My Online Store: How Much Will It Cost Me?

Building an online store is one of the less risky ventures in terms of startup capital required to make it operate. Most of what you need to become successful involves time and patience. Especially if you're not planning to buy a bunch of inventory and warehouse it to begin with, you can become profitable building an online store within a matter of months, maybe even less. However, there are some costs involved. Here's what to expect.

Domain Registration - $8/year
Registering a domain costs next to nothing. I register my domains with NetFirms.com. They are the cheapest I've seen. Yes, you could register your domain with GoDaddy, but then you'd be putting money into the pocket of one of the biggest perverts (Bob Parsons, who owns GoDaddy) on the planet. If you have any sense of morality, use NetFirms instead.

Web Hosting - $8/month - $200/month
The reason there is such a wide range here is because there are greatly varying levels of hosting available. For $8/month, you can get an account on a shared server, which means that your website shares resources with likely hundreds of other websites, any and all of which could (and likely will) affect the accessibility of your website. If you're just starting out and on a limited budget, shared hosting is not a bad way to go. However, if you want something much more reliable, you can get a dedicated server, which gives you much more flexibility. A dedicated server (with a dedicated IP address for your store) will cost you close to $200 per month.

Merchant Account - $25/month
Merchant accounts typically charge a monthly fee for their services. I set up my merchant account with Elavon, who has a partnership with Costco. Since I have an Executive Membership with Costco, the monthly fee is waived. I've heard that Sam's has a similar deal for merchant account services, and there are likely other ways to set up a merchant account without incurring a monthly fee.

In addition to the monthly fee charged by merchant accounts, there is also normally a per transaction fee, which is usually in the neighborhood of 25 cents per transaction. If you are incurring transaction fees, it's a good sign for your business because it means you're making sales.

Payment Gateway - $99 setup + $20/month monthly gateway fee
I use Authorize.net for my payment gateway. Their fees are pretty standard, $99 to set up your gateway and $17.95 per month to use your gateway. There is also a $0.10 charge for each transaction you put through your gateway. The good news is that the $17.95 per month gateway fee is waived if you have enough transactions (180) in any given month.

SSL Certificate - $75/year
You'll need an SSL certificate to secure your site and protect your customers' data. I bought my latest SSL certificate through Register.com, and it cost me $54 for two years because I found a coupon. The reason I put $75.00 as the cost of an SSL certificate per year is that number is pretty standard for SSL certificates. There are varying grades of SSL certificates, but you can get by just fine with the cheapest one. The more expensive ones ($200 - $1000 per year) from Thawte or VeriSign are usually used by larger corporations. From my experience, there's not a legitimate reason to spend any more than you have to for an SSL certificate.

There are obviously other costs to anticipate such as telephone, internet access, and other costs, many of which you would probably be facing through your normal lifestyle anyway. A good first goal in the development of your online business should be to hit the break even point where the margin you make on your sales exceed your monthly expenses. As you can see, it shouldn't take many sales in a month period to become profitable. There's a surge of morale that comes with knowing that your new business is profitable.