How much does it really cost to build a web startup?

$1,000? $10,000? $100,000?


Earlier this year, I decided I was going to take the initiative to start my first startup. However, I’d never really done any web development before so I had no clue how much money I needed to get started. One of the biggest factors deterring me from starting a company was that I thought I didn’t have the funds necessary to start one. I read in several places that the barrier to entry was much lower now than before because of low costs, but I couldn’t really find information on what these costs were and how low they actually were.

I did a lot of research online and came across different calculators — like this one — but without web dev experience, I had no idea what any of it meant. I talked to a company that specializes in building web product MVPs (Minimum Viable Products), but they gave me a $15,000 quote plus they’d take 2% equity in the company. I also came across this post, which examines the estimated cost to build MVPs of the most popular tech startups. The costs range from $50,000-$500,000 for startups, which I’ve always heard were simple to clone.

Eventually I gave up on trying to figure out how much it would cost and decided to just build it. I was amazed at how cheap it was to build my startup’s MVP. Now, as I get ready to launch my product, I thought I’d share what I learned to help other people who are trying to figure out whether it’s feasible to build and launch their own product.


The Costs

The total development costs for my startup from start to launch was $148. That’s it. Below I have a breakdown of the costs and some descriptions for each of those. Items with asterisks have significantly cheaper or free alternatives, which I’ve described below.

  • Development — $99 *
  • Domain Name — $10 *
  • Hosting — Free
  • SSL Certificate — $9
  • Custom Email — $10 ($5 / user / month) *
  • Payments — Free
  • Design — $20*

Note: These costs are just development costs up until the launch of our product. It doesn’t include legal costs or the cost for supporting the product once it’s live or the marketing costs.


Description of Costs

Development — For most web startups this will likely be the biggest expense. If you’re not already technical, I recommend learning to code or finding a technical co-founder since it will greatly lower your costs. I started without any web dev experience and decided to learn it along the way as I launched my startup. I used One Month Rails, a program that teaches you how to build a Pinterest clone using Ruby on Rails. For a one-time fee of $99, you build a simple Pinterest clone. If you’d like to cut down even more on this cost, there are free alternatives like Rails for Zombies.

Domain Name — The custom URL to your site. I personally like to use namecheap because of the clean and simple interface and the fact that they don’t try to sell me 100 things before I checkout. A “.com” domain on namecheap tends to cost about $11. However, if you’d like to save money you can usually find coupons for Godaddy which can let you register a domain for under $2.

Hosting — The server for your site. While you’re developing you can use Heroku which is free and makes the job of deploying extremely easy. Once your site is live and starts receiving more traffic you’d probably want to switch as Heroku gets expensive if you need to scale up. I’m undecided on which option is best, but am likely going to start with Linode since it seems to have the best pricing. When you do switch from Heroku, I recommend using Cloud66 since it makes the process of deploying much easier.

SSL Certificate — An SSL certificate adds a layer of protection to your site to allow secure sessions within browsers. SSL certificates can be purchased on namecheap for $9.

Email — As a startup founder you’ll likely want a custom email ([your name]@[your startup].com). I prefer Google Apps mail ($5 / user / month) because of the familiar UI and range of resources. Zoho Mail is a free alternative that can also be used.

Payments — For the majority of web startups, you’ll need to set up online payments. Stripe is perfect for this, making it extremely easy to accept payments online. Stripe charges a low fee per transaction (2.9% + 30 cents per transaction), but is free to set up and you don’t pay anything until you start making money yourself.

Design — I find design to be a difficult and tedious task. Although I don’t recommend this for the life of your startup, using a theme from the internet can make your life a lot easier when you’re building a MVP. I like to use Themeforest, a marketplace for themes. You can usually find a good theme for under $20, but there are also several websites that offer free themes.


Finally

Building and launching has become extremely cheap and easy, especially if you’re willing to put in the time and effort to learn some web development. Different products have different needs and costs, but hopefully this post helps some aspiring entrepreneurs realize just how cheap it really is to start a company.

Follow me on Twitter to follow my journey into the startup world.

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