Anyone can start an online business today - it almost seems free. It's not quite free as there's a lot of small costs associated with it and some of these you will have to endure from day 1.
The cost of starting a basic website is going to cost you around $30/month. I’m going to break down the costs individually in the sections that follow so you can understand the breadth of expenses. Keep in mind that the startup costs are different than the operating costs.
The internet is amazing, I love most things about it. One of the best parts about the internet is that it allows anyone to start a business from the comfort of their home. Although there’s many different types of businesses on the internet e.g. blogs, services, marketplaces etc, I want to focus on traditional pure eCommerce businesses.
Even in eCommerce businesses, there are different types. There are businesses who hold inventory and other businesses who drop-ship. Businesses who drop-ship don’t own their inventory and most of their efforts are towards marketing. Almost all of the biggest businesses in the eCommerce space hold inventory as it allows for more control over their products and higher profit margins. In this category, there are subcategories as well such as businesses who manufacture and sell their own products vs others who distribute products for other businesses.
Most of the businesses in the eCommerce space hold their own inventory so we’re going to focus on the costs associated with running this business model.
A domain is going to cost you around $1/month
This is the first thing that comes with an online business. You want to secure a domain name for your business. In a perfect world, the domain name you are looking for will be available but that’s not the case. If you are selling shoes, you probably won’t be able to get shoes.com.
Hopefully, you will have thought of a name for your business or brand and it’s more likely that it’s available. Example =
Brand Name = Waleed’s Shoes
Domain Name = waleedshoes.com
Luckily, this domain name is available.
As you can see, it’s going to cost me $2.99 for the first year and $24.99 for the 2nd year.
What this means is that I'm going to be paying an average cost of around $1/month. Not so bad, huh?
Hosting is going to cost you around $5/month.
A domain is not a website. Think of a domain as an address. Once you’ve purchased the domain, you have an address but nothing exists on this address. The reason is because you don’t have hosting in place yet.
If a domain is an address, hosting is the land. Getting a hosting plan will allow you to build something that viewers can see when they visit your domain/web address.
Check out some of these hosting options available on GoDaddy:
A CMS is going to cost you around $60/month if purchased individually. It’s actually way cheaper if you purchase a Domain + Hosting + CMS + SSL as a combo.
Beside hosting, you will also need to integrate with a CMS. A CMS is a content management system. You’ve probably heard of WordPress, Wix, Shopify or Magento. These are all examples of CMS. They essentially provide structure for you to build your website.
Most of these come with eCommerce templates with great designs that you can get started right away. A completely custom website design can run you anywhere from $5-$30K. I recommend only creating a custom website once your business is established and profitable.
All of these expenses you are making should be seen as investments. Once you can justify the investment by seeing a foreseeable return, you should then look into spending the money. Having a lean startup mentality pays off because there’s a lot of other expenses as well.
An SSL certificate will cost you around $8/month. This is expensive and just like CMS, I recommend getting it as part of a combo.
Having a secure website is essential in the eCommerce space. You don’t want visitors to turn away from your website because they know their information isn’t safe. Having an SSL certificate will let customers know that their credit card information is encrypted. Go to any of your favorite online website, you will see this padlock beside the domain name. This means that they are SSL secured.
Noteworthy =Even non-eCommerce businesses, that don’t process payments through their website, should invest in an SSL because browsers warn users that they are entering an unsafe website. On top of that, Google also punishes non-SSL websites by lowering their rankings in search results.
The combination will cost you around $27/month. I HIGHLY recommend purchasing all of these essentials in a combination. It’s way cheaper than purchasing all of them individually. That’s savings of $40/month.>
These come in many shapes. WordPress is the most popular CMS in the world and it’s because of how simple it is. I think Shopify is also a great option if you’re looking for a package with comparable costs.
Once you’ve secured all of this, you will probably spend some time setting it all up and having it ready so you can start selling. The perceived cost of $1/month easily jumps to ~$30-70/month.
Keep in mind that these costs can be lower or higher depending on where you live and which services you choose to go with. Depending on how much resources your website uses and the tools required to operate, this cost can easily grow 10 fold. My website’s hosting alone costs me around $200/month.
I’m going to provide you my top 3 picks for each:
I’ve used all 3 of these in the past and they’re all pretty easy to get started with.
GoDaddy is my recommendation for anyone starting a new website because of it’s easy of use.
For advanced users who are selling 100s of different items on their website, AWS is the way to go because it’s much faster.
WordPress is the CMS but WooCommerce is the extension that allows you to list products and process payments through WordPress. If you’re using WordPress, you will most likely be using WooCommerce so I don’t differentiate between them.
Although WordPress is the most popular CMS, Shopify is actually the fastest growing CMS in the eCommerce category. Shopify is the way to go.
If you are an experienced user who requires high customization, I recommend Magento. There’s nothing you can’t do on any other CMS that you would be able to on Magento but the same thing will cost you way more with other CMS.
These are just the costs of starting an online business. In another article, we will discuss the costs of operating an online business.
