Every online business owner needs to consider how much does it cost to start an online business.
Knowing how much it costs and setting your budget is important. Be realistic about whether you will have the money available to start an online business and launch it to your target market successfully.
Starting an online business can have much lower start up costs compared to a bricks and mortar retailer. But, it is not free and a plan and budget are essential for success.
Costs vary wildly depending on how deep your products are, how competitive the market, what type of online business you plan to start and also whether you plan to do most of the work yourself. If you plan to outsource to website developers, bookkeepers, digital marketing agencies and have virtual assistants keep everything running then your costs will increase significantly.
Cost to start an online business
- Domain name (website address) – $20-50 / year. Depending on what you want (a .com and / or a .com.au). Also additional extras such as domain privacy so that you don’t get hit by spammers from day one. Some domain companies also charge you extra for setting up forwarding to your email hosting through Google Apps, Micorosft 365, etc. (see below).
- Email address and hosting – $7 to 15/mth. This can be a free gmail account, or you can pay for Google Apps which allows you to use your domain in your email address, i.e. email@example.com. Microsoft 365 is also a good option as it also provides the Microsoft products such as Microsoft Word, Powerpoint, Excel.
- Website hosting (where your website is stored) – $200/yr to $1000./yr. This is a very big variable as it depends on whether you use a platform like WordPress which is free. WordPress is free but your site still needs to be store on webiste hosting and we use Siteground for this. Alternartively there are services like Shopify which is an ecommerce platform that takes care of the hosting and the tech for you but will potentially cost you more later as there are ongoing monthly costs and also paid apps, etc. you use.
- Business registration – you will want to register your business at some point to ensure you are trading legally, in Australia that is through the Australian Business Registry.
- Marketing and advertising – this where the budget starts to really vary, some people are happy to start spending $3000/mth on online advertising from day 1, others want to use the power of social media, their networks, email, etc.
Other Platforms and Tools
You will likely also need are email marketing platform, social media management tools, and accounting software (for example). These can all greatly impact your budget. If you plan to start on a shoestring you may avoid a lot of these costs initially until you have proven your idea works.
Getting started with your online business
Our resources page has links to the tools and resoures we have used when helping businesses get started online and to manage our own online businesses.
You may also want to check out our article on How to Start An Online Business or check out our workbook on Six Ways to Start Your Online Business.