The cheapest way to start an online business is for free as I covered in a previous post.
Starting an online business for free is a great way to test if your business model is successful or if it requires a rethink and possibly a total revamp before you start throwing money at scaling up.
Let’s have a look at the costs of starting an online business – other than for free.
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Two Essential Expenses Required for an Online Business
The final costs of starting an online business will ultimately depend on what type of online business you get involved in; the choice of which will probably be based around your expertise and business skills.
See this article on skills required to start an online business in which I cover the more common types of home based online businesses.
Regardless of you business model there are two essential elements you must have to get an online business started and to keep it going.
- A Website and a Domain name.
This is obviously essential part of any online business and will be your shop front, warehouse or office.
It is also your marketing and promotions department where your customers will have access to your products or services. - Website Hosting Services.
For a website to appear online it needs to be “hosted”. The choice of your hosting company could be a local outfit or a more global one.
Your website will be placed on your host companies servers for access by the search engines (such as Google, Yahoo, Bing etc) and for direct access from the public.
Think of your hosting company (and the Internet) in general as a large library where all websites are stored.
These are the only two costs you absolutely must incur start and online business and may be all you will ever need to spend.
I have 4 websites and my expenses do not run beyond these two basic requirements (see penultimate paragraph below).
The Cost of A Domain Name
There are two costs involved in purchasing and retaining a domain name.
- Initial purchase price.
- Annual registration
The cost of your domain name can be anything from as little as $12.00 up to an unlimited amount if you have to purchase it from a current owner.
The initial purchase price of your domain in includes the first year’s registration fee.
Before you can create a website you do need a Domain name. The domain name of this site is whatnowtrucky with a .com extension. Other extensions are available of which .net and .org are the most common.
Should your preferred domain name not be available (IE someone is already using it) you will need to think of an alternative name or use an alternative extension. For example if .com my name “What Now Trucky” had been taken I would have had to change it to some other name, in order to secure a .com extension, or opted for a .net.
Other options for extension include country specific ones such as .au (Australia), .ca (Canada), .nz (New Zealand), .za (South Africa) and so on and so forth.
The most popular are the .com but if you are running your inline business for a specific country these latter ones are absolutely fine.
Once again using this site as an example – I own www.whatnowtrucky.com and it is therefore unavailable in this (.com) format to anyone else. They could, if they really wanted it, approach me requesting I sell it to them and I could flip it on to them for a price set by me.
By the way this is called Site Flipping and is a lucrative online business model – similar in many ways to selling real estate!
Domain names require annual registration – again these vary in costs depending on the charges levied by your domain registrar (usually the place you bought the domain name from.
The Cost of Hosting and Annual Domain Registration
Hosting is relatively cheap these days due to the fierce competition among hosting companies.
Hosting can be as little as $4.00 per month (and it wouldn’t surprise me if you could get it cheaper) per domain name or as much as $5,000 per month. It all depends on how much band width you are taking up on the hosting companies server.
We pay for storage space.
For example Amazon.com would be paying a lot more than whatnowtrucky.com if we were both on the same server.
Note – I should think that Amazon has their own servers to ensure they have total control.
The point is hosting is relatively inexpensive and unless you have a huge site is a minimal running cost.
Domain Registration is an annual fee to ensure continued ownership of the name of your online business.
Your first years’ registration is usually included in the purchase price of your domain name.
Annoyingly the 2and and subsequent years’ registration fee can be substantially higher than the original purchase price and first years’. However, this need not always be the case – for example my annual registration fee for each o my four sites remains fixed and equal to my domain purchase price of $13.00 per domain name.
Shop around for the best deal.
Should you neglect to renew it the domain will go back on the “for sale” shelf and sold for the same or a higher fee by your registrar.
The standard lapse time before you lose the domain name permanently is 60 days – this gives you a bit of time to renew it but the site will not be live until the renewal is paid in full.
Based on the above it is quite possible to start and run your online business for as little as $20.00 per month:
- Purchasing domain name and first years registration $15.00 – renewable annually
- First years hosting at $5.00 per month
You can start your online business for as little as $20.00 for your 1st month and $5.00 per month thereafter.
If it turns out the online business world is not for you then this small investment is no great loss.
KISS! – Keep Your Expenses Low When Starting an Online Business
Depending on what online business you are starting you do not need to spend a lot of money on setting your business up.
Keep
It
Simple
Sunshine!
The exception to this is those who have an existing and well-known brand that people are going to look for.
In that case your customers have a preconceived idea of what your site should look like. Retaining the brand look is probably a good idea.
However that is not, in my opinion, ‘starting an online business’ but more like expanding an existing business to have an online presence – a big difference.
For some online business models, such as drop-shipping, you may need specific software and licensing fees.
But for 99.9% of online home businesses a website (with the costs detailed above) is all you need, and enough to keep your business online until it starts making a profit.
Once you are making a profit you may then decide you want to pretty things up and spend money on external consultants (graphic designers etc), bells and whistles and other things.
I can tell you from almost 20 years’ of experience it isn’t at all necessary.
You will do much better off reinvesting a portion of your profits in expanding your business by concentrating on increasing exposure and getting more traffic to your site.
What My 4 Online Businesses Costs Me
I have 4 niche websites that I run for my affiliate marketing inrterests and my fixed costs are very low.
I know exactly what I am in for in terms of my yearly financial outlay and can therefore concentrate on generating income by investing my time in improving my site and getting more visitors.
My time is my most valuable asset!
My 4 website cost me between $12.00 and $14.50 each to purchase and this same amount is my annual domain registration amount.
At an average of say $13.00 my domains cost me a total of $52.00 a year – ironically that is $1.00 per week!
All four sites are hosted at the same place -Wealthy Affiliate and provided free for as long as I am a member of the site.
My membership costs me $499.00 per year and is a discounted price for paying *annually.
“So it’s not free then Lawrence – who are you kidding?”
That is very true but I did not join Wealthy Affiliate for the domain names and registration.
I joined them for the training they give to learn how to start an online business from home.
I figured it was easier and wiser to learn from someone than to go throwing money away on shemes that sounded too good to be true. Turns out that was a wise decision.
Smart marketers that Wealthy Affiliate no doubt are they also sell domain names and host them for members as part of the package. Once you’re in your not likely to want to leave!
The advantage to me is twofold:
- My domain registration is fixed at the original purchase price of $13.00 (average price) each
- I can have up to 20 sites hosted at no extra cost!
Adding that all up my annual costs for 4 websites comes to $552.00 – that’s way cheaper than a month’s rent in any brick and mortar store I know of and with way less stress.
Less than $50.00 per month to run 4 online websites is hard to beat.
Interested in learning more about Wealthy Affiliates packages, Services and Prices including the free starter-membership package?
*NOTE: I would not recommend anyone pays an annual fee until such time as you are certain your business will be a success. Until then pay the minimum monthly fee that you can find for your hosting.
When I first started at WA the monthly subscription was $25.00 – that is a much cheaper way of getting started.
Hosting, and many of the other services and tools now available to us, were not offered as part of the service at the time I joined.
Final Word on Starting an Online Business – and an example of what NOT to do
I’m probably overselling the “start slow with low overheads” theory but why would you jump in at the deep end weighted down with dollar bills?
I have a friend who went to a seminar promoting starting an online Amazon shop.
It sounded fantastic –
- Choose a product …
- Get your Chinese supplier to make and brand the product in your name …
- Send the product to Amazon …
- Add some keywords …
- Sit back and rake in the money …
- Party and go on holiday, to the destination of your choice, for 6 months of the year, each year for the rest of your life!
Less than a year later and she has blown through $55,000.00 and made sales totaling $75.00 (that’s gross and Amazon takes a cut of it).
Just insane – please don’t be this person.
$55,000 is 100 years’ of my expenses – and I make a darn site more than $75.00 dollars in a year – hell I make more than that in a day!
Questions?
Hundred?
Stick them below and let’s start a discussion.
Keep on trucking …