How much does it cost to start an online business?
Most people assume the answer is in the thousands because when we think of “starting a business”, we picture either a store front or tons of inventory. That’s the traditional model and it’s EXPENSIVE!
Even then online businesses can get pretty pricey as well. I learned this the hard way over 10 years ago when I first dipped my toes into the online world through eBay.
At one point, I became a Top-Rated Seller. It was exciting but it wasn’t as cheap or simple as I thought it would be.
Putting money into inventory upfront and watching profit margins shrink while competition grew to say the least sucked.
I found myself spending more time on my business than I did spending time with my family.
That experience taught me that not all online businesses are created equal. Some models carry more costs and stress than others.
The good news? Today, there are ways to start an online business with a fraction of the cost and far less risk.
I’ll break down what it really costs to start an online business now and you’ll see how my current expenses compare to traditional businesses, what the core online startup costs could look like, and why affiliate marketing stands out as one of the most affordable and flexible options.
Let me know if you have any specific questions in the comments section and I will get back to you.
The Cost of a Traditional Business (baseline for comparison)
Before I break down how much it costs to start an online business, it helps to see what the “old school” path looks like. Starting a brick-and-mortar business has always, in my experience, carried heavy upfront expenses. Many which you simply can’t avoid!
Common Startup Cost for Brick-and-Mortar Businesses
The reality of starting a traditional business is that costs can add up fast. The U.S. Small Business Administration (SBA), for example, offers micro-loans up to $50,000 to start up or expand. That’s only to have access to funding, not guarantee success or profitability.
And depending on the model, many entrepreneurs end up needing far more than that just to keep the doors open.
These costs often include things like:
- Franchise Fees – If you choose to a franchise model, the upfront franchise fee alone can range from tens of thousands to several hundred thousand dollars, before factoring in ongoing royalties and marketing fees.
- Rent and Utilities – Leasing a physical storefront means committing to monthly rent, insurance, and utility bills before you even open your doors. Depending on location, this could easily run into thousands per month.
- Licenses and Permits – Local, state, and federal regulations often require business licenses, permits, and other filings that add up quickly.
- Inventory – Stocking shelves or buying products upfront can eat a huge chunk of your starting budget.
- Payroll – If you hire employees, payroll is often one of the biggest ongoing expenses, not to mention taxes and benefits.
When you look at all those expenses together, it’s easy to see why traditional businesses often require tens of thousands of dollars just to get started.
My Own Experience with Traditional Business Costs
I’ve personally looked into starting a brick-and-mortar business. Back when I was leaving Gamers, a video game store I worked at, I had just finished my bachelor’s degree in business and wanted to launch something of my own.
I researched a franchise opportunity with another chain called Play n’ Trade. The franchise fee alone was around $30,000 with the total cost in the range of $215,000 – $329,000.
Looking back, I’m glad I didn’t pursue it. Not only would it have been a stretch financially, Play n’ Trade eventually shut down as a company, and only a handful of independent retailers still exist.
On top of that, I’ve seen the challenges up close in my own family. My grandpa ran a successful window blinds company for over 26 years. They built great relationships with their customers and employees.
With costs rising and a constantly changing economy, running a business only was getting harder. When their lease came up for renewal, they ultimately decided to close and accept a buyout from their parent company. It was the right decision, but it’s a clear reminder that even established businesses carry risks that have to be considered.
The reality of a traditional business is that there can be high overhead, potentially high risk, and no guarantees. By contrast, starting an online business drastically reduces overhead.
Most of these big expenses disappear, leaving you with just a handful of essential tools to get started.
Core Expenses of Starting an Online Business
This is where the comparison gets interesting. With an online business, most of these costs disappear. There’s no storefront to rent, no staff to pay, and no shelves to stock.
Instead, your “storefront” is your website, or it could be your YouTube or TikTok account, and this drastically reduces your potential overhead costs.
This is why the question “how much does it cost to start an online business?” often surprises people I talk to. The gap between $30k+ and just a few hundred dollars is massive.
Let’s break down the potential cost to start an online business.
Domain & Hosting
- Domain Name – Around $10-$15 per year with registrars like GoDaddy or Namecheap.
- Web Hosting – Typically $5-20 per month, depending on the provider. (I personally use a platform like Wealthy Affiliate, where hosting is bundled into the membership.)
For the business I run these are non-negotiable expenses, but the cost is minimal compared to other businesses.
Website & Platform Tools
- WordPress – Free to use, though premium plugins and themes can add $50-250 annually. I’ve managed to limit the need for paid plugins which is a huge cost savings.
- Funnel/Page Builders – If you plan to use a standalone tool like ClickFunnels you can expect to pay anywhere from $50-100 per month.
From my own experience, I’ve been able to build this website on WordPress with only minimal web development skills. The end result looks very similar to the landing page builders I used to pay for.
Email Marketing/Autoresponder
- Services like Aweber or Mailchimp start around $15-50 per month, depending on your email list size.
- Side Note: Aweber is a beginner friendly email marketing tool that offers a free tier!
- An email list is often one of the most valuable assets, one that I’m still working on, and is one of the best investments you can make.
I didn’t take email marketing seriously at first. That changed once I saw how quickly search engine algorithms shift.
With email, you own the relationship with your audience, and that stability makes it worth the monthly cost. The same lesson applies to education.
Education & Training Resources
Just like an email list is an asset you own, so is the knowledge and skillset you build. Ongoing learning is critical if you want to be successful in your online business.
Online courses and coaching programs can run anywhere from a $100 to $2,000+. Not all training platforms are created equal, so it’s important to choose one that’s right for you.
I’ve noticed in my own journey that training isn’t just “nice to have”, it’s essential. Studies back this up, showing that companies who commit to continuous learning are more innovative and better able to adapt when the market shifts.
While tools like hosting, email marketing, etc are the essentials. There are also some extra costs you might come across. These aren’t must haves but can be nice to haves once you’ve got the basics in place.
Optional Extras: PLR, Graphics, and Ads
- PLR Content Packs – Pre-written articles or eBooks you can repurpose.
- Stock Photos & Graphics – Useful for branding, common price ranges I’ve seen are around $10-30 per pack or some sites offer a subscription.
- Paid Ads – Facebook, Google, or TikTok ads are a powerful way to boost traffic but aren’t necessary when you’re getting started and can be very expensive.
- Inventory – Depending on the type of business you are starting online you may need physical inventory which can run $2,000+ upfront. This was approximately what it took when I was doing stuff on eBay, and I had to buy equipment, packaging supplies, etc on top of that.
In my opinion, it’s easy to get caught up buying every shiny tool or pack you see. You think it will make success faster, but usually it doesn’t.
Focus first on building your foundation such as your website, your content, and your audience. Later on, when you have momentum, extras like premium graphics or a small ad budget can help you scale.
When you look at the numbers side by side, it’s clear that starting an online business requires a fraction of what a traditional brick-and-mortar setup does.
But the truth is, not all online business models are created equal. Some still require heavy upfront investment, like stocking products or running ads. It’s one of the reasons I’ve chosen the affiliate marketing business model.
Why Affiliate Marketing is the best low-cost online business model
When I first dipped my toes into the online business world, I’ll be honest. I was overwhelmed. Dropshipping, freelancing, digital products… every guru was shouting about a different “best model”.
The thing I discovered after my adventures with selling on eBay, and testing a few of the other online business models. Affiliate marketing consistently stood out as the simplest, lowest-risk way to start an online business.
If you’ve ever asked yourself, “What’s the best low-cost online business I can start today?” My answer would still always be affiliate marketing.
Let me break down why:
No inventory or shipping
Unlike dropshipping or e-commerce, you don’t have to worry about storing boxes in your garage or dealing with shipping headaches. The company you partner with handles all of that. Your job? Connect people to the right products.
I still remember when I ran my first affiliate campaign, it felt strange not having to deal with customer complaints or returns. The sale went through, I got credit, and that was it. Simple.
No Product Creation Required
Creating your own product takes time, skill, and money. With affiliate marketing, you can skip that learning curve.
All you have to do is recommend products or services that already exist. Ones you’ve used, trust, or know will help your audience.
Here’s a quick example: How many times have you told a friend about your favorite app, coffee brand, or gadget? That’s affiliate marketing, except you actually get paid for it.
And for transparency, yes, it still takes effort to build traffic and an audience. Something I’m still working on. It’s not push button money!
Unlimited Earning Potential
There’s no ceiling. Whether you want to make $500 a month as side income or build a six-figure business, affiliate marketing scales. As your audience grows, so do your commissions.
And unlike a 9-to-5 paycheck, you’re not trading hours for dollars. A blog post, YouTube video, or social media post you publish today can earn you money months (or even years) later.
Low Upfront Risk
You don’t need $4,000+ to get started like I did on eBay (between inventory and additional supplies). In fact, you can begin with just a domain, hosting, and maybe an email marketing tool.
Even if you put ZERO effort into this model and make no money. The worst case scenario is that you spent less than $1,000 with no return. This is really hard to do if you’re actually trying…
Perfect Fit for beginners → Laptop Lifestyle Freedom
Because the barriers are so low, affiliate marketing is the perfect entry point for beginners. You don’t need a degree, coding knowledge, or a warehouse full of products.
You just need a laptop (or even just your phone) and a willingness to learn.
This is where the “laptop lifestyle” really comes into play. When your business is online, you aren’t tied down to one location.
Final Thoughts: The Smartest Business Investment You’ll Make
When I first started exploring ways to make money online, I assumed it would cost thousands just to get something off the ground. After all, I had looked into opening a Play n’ Trade franchise years ago, and the startup costs were over $215,000.
I also watched my Grandpa run a successful blinds business for decades, until rising costs and shifting economics led the business to close.
Both experiences made one thing clear. Traditional business was way too expensive and risky.
Now compare that with launching an online business. For less than $1,000 a year, you can secure your domain, hosting, tools, and training.
I won’t sugarcoat it, affiliate marketing isn’t a magic money machine. It takes effort, consistency, and a willingness to learn. But it also comes with no inventory to store, no staff to manage, no customer complaints, no storefront to rent, and far less risk.
That’s why I recommend it as one of the best starting points for beginners who want to build real online income.
Don’t wait until you “have enough money” to start. If you can carve out a couple hundred dollars and some focused time, you already have what you need to begin.
The biggest difference between those who succeed and those who don’t isn’t money. It’s action!