I get this question pretty frequently.
If you’re one of those shoppers (like me) who looks at the price first, investigating Customer Data Platforms is going to frustrate you. The best answer to “how much does a CDP cost?” is “it depends.” But don’t worry. I will give you some general ideas.
The pricing question is complicated for two reasons.
- CDPs do different sorts of things.
- CDPs have different “origin stories,” and their pricing is often a relic of what they used to be and do.
A CDP that started off as an email service provider might base its price on events, like page views, clicks, emails sent, etc.
A CDP that used to be an analytics platform might base its price on total web traffic, while a CDP that used to be a data warehouse might set its price by how many profiles are under management.
There are lots of other price models, including …
- By “known” profiles
- By the size of the user database
- By API calls and the volume of incoming data
- By the components used, like the data clean room, or the built-in ESP.
You’re going to have to get a custom quote from each vendor on your list. But the quote doesn’t tell the whole story.
Why the CDP’s Origin Story Matters
Most CDPs started off as something else and added or acquired functionality to become a full-fledged CDP. (MarTech defines a CDP as a marketer-managed system designed to collect customer data from all sources, normalize it and build unique, unified profiles of each individual customer. The result is a persistent, unified customer database that shares data with other marketing technology systems.)
Knowing a CDP’s origin story is very important, not only because of its possible relationship to price, but because it will give you insights into the company’s culture, biases, and how they’re likely to view their work and their services. If there’s a conflict, it can become a hidden cost in added development time and workarounds.
A good fit can be better than a good price. The CDP that has experience in your business and in your industry is going to do better for you in the long run.
The “Best of Breed” Decision
A company that is considering a CDP probably already has a solution for some of what the CDP offers. For example, the company might already have a service to manage a paywall, which most CDPs can also do. This is where you run into the “best-of-breed” vs. Swiss Army Knife problem.
Some CDPs stick to a narrow focus. They provide a consistent, single view of the customer (which is a myth, but never mind that for now). Such CDPs leave it to other services to send emails, cleanse data, create interactions on the website, build forms, provide content recommendations, and so on. They consider themselves “best-of-breed” in their narrow focus, and they expect you to use other solutions for those other requirements.
The Swiss Army Knife CDP tries to incorporate some or all of these other functions into their service.
A potential problem with the Swiss Army Knife model is that its version of some function or service will almost certainly not be as good as the offering from another company that is exclusively dedicated to that function or service – just as the can opener on a Swiss Army Knife isn’t the best can opener, but it’s the one you have in your pocket.
There’s no simple solution to this equation. It’s tempting to think that the best answer is to use only the best-of-breed solution for every function, but – aside from the fact that “good enough” is often good enough – that can get impractical.
- There’s no guarantee all these services will play well together.
- Signing with all those companies might be prohibitively expensive.
- There’s no guarantee these other companies won’t merge, change their focus, or go out of business.
- What’s best-of-breed today won’t be best-of-breed tomorrow.
All of this is relevant to pricing because the cost of the CDP isn’t only what they quote you. You also have to consider what you can save by eliminating duplicative services (provided you can get out of the contract), or what you might have to add to get all the functions you need.
For example, a CDP that has its own email service provider might save you the money you’re currently spending on an ESP. Or, on the other side of the ledger, a CDP that doesn’t have a clean integration with an essential service might result in development or middleware costs.
Start with Use Cases
These and many other factors add complexity to CDP pricing. It depends on your size and the services you’re looking for, which is why you have to start the process by developing use cases. What are you going to do with a CDP and what return on investment are you hoping to get? Documenting these cases will help you make a list of all the functions you require.
With use cases in hand, you can add and subtract costs from a CDP bid based on what current services you can discard and what additional services you’ll need.
Please, Just Tell Me a Price
The minimum investment is about $5,000/month, and it will go up from there based on volume and so on, as I’ve mentioned above. It’s quite easy to get into multiples of six figures annually, or more, so you should only invest in a CDP if your use cases are likely to result in substantial savings or additional revenue.
If the price tag scares you, don’t let that stop you from doing a little investigating. You might not need a full CDP. By working on your use cases, and considering what functions are required to make them happen, you might discover things you can build yourself, or some “not quite CDP” solutions that solve your requirements.
The best thing about considering a CDP is that it requires you to think about what you’re doing, why, and what benefit those current or potential activities would bring to your company and your customer. That exercise can sharpen your focus, and you might discover revenue opportunities that make the price sting a little less.
