Business SMS pricing is not static. Multiple forces shape what you pay per message, and understanding them helps you make better decisions about your messaging provider and strategy. Here is a look at the key factors driving A2P SMS costs in 2024.
Market growth and volume pricing
The global A2P SMS market continues to expand. Juniper Research projects that A2P messaging traffic will grow from approximately 2.2 trillion messages in 2024 to 2.8 trillion by 2028. This growth is driven by increasing demand for two-factor authentication, transactional notifications, and marketing SMS across every industry.
As volumes grow, per-message costs for high-volume senders are generally trending downward. Providers and carriers offer volume-based pricing tiers, meaning businesses that send consistently at scale can negotiate better rates than low-volume, sporadic senders.
Carrier consolidation and termination rates
In the UK, mobile operator consolidation has reduced the number of networks to four major players: BT/EE, Vodafone (now merging with Three), VMO2, and Sky Mobile. Fewer operators means less competition on wholesale termination rates — the fee that mobile networks charge for delivering each message to their subscribers.
UK A2P SMS termination rates have increased since 2021, with some operators raising wholesale prices by 15-75% according to Ofcom's market review data. These wholesale increases are passed through to businesses by SMS providers, contributing to the gradual rise in per-message costs.
International SMS routing
Sending SMS internationally is significantly more expensive than domestic messaging, and the cost varies enormously by destination. Factors that influence international SMS pricing include:
- Local termination rates — set by mobile operators in each country
- Regulatory surcharges — some countries impose additional fees on international messages
- Sender ID registration costs — an increasing number of countries require pre-registration
- Routing quality — direct carrier connections are more expensive but deliver higher reliability than grey routes
The GSMA reports that international A2P SMS termination rates vary from less than one US cent in some markets to over ten cents in premium destinations.
Why Tier 1 direct connections matter
Not all SMS routes are equal. The messaging industry broadly categorises routes into three tiers:
- Tier 1 (direct) — the provider has a direct commercial agreement with the mobile operator. Messages are delivered via the most reliable, fastest route with full delivery reporting.
- Tier 2 (aggregated) — messages pass through one or more intermediary aggregators before reaching the operator. Delivery is generally reliable but slower, and reporting may be less detailed.
- Tier 3 (grey routes) — messages are delivered via non-standard routes, often exploiting SIM farms or interconnect loopholes. These are the cheapest but least reliable, with risks of filtering, blocking, or delayed delivery.
Tier 1 connections cost more per message, but the higher delivery rate, faster delivery time, and accurate reporting make them significantly better value when measured by cost per delivered message rather than cost per sent message. Faretext uses exclusively Tier 1 direct carrier connections — view our transparent pricing to see the difference quality routing makes.
Regulatory impacts on pricing
New regulations are adding costs to the SMS ecosystem. Sender ID registration requirements, now in force in countries including India, Ireland, the Philippines, and parts of the Middle East, add administrative overhead. Anti-fraud measures, while welcome, require investment in monitoring systems. Our fraud prevention infrastructure is an example of this necessary investment. These costs are shared across the industry and contribute to the gradual upward pressure on pricing.
For businesses evaluating their SMS provider, the key question is not simply "what is your per-message rate?" but rather "what is included in that rate, and what is the actual delivered message cost?" Transparency on routing quality, delivery rates, and additional fees matters more than headline pricing.
Frequently asked questions
Why do SMS prices vary so much between providers?
The main variable is routing quality. Providers using direct Tier 1 connections charge more per message but deliver 97-99% of messages reliably. Cheaper providers may use aggregated or grey routes with significantly lower delivery rates, meaning more of your budget is wasted on undelivered messages.
Will SMS prices continue to increase?
UK wholesale termination rates have been rising, which puts upward pressure on prices. However, volume-based pricing means that businesses sending at higher volumes can offset this through better rates. The overall value of SMS remains strong due to its unmatched engagement rates.
How can I reduce my SMS costs without switching to a cheaper route?
Focus on targeting and timing. Better segmentation, personalised messaging, and send-time optimisation all improve conversion rates, reducing your cost per conversion even if the per-message rate stays the same. Our API supports the integrations needed to implement these strategies.
Sources: Juniper Research — A2P Messaging Market, GSMA — Messaging Resources
