How Much Money Do You Need to Open an Online Store?

May 23, 2016 by Jesse Ness, Ecwid Team
how much is it to create a store
Posted May 23, 2016 by Jesse Ness, Ecwid Team

Starting a business is a risky initiative. No one wants to waste their time and money without a return. Some of you may have a friend who had a friend who took a loan, opened a business, went belly up and swore not to touch business plans ever again.

In this article we will break the stereotype of spending gazillions dollars to start a business.

This one is for beginners who haven’t opened an online store yet. Experienced entrepreneurs are unlikely to find anything new here. You might want to read how to increase your revenue with newsletter segmentation instead.

Back to the beginners — let’s begin.

Spending a lot of money

A bankroll is helpful, but not a must. Start with small things. Creating an online store is much cheaper than opening a boutique in the mall. You don’t pay for the space, decorations or many other things.

Initially, your apartment or garage can serve as a store. Your cat will enjoy it.

cat-box-runway-model

Metro.co.uk

Let’s look at the expenses for opening a physical store.

The price for retail space per square foot starts at $15-20 in major cities and opening a store typically requires 1,000 square feet of space. That means you need to bring in about $15,000 per month just for the space, and the price is influenced by many factors such as location, condition of the space, length of term and availability.

Now you need to make your store look the part. Shelves where you’ll put your products, decorations that give your space a particular aesthetic, and the cost of keeping someone on the floor of your shop along with any other administrative will add up quickly. Including inventory expenses and utilities — they vary too widely to list them — most entrepreneurs wouldn’t dream of opening a store with less than $50,000.

Having no money

At first, expenses for an online store may be confusing. One would think: “Okay, I need to build a website. I need to find a hosting company. I need to buy a domain name, determine taxes, add payment methods, ooooh…”

If you don’t have a lot of money and don’t feel great at the thought of burdening yourself with a big loan, a good thing to do is to start an online store in two stages. At first, plan to create a Facebook page with a store to check if the juice is worth the squeeze. And if everything goes well, dare to register a business and create a website.

Free is not always convenient

Let’s imagine it was off to a good start — you sold everything during the first month.

And your store’s following is growing. You check your social media accounts hundreds of times and answer thousands of questions. Every customer must receive a personal reply with confirmation of their purchase as well as delivery details.

After a couple of months, it’ll be clear that time is more valuable than money.

Machines work, people earn

People invented computers to take on rote work and use their time more efficiently.

YUD4IEv

imgur.com

E-commerce platforms have the same goal — to make entrepreneurship easier. An online store serves as a storefront, a shop assistant for customers, and a personal manager for its owner.

Business registration

This paragraph was added because lawyers asked me. Just kidding.

To make your business legal, it must be registered. Most people start with a sole proprietorship because it has the lowest barrier. An annual business license for the State of California is $35. If you have bigger plans or need to protect yourself, there are two options: LLC or Corporation. We discussed their differences in the article devoted to registering your e-commerce Business. Small businesses generally prefer LLCs.

Domain

The domain is your site’s name or URL. Share it with your friends, print it on business cards and link to it on social media. You can buy a domain on special sites like this one.

The price starts at $1 per month.

Hosting

A website is a set of files that needs to be stored somewhere. This is why you’ll have to  get a hosting account. The companies that sell domain names typically offer hosting. Like Ecwid, you can pay for hosting month-to-month or purchase rights to the domain for the entire year. The latter is cheaper, of course.

Basic hosting on FatCow.com costs $48 per year.

Online store

Ecwid is an e-commerce platform that allows you to create your own online store. Using Ecwid, you can display and sell your products on a website, calculate shipping expenses and taxes, monitor your orders and enable various payment methods.

It is free to create a store using Ecwid. If you have under 10 products, a free plan will be enough to start. When you’re ready to implement advanced tools, premium features in Ecwid’s paid plans come around to grow your business.

For example, Venture Plan (allows 100 products) costs just $15 per month.

The budget

Let’s add everything up to see what it costs to start selling online.

With a websiteWithout a website
Business registration$35$35
Domain name$12$12
Annual hosting$48
Ecwid free plan$0$0
Total$95$47

What does “without a website” mean?

Ecwid creates a free starter site when you sign up. Later you can buy a domain name and connect it to the starter site. It saves money and time.

New businesses have different goals and different budgets, but creating an online store can be cheaper than visiting Starbucks once a week. Whatever your budget, start a small business with an online presence on Ecwid, because it is a much cheaper, less risky alternative to opening a retail or physical location.

Share this article with your friends who are looking to start something new.

About The Author
Jesse is the Marketing Manager at Ecwid and has been in e-commerce and internet marketing since 2006. He has experience with PPC, SEO, conversion optimization and loves to work with entrepreneurs to make their dreams a reality.

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