as low as 0.0002 to 0.0005, that’s the price carriers charge, but there are middlemen between them and the Telecom API providers listed here. Large differences between retail and wholesale pricing can lead to market instability, I’ll leave that discussion for another weblog. Also I’m not going to add in the complexity of short codes, 800 codes. I’m just looking at long codes to keep the analysis simple.

The first big different is the charge Twilio makes for SMSin (receiving an SMS) of 0.0075, when most other providers are free. If you’re running 10M SMSin per month, that’s and extra $75k! For SMSout (sending an SMS) there’s a 100% premium compared to some providers. And don’t forget IP messaging (smartphone notifications, Facebook messenger, etc.) is just the cost of compute which can be as low as 0.000005, but that’s yet another weblog.

The UK pricing for SMSout tends to be closer, and often country focused providers will cut more favorable deals given their sales people have more flexibility on the rate plans. There is a SMS gray market, but I’m not examining their pricing here. I’m comparing services I consider generally on the same level of performance. Yet for the UK there’s still that SMSin charge from Twilio of 0.0075, while the rest are free.

My advice remains since this SMS API market began over 10 years ago: shop around. Yes, SMS API providers existed before Twilio was founded! Get to know your Telecom API provider, ideally in person. You’re running your business on their APIs, its important. Just because someone spends a lot on marketing doesn’t mean you should be paying for their marketing budget, especially as the core product commoditizes.

Another complexity is as you build out your business on Telecom APIs, other integrations happen with that provider, which creates a barrier to change. Some larger API consumers have built their platform from the start with a multi-vendor strategy, and actively run traffic across multiple providers. Its not difficult and can, with planning, avoid lock-in.

A common piece of advice I have for all API providers is to offer migration services to make the transition, or simply enabling diversity in supply, as easy as possible. For example, we’ve seen some providers emulate the Twilio API. But once you make that decision to go with an API provider things do tend to get locked-in without an explicit multi-vendor plan, and then you could find you’re paying 100-200% more than comparable alternatives, which as your business grows becomes a significant burden.

There was an old IT adage, no one ever got fired for buying IBM. Today that is not true. Choosing the biggest or the one that spends the most on marketing does not necessarily mean you’re making the best choice for your business.

This is why we run TADHack and TADSummit, bringing the industry together to see what is possible, to compare products side by side, to work out what is right for your business. Come join us at TADHack-mini Orlando, just before Enterprise Connect 2018, to experience a range of SMS APIs and much more besides, to see how much you could be saving and discover your ideal telecom API provider!

US SMS API Pricing (USD)
Twilio SMSin .0075
Nexmo SMSin FREE
Flowroute SMSin .004
Telnyx SMSin FREE
VoIP Innovations SMSin FREE

Twilio SMSout .0075
ThinQ SMSout .0035
Nexmo SMSout .0069
Flowroute SMSout .004
Telnyx SMSout .0045
VoIP Innovations SMSout .004

UK SMS API Pricing (USD)
Twilio SMSin .0075
Apifonica SMSin FREE
Nexmo SMSin FREE
VoIP Innovations SMSin FREE

Twilio SMSout .04
Apifonica SMSout .04
Nexmo SMSout .0401
VoIP Innovations SMSout .04