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One of the hardest parts of monetizing your podcast is figuring out what your podcast ads should cost. 

In this episode we’ll talk about the industry standard for podcast ad pricing, the formulas you need to break even on your podcast expenses, and how to confidently pitch to future sponsors knowing you’re providing an equal value to the rate you’re asking for! 

Understanding Industry Standard for Podcast Ad Pricing

Before we get into customized pricing models, it’s crucial to understand how the industry quantifies the worth of your podcast, typically using the CPM model.

What is CPM?

CPM stands for Cost Per Mille, meaning cost per thousand (downloads).

On average, a 60-second pre-recorded ad will have a CPM of anywhere from $15-$30, while a 60-second host-read ad typically ranges from $20-$40.

The Drawbacks of CPM Pricing

As you can imagine, CPM pricing can be limiting, especially for smaller podcasters.

For instance, a podcast with 2,000 downloads per episode would only earn about $50 per ad, and that doesn’t even cover the basic cost of podcast hosting per month. This is why I encourage all podcasters to establish a custom pricing model based on their own expenses and podcast audience. 

Understanding Ad Placement and Formats

Types of Ad Placements:

1. Pre-roll: 30-60 seconds at the beginning of an episode.
2. Mid-roll: 60-120 seconds in the middle of an episode.
3. Post-roll: 60-90 seconds at the end of an episode.

Types of Ad Formats:

1. Baked-In/Static Ads: Permanent ads embedded in the episode.
2. Dynamic Ads: Temporary ads inserted through your podcast host.

Calculating Your Podcast’s Ad Pricing

Step 1: Calculate Your Monthly Expenses

List all your expenses, including hosting, production, and equipment. For example:

• Podcast Hosting: $18
• Website Hosting: $44
• Domain Hosting: $8
• Adobe Creative Cloud: $67
• Equipment Spend (divided by 12): $166
• OtterAI: $20
• Riverside: $24
• ChatGPT: $22
• Post-Production Editing: $400
• Your Time ($20/hour, 20 hours): $400

Total Monthly Expenses: $1,169

Step 2: Determine Your Profit Margin

Multiply your total expenses by 2, 3, or 4 to include a profit margin. For this example, let’s use 3:

$1,169 x 3 = $3,507

Step 3: Break Down Per Episode Cost

Divide your monthly expense and profit margin by the number of episodes per month:

$3,507 ÷ 4 episodes = $877 per episode

Step 4: Allocate Costs to Ad Slots

As each ad placement has a different value (and likelihood of listeners hearing the ad, we’ll assign a weighted cost to each ad slot. For example, as mid-roll is the most valuable it’ll take 45% of the ad cost for this episode, pre-roll being the second most valuable will take 35% and post-roll being the least valuable will take 20%.

Again, this is based on the average of listeners actually listening to the ad, since many listeners skip past the first ad and don’t listen to the last part of an episode. 

Assign percentages to different ad slots:

• Pre-roll (35%): $307
• Mid-roll (45%): $395
• Post-roll (20%): $175

Creating a Media Kit and Rate Card

A media kit with a rate card is an essential tool for any podcaster who wants to get sponsorships. At the least it  should include your podcast’s average weekly downloads, audience demographics, and pricing structure. This will start the process of building value with your potential sponsors and help them understand what they’re investing in.

If you want to purchase the media kit I use for all my podcasts (or see how one is laid out) you can find it here! 

Final Tips for Pitching Sponsors

1. Know Your Value: Show your podcast’s impact through case studies, listener engagement, and social media following.
2. Educate Your Sponsors: Provide them with evidence and confidence in the value of their investment.
3. Be Prepared to Adjust: Be flexible and willing to reevaluate your prices based on feedback and market changes.

Have you ever heard there are 100 ways to skin a cat?

Well, there are 100 ways to skin a cat and that’s pricing podcast ads!

I can’t tell you specifically what to price your podcast ads, but I can tell you that if you take the time to look at your podcast’s financial needs, the requests of your sponsors and the expectations of your audience there’s an intersection at those 3 points that will give you exactly the number you’re looking for. The best way to get started is to go for it. Make a media kit, make a rate card and start pitching sponsors if no’s talking to you, then reevaluate your prices and how you’re pitching your podcast. 

You never know until you try. So get out there and start trying!

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