How Much Does It Cost to Start an Online Business?

How Much Does It Cost to Start an Online Business?
Want to start an online business? Find out how much it costs to start an online business and prepare for your next digital business venture. Visit Square.
by Square Mar 14, 2022 — 4 min read
How Much Does It Cost to Start an Online Business?

Now is the time to get your business online. Global online retail sales are expected to exceed $4.921 trillion this year, and eCommerce sales are expected to make up nearly 25% of all product sales.

While it is much cheaper than setting up a brick and mortar store, there are still costs associated with starting and running an online business. Here we cover typical online store startup costs and show you how Square can help you start selling online.

The cost of an online business — from kickoff to success

Starting out in the world of online retail is exciting. You get to make decisions about your company name, what you will sell,your brand and store persona. But, it’s important to ask yourself “how much does it cost to start an online business?” before you launch into the world of eCommerce.

No matter what you intend to sell, the cost of starting an online business can be steep. Some of these costs will be once-off, others will be ongoing. Some costs you will recoup through return once the sales start coming in and others can’t be earned back.

Understanding these costs before you begin will help you create a business plan and come up with a figure of how much you will need to launch your online business. Here are a few to consider.

1. Business licenses & permits

If you are selling goods online for profit, you are required to have an ABN. It is a requirement that your ABN is on invoices and receipts. Did you know that you also need an ABN to be able to access a, .au or web domain address.

What are the costs? It’s around $100 to get an ABN and this is a one-off fee. Depending on what you are selling, you may also be required to have other relevant licenses or permits/ It pays to check industry and state requirements.

2. Inventory

Your stock may be your biggest expense. Unless you’re providing an online service, you’re going to need products to be able to sell products. Your inventory could be the products you have purchased to on-sell or the materials you use to create new products.

Working out how much stock you will need to get started can be a little complicated. Too little stock and you might not be able to meet demand. Too much stock and you may find you have exhausted your capital with nothing left for other costs. Do your research to determine how you can keep the initial inventory outlay as low as possible. For example, consider a print on demand service and shop around for the best products at the best.

3. Web hosting

Your website needs to be located on a server so that customers can access it. Where and how your website is hosted can make quite a big difference to how your customers experience and interact with your eCommerce site.

Web hosting fees will vary depending on how big your website is, how extensive your product offering and options are and how much traffic your website will attract. There are also hosting security features that can be an additional but beneficial cost.

There are also costs associated with establishing a domain name (website address or URL). These fees are ongoing rather than a single cost at startup. Budget for at least a hundred dollars a month here.

4. Staffing

If you’re anticipating creating your online business as a sole trader, you might be surprised to know that down the track there may be others helping you out!. Or, you may decide to runyour a business on your own, and you might well be able to manage all of the aspects of running a business online.

As your business grows you may look to people to help you with some of the aspects like managing the website, marketing, stock handling, packing and shipping. The more people you have working for you, the bigger your costs will become.

5. Marketing

Marketing expenses might include paid social media advertising: Facebook, Snapchat, Instagram and Pinterest all offer paid advertising services. Or signing up for an EDM marketing platform such as Square Marketing.

These platforms are great because you can hone in on customers within your target markets or geographic area. You may choose to spend your marketing budget on improving your prominence in search results and employ someone to help you create SEO rich content.

6. Shipping

Shipping expenses are one of those online business startup costs that are easy to overlook. Even if you charge customers the complete shipping cost, it does pay to think about where this cost might unexpectedly rear its expensive head.

Postage fees are one thing, but you may also incur costs related to safely packaging your products. There are also costs that can arise from damaged and returned items.

7. Payments processing

Payment processing tools enable transactions to be completed quickly and simply. An easy and intuitive payment process is essential for your online store so that customers who want to make a purchase can do so without any hiccups.

Payment processors work by connecting with your customer’s bank to validate the transaction, authorizing the sale and securing the funds for your account.

Square’s secure payment processing capability enables you to collect money from sales through remote transactions, online payments and in-person sales.

Square can help you build a robust eCommerce website

If you’re ready to launch into the world of online retail, select Square to get your website and payment options set up simply. With Square, you can create a beautiful, intuitive website. Square can also help you sell through social media platforms, giving you a consistent brand presence across all your channels.

Square is great for people just starting out with their eCommerce store. If you’re concerned about the costs of setup mounting up, then choose Square. It’s free and can help your business grow at a rate you can manage. There is no expensive initial outlay with Square, meaning this is one cost you don’t have to worry about.

There isn’t an online business owner who hasn’t jumped for joy when that first sale came through. Square will help you land that first sale, and keep track of your sales as they grow.

The Bottom Line is brought to you by a global team of collaborators who believe that anyone should be able to participate and thrive in the economy.


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