How much capital does a person need to start an online business? $100? $10,000? Obviously the answer is different for everybody, depending on your business goals and how many things you’re able to do on your own, but there are some common expenses that almost everyone has to shell out for. There are cheaper and more expensive ways of setting up almost every aspect of your online business, but make no mistake, a business is an investment and it’s going to cost you something. It might take you a couple of months to see a return on that investment, so don’t start an online business because you lost your job and you need to make rent or you want to buy a birthday present for your girlfriend next week.
What if I don’t have very much in savings?
It’s okay if you don’t have thousands of dollars stashed under your mattress. You can look for less expensive options when setting up your online business, or you can seek additional funding from partners, bank loans, and lines of credit.
What are the costs of starting an online business?

The 8 main costs of starting an online business are as follows:
1. Education
Before you can start an online business you need to learn how to formulate business and marketing plans, how to choose a product, how to find suppliers, how to pick your venue, how to set up an effective website, how to market that website, and so on and so forth. Perhaps your education will cost you no more than a library card. Maybe you’ll get most of your information online, from a friend, or from a database. Or maybe you’re a person who needs step-by-step encouragement and instruction and the best option for you is to hire a coaching service.
Learning how to operate an online business can cost you anywhere from $50 for a few good books to $5000 for a full-time coach.
2. Seller’s Permit and Tax ID Number (EIN)
It’s best to get your Seller’s Permit and Tax ID Number (EIN) as soon as possible. You can get your Seller’s Permit either through one of the many companies offering their services online, or by downloading the form from your state Revenue Agency. Your Tax ID Number can be obtained by applying online at the IRS website (you receive your number immediately and can download and print your confirmation notice).
Fees vary state by state, but it shouldn’t cost you more than $80 for the Reseller’s Permit, even if you use a service, and the EIN is free.
3. Finding suppliers
You can try finding suppliers online, but as anyone who has ever typed “golf club dropshippers” into a Google search can attest, you will have to wade through some 38, 700 results, 99% of which will be queries, middlemen, scams, foreign suppliers, and directories. A second option is to attend tradeshows and other events to meet suppliers. A third option is pay for access to a quality database. The Wholesale Match database offers affordable monthly and annual memberships, a Research Team to do the work for you, free educational materials, and a 100% money-back guarantee (probalby the only money-back guarantee you’ll find for an online service).
Finding suppliers will cost you approximately $200-500 for access to a database, or around $1500 for entrance fees, airfare, and hotel accommodation to attend a couple of tradeshows.
4. Products
You can handle your product sourcing in two main ways: by dropshipping or purchasing from a wholesaler. If you decide to dropship, you won’t have to spend hardly any money upfront for your products. There may be a small fee to set up an account with a dropshipper, but even this is uncommon. When purchasing from a wholesaler, by contrast, you will probably have to make a large initial order. (Subsequent orders may be much smaller).
The cost of purchasing products from a dropshipper is generally $0 upfront. If you purchase from a wholesaler, your initial order may be anywhere from $50-$2000. $100-$300 is most common. (Many wholesalers allow you to open a line of credit so you don’t actually have to pay any money upfront.)
5. EBay fees
Posting items on eBay occasions paying fees, whether or not your product sells. Depending on the reserve price you set, posting a single item on eBay will cost you between $0.10 and $4.00 (adding extra photos, videos, etc. is extra). You will also be charged a percentage of your final sale value, but that’s only if you make a sale, so that fee is really an operating cost, not a set up cost. There are other auction sites you can use like Bonanzle which do not charge a fee unless your item sells, which is nice for e-commerce newbies, but these sites don’t always see the same traffic eBay does. You should probably try selling on a few different auction sites and see what works best for you.
The cost of posting items on eBay is at least $0.10-$4.00 for one, or $1.00-$40.00 for your first ten.
6. Setting up a website
If you’re proficient at web design, setting up a site will cost you practically nothing. Even if you’re not particularly computer-savvy, there are thousands of customizable templates you can use for your website (many are available free through hosting services).
If you do want to hire a professional, web-design will cost you between $500 for a student to $3000 for a seasoned pro. You will also have to pay about $5-50 a month for web hosting, and between $10-100 to register your domain name.
7. Marketing
Once you have your website set up, you’re going to have to do something to bring in visitors. The most common way to market a website is through Pay-Per-Click Advertising (PPC). PPC can cost anywhere from $0.10-$1.00 per visitor – basically you bid for certain keywords, and whenever someone types that keyword into a search, your ad pops up at the top or side of the search engine response page. PPC is nice because you can set a certain budget, say $300, and once that amount is exhausted your ad will disappear.
Of course there are many other ways of advertising your online business including banner ads and press releases. You can even find free ways of promoting your business, such as contacting your local newspaper for a write-up, sticking an ad decal on your car, or participating in an advertising exchange. But for now, let’s assume that PPC will be your main marketing method.
PPC will probably cost you around $200-500 per month for the first few months (once you start receiving organic traffic, you can cut down on your PPC ads).
8. SEO
SEO is Search Engine Optimization. As mentioned above, the ultimate goal is to receive “organic” or “natural” traffic to your website. This means that visitors naturally to your site due to your high placement in the search engine response pages (SERPs), recommendations and inbound links on other websites, and word of mouth. SEO helps with your placement on the SERPS. You build SEO mainly through keywords, quality content, inbound links, well-designed web pages, directory submissions, and deep submission. SEO is something that needs to be done constantly and it can be quite complicated and time-consuming. You can practice SEO yourself, but you may also want to hire a service to review the efficacy of your SEO or hire someone to do some of the work for you.
SEO can cost you nothing but your time, or can run you around $100 for a review, or $1000 + to pay somebody to help you out.