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Estimate Your Expenses
Published: Monday, October 20, 2003
Estimating Your Costs
It is always a wise idea to roughly estimate the expenses for setting up your website. For most new content oriented websites with no internet presence, the expenses are usually minimum. However, for e-commerce sites who are opening to the internet to boost sales, the cost of setting up a website might be high. Planning is certainly required as regards to the budget, so as to make quick decisions about what to postpone for a later phase.
Things to consider
This list is no way exhaustive, but will help in figuring out how much the company or an individual has to spend to set up, launch and maintain their website. Most small scale websites rely on organic growth (growth from within, does not depend on external funding). These sites grow at a slower pace than those that start out big using venture capital. However, risks are much lower in case of organic growth if the website fails to perform.- Development: The cost of developing (coding) the website is often the biggest out-of-pocket expense for companies or individuals. For amateurs who are familiar with the technologies, can create the websites themselves, so costs are almost nil (not considering the time spent on building these pages).
- Hosting: This section of the cost cannot be ignored for serious websites doing business on the internet. Being frugal on website hosting may lead to lost sales due to problems arising out of server downtimes and lost or insecure data. Domain registration costs are very cheap these days, within $10/yr (used to be US$35/yr in late last century). Hosting costs may be as cheap as $5/month (for small websites with low traffic) to hundreds of dollars per month for high traffic websites. Free hosting is not recommended as the disadvantages outnumber the benefits of not paying a dime. There is a section devoted to hosting for further reference.
- Marketing: Internet marketing costs are relatively very low (but effective) compared to traditional marketing channels such as TV, radio and print media. However, competition drives marketing prices higher. For example, if your website is in a dating & personals category, expect a high cost of marketing. Cost per click rates can be as high as $0.65 to $5.00. Similar is for an automobile sales website.
- Ecommerce: Adding an ecommerce component can drive your expenses higher if you are not careful. There are costs associated with merchant accounts, setting up shopping carts, accepting payments via the website, and other maintenance fees. Another important cost that is often ignored by new ecommerce sites is fraud. One fradulant charge back can eat up profits generated by months of sales. A section on ecommerce has further information on this.
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