How Much Does it Cost to Start an Online Business? [Website & eCommerce]

Starting an online business can be a great way to make money while working from home. But how much does it cost to start an online business? In this blog post, we will break down the costs associated with setting up a website and an eCommerce store. The purpose of this article is, therefore, to give you some ideas on what costs to expect and budget for. 

We will also provide tips on how to keep your expenses as low as possible. So, whether you are just starting or you are looking for ways to reduce your costs, this blog post is for you!

DISCLOSURE: Some of the links that I share in this article ARE my affiliate links. This means I may earn a commission, at no extra cost to you. In fact, sometimes you'll get a discount or free credits just FOR using my link. 🙂

What are some costs associated with starting an online business?

The following are some of the main costs you need to consider when starting an online business with your own website. Depending on what kind of business you have and where you are located (as there may be costs specific to your city or country), the actual costs may vary.

If you are starting your online business in an online marketplace such as Amazon or Etsy, you may not need to set up a website at the beginning and incur the related costs.

I started my online business journey by selling on Amazon.com without my website, but I soon realized that I needed one for branding. So I set up my website after a few months.

Domain name

Register Domain Name: $0.99-$15/year

The first cost you need to consider is the cost of your domain name. A domain name is a unique URL that identifies your business online. Your domain name is how customers will find you online, so it's important to choose a good one. You can usually expect to pay around $15 per year for a basic domain name.

If you want a more unique or memorable domain name, you may have to pay more. But there are ways to get around this. For example, you can use a domain name generator to help you find a good domain name for your business.

Any way to save? Yes, I recommend Namecheap which provides very reasonable rates as compared to other domain registrars. They also provide free lifetime domain privacy protection to protect your personal information.

One-time or recurrent costs? Recurrent.

SSL Certificate

SSL stands for Secure Sockets Layer. It's a security protocol that helps protect information that is sent between your website and visitors' browsers. When you have an SSL certificate, it encrypts this information so that it can't be intercepted by third parties.

An SSL certificate is necessary if you want to accept payments on your website. Most payment processors will need certificates to encrypt and protect your website's traffic. This is important because it helps ensure that your customers' data is safe and secure. You will need an SSL certificate for any eCommerce store.

In fact, Google displays a warning message in the search results if a website is not using SSL. So, it's important to have one if you want customers to trust your website.

SSL certificates generally cost between $10 to $60 per year, but some hosting providers, such as SiteGround and Namecheap provide SSL certificates for free with their plans.

Web hosting

Hosting: $3.50-$250/month

The next cost you need to consider is web hosting service. This is where your website is stored and hosted. It's important to choose a good web hosting provider, as this can affect the speed and uptime of your website.

There are various types of web hosting, from shared hosting (where your website is stored on the same server as other websites) to dedicated hosting (where your website is stored on its own server). The cost of web hosting will vary depending on the type of hosting you choose.

I recommend SiteGround for hosting. They offer great prices, excellent customer service and features.

Is this necessary? Yes, if you are hosting your website.

Any way to save? SiteGround provides great prices and features. You can also use eCommerce platforms such as Shopify, which do not need separate hosting fees.

One-time or recurrent costs? Recurrent costs – monthly or yearly basis.

Website design and development costs

Design: $0-$100/month

Development: $0-$100/month

Website Theme: $50-$200

Apps & Plugins: $0-$200+/month

The website design should be easy to navigate and look professional. The cost of website design and development will vary depending on how complex your website is. If you are using a website builder, the cost will be lower than you can do it yourself. However, if you need a custom-designed website, the cost will be higher.

A website builder is a platform that allows you to create and build your website without needing to code. A CMS is a content management system that helps you manage your website's content. There are many free and paid options available, so it's important to choose one that's right for you.

Some popular website builders/CMS include Shopify, WordPress, Wix, and Squarespace. Prices for these platforms range from free to $500 per month. The most popular is WordPress, which has a paid version and a self-hosted version.

If you are focusing on blogging, this is a good choice. It is also possible to find free WordPress themes and plugins to make your website look more professional. On the other hand, if you want to start an online ecommerce store, then I would recommend Shopify.

You can read Shopify vs WordPress: Which One is Right for Your Business? for a comparison between the two.

If you are using Shopify or WordPress, you can use pre-designed themes which cost between $50-$200. If you need a custom design or development work, the cost will start at $100/month.

To save on costs, you can use free WordPress or Shopify themes and plugins or apps (in Shopify) to make your website look more professional. Do note that paid themes may come with an annual maintenance fee.

I recommend using Fiverr for website design and development. You can find designers and developers who will create a custom website for you starting at just $50.

Is this necessary? No, you can code your website from scratch.

Why is this necessary? Use pre-designed themes and plugins, use a website builder such as Shopify or WordPress, or find designers and developers on Fiverr. While there are free website builders and themes available but they may be limited in functionality.

Any way to save? Yes, there are many free options available, such as setting up a free account on WordPress.com, but the functionality is very limited.

One-time or recurrent costs? Some website builders have monthly recurring fees while some paid themes have annual maintenance fees.

Set Up Your Business and Other Business licenses

Incorporation: $200-$800

Business licenses: $50-$200+

It is necessary to set up a business entity, such as an LLC or corporation, to get a business license and also to limit your liability and exposure. The cost of setting up a business entity varies depending on the state in which you are located.

The cost of setting up an LLC is usually around $100-$200. For a corporation, the cost is usually around $500-$1000.

You can read more about setting up an LLC from the following blog posts: Do You Need an LLC to Start an Online Business: The Pros and Cons and Setting Up New LLC For Your Online Business: A Step-By-Step Guide

After you have set up your business, you will need to get a business license. A business license is required if you are selling products or services online. Business licenses vary by country, state, and city. The cost of a business license is usually around $50-$200.

Is this necessary? Yes, unless you are not selling products or services online.

Any way to save? You can compare price and get quotes from different service providers.

One-time or recurrent costs? Recurrent.

Logo Design: $5-$300

Your logo is how customers will remember your brand. A good logo should be simple, memorable, and easy to read. There are many ways to create a logo.

You can use a free online tool like Canva or hire a professional graphic designer on Fiverr starting at $50. If you want a truly unique and high-quality logo, you can expect to pay $300 or more.

When I started my online business years ago, I saved on this by using a free online logo design tool to create my logo.

Is this necessary? Not strictly speaking, especially if you can design yourself, but it is recommended.

Why is this necessary? A logo helps customers remember your brand and makes your business look more professional.

Any way to save? You can use a free online tool like Canva or hire a professional graphic designer on Fiverr starting at $50.

One-time or recurrent costs? One-time.

eCommerce platform

(Optional) A Shopping Cart Template Or Theme: $20 – $200

Select A Shopping Cart: $3 – $29

Sign Up For Credit Card Processing: FREE

An eCommerce platform allows customers to buy your products and services online. This eliminates the need for you to set up a website and allows you to focus on selling your products and services.

There are many e-commerce platforms available. The most popular ones are Shopify, WooCommerce (WordPress), and BigCommerce.

The cost of using an e-commerce platform varies depending on the features you need and the size of your business. For small businesses, the cost is usually around $30-$100. I recommend using Shopify because it is the most user-friendly and has the best features and security, which are important when you are selling products and services online.

Shopify is an all-in-one eCommerce solution for small businesses. Shopify has a 14-day free trial with no credit card required, so you can try it before you commit to a paid plan. You can also check out the following guide to set up a Shopify store: How to Create an Ecommerce Website With Shopify (Simple and Easy Steps).

Is this necessary? Yes, if you want to sell products and services online.

Any way to save? Shopify has a 14-day free trial with no credit card required so you can try it before you commit to a paid plan. You can also sign up for a longer duration such as annually to get a cheaper price.

One-time or recurrent costs? Recurrent.

Credit Card Payment Processing: 3-5% of revenue

Credit Card Payment Processing is a service that allows businesses to accept credit card payments from customers. This service typically charges a fee of 3-5% of each transaction. Popular payment processors include Stripe and Paypal. Shopify also provides Shopify Payment which is powered by Stripe.

Product Photos: $20-$1000

Product photos are an essential part of an online business. They help customers visualize how the product will look and how it can be used. Good product photos should be high-quality, well-lit, and accurately represent the product.

The cost of hiring a professional photographer can range from $20-$1000 or more. If you are not comfortable taking your own product photos, I recommend hiring a professional photographer. You can find photographers on Fiverr starting at $50 per photo.

Is this necessary? Yes, good product photos are essential for an online business.

Any way to save? Yes, you can take your own photo or use product photos provided by the supplier. You can also find someone on Fiverr to help process the ready-made photos taken by yourself or given by suppliers to further beautify them.

One-time or recurrent costs? One-time for each product you want to sell.

Inventory, Storage, and Fulfillment Costs

Inventory: $0-$1000 to start

Your inventory cost will vary depending on the type of product you are selling and how many products you need to start. For example, if you are selling physical products, you will need to buy inventory from your supplier unless you are doing drop shipping or print-on-demand. If you are selling digital products, you will not need to buy any inventory.

I recommend starting with a small inventory to test the market and see how well your products sell before investing in a larger inventory. Previously, when I started selling on Amazon, my first order was 500 units of a home product that I was selling. Only when the product was proven to sell regularly, I increased my order to over 1000 units.

Is this necessary? Yes, if you are selling physical products.

Any way to save? Start with a small inventory and gradually increase it as your business grows. You can negotiate with your suppliers for lower unit costs when you order more products.

One-time or recurrent costs? Recurrent.

Warehouse: $4 to $7 per month per square foot

If you are starting an online business and need to store your inventory, you will need to rent a warehouse. The cost of renting a warehouse varies depending on the size of the warehouse, the location, and the length of the lease.

Is this necessary? Not in the beginning unless your product is bulky.

Any way to save? Yes, when you are just getting started and have a small quantity of products, you can store them in the storeroom or garage of your home and save on storage costs. This is how I started. However, if that is not possible, try to find a warehouse that is close to your supplier to reduce shipping costs. You can also negotiate with the landlord for a longer lease term to get a lower monthly rate.

One-time or recurrent costs? Recurrent.

Fulfillment

If you are selling physical products, you will need to pay for shipping and handling. The cost of shipping and handling will vary depending on the type of products you sell and the shipping methods you use.

Insurance Costs

Product liability insurance: $500-$2000 per year

There are many types of business insurance, but product liability insurance is the most important for online businesses. This type of insurance protects your business from lawsuits if your products cause injury or damage to customers.

In addition, some marketplace platforms may have requirements for insurance, so if you are selling on their platform, you will need to have this insurance in place. For instance, Amazon requires business insurance for Amazon Pro Merchants and sellers who made more than $10,000 in gross sales on the company's platform in any month.

You can read more about it here: https://capforge.com/amazon-insurance-policy-requirements/

The cost of product liability insurance varies depending on the type of products you sell, the annual revenue of your business, and the country in which you operate.

Is this necessary? Yes, particularly if you are selling physical products.

Any way to save? Yes, you can compare quotes from different insurance companies to find the best rate. Some insurers offer discounts if you buy multiple policies from them.

One-time or recurrent costs? Recurrent.

Legal fees

If you are selling products or services online, you will need to make sure that your website terms and conditions and privacy policy are up to date. You can either create these yourself or have a lawyer do it for you. The cost of legal services varies depending on the country in which you operate and the type of legal services you need.

Is this necessary? Yes, if you are selling products or services online.

Any way to save? You can create your website terms and conditions and privacy policy yourself using templates available online. However, it's good to have someone with legal experience review it to make sure everything is in order before you publish them on your website.

One-time or recurrent costs? One-time.

Accounting software

Many small businesses use accounting software to manage their finances. The cost of accounting software varies depending on the features you need and the size of your business. For example, QuickBooks Online starts at $15 per month.

Is this necessary? Yes, if you want to track your expenses and income in a more sophisticated way than a spreadsheet.

Any way to save? You can use free accounting software like Wave Accounting.

One-time or recurrent costs? Recurrent.

Marketing and advertising expenses

The cost of marketing and advertising will vary depending on the type of products or services you sell and how you want to market your business. These costs are optional but can be very important in driving traffic to your website and generating sales.

I have listed some common marketing and advertising expenses below for your reference:

Copywriting : $500

The most important investment you'll make is in your copywriting. This can include web content creation and content marketing or any other type of writing that promotes your business. Good copy can help you generate more leads and sales, so it's worth investing in a good writer. You can expect to pay around $500 for quality copywriting services.

Alternatively, you can invest in a good AI writer to help you with your writing. Check out the following post to find The 11 Best AI Writer Software to Help You Write Better Content 2022. For the best overall AI writer, I highly recommend Jasper. You can get to try it for free for 10,000 words if you click the image below and sign up for a free trial.

Pay per click (PPC) advertising: $300-$5000 per month

PPC is a form of online advertising where you pay to have your ads displayed on search engines and other websites. The cost of PPC varies depending on how competitive your niche and keywords are and how much you will spend per click.

Even when you sell in a marketplace such as Amazon, you would still need to spend on PPC to get your products in front of buyers.

Social media advertising: $500-$5000 per month

Social media advertising is a type of online advertising where you pay to have your ads displayed on social media platforms such as Facebook, Twitter, and LinkedIn. The cost of social media advertising varies depending on how many people you want your ads to reach and the type of ad you want to create.

For example, a small business could expect to spend around $500 per month on social media advertising. However, if you want to reach a larger audience, you may need to spend up to $5000 per month. To get started, you can expect to spend around $500 per month on social media advertising.platforms,

Is this necessary? It depends on your business goals. If you want to generate more leads and sales, then invest in some form of online advertising.

Any way to save? You can start with a smaller budget and increase your spending as you see results. You can also use organic methods to promote your business, such as social media marketing and content marketing.

One-time or recurrent costs? Recurrent.

Email marketing: $0-$100/month

Email marketing is a great way to stay in touch with your customers and promote your products or services. The cost of email marketing will vary depending on how many subscribers you have and how often you send emails.

Is this necessary? Not in the beginning when you have a small email list, but as your list grows, you may want to consider investing in an email marketing service.

Any way to save? You can make use of the free tier of email marketing tools to get started free. I recommend MailerLite for this as it provides up to 1,000 contacts for free and has powerful automation features even for the free plan.

One-time or recurrent costs? Recurrent.

Social media management

Social media management is the process of managing your social media accounts to create and publish content, grow your audience, and analyze your results.

The cost of social media management will vary depending on how many social media accounts you have and how often you want your posts published. To get started, you can expect to pay around $500 per month for social media management services.

Alternatively, you can use a good Social Media management software such as SocialBee to help you automate the management of your social media channels.

Is this necessary? Not in the beginning when you are just starting out but if you want to grow your social media following and get more leads and sales, then social media management is a good investment.

One-time or recurrent costs? Recurrent.

How Much Does it Cost to Start an Online Business – Conclusion

As you can see, there are many costs associated with starting an online business. Fortunately, there are also many ways to save on these costs. By being mindful of the necessary expenses and shopping around for the best deals, you can keep your start-up costs to a minimum.

The most important thing is to create a budget and stick to it. With a little bit of planning, you can start your online business without breaking the bank.