The Real Cost of An IM Business...

by sal64
27 replies
You hear it everywhere...

Starting an IM biz is fast and costs you next to nothing. Unlike a bricks and mortar biz, you don't need rent, manufacture or employ staff.

Fact or myth??

We have all fallen for it one way or the other...

We buy into products, systems, secrets and all that stuff. Prices range from $7 to $10,000.

But the problem is that there are real ongoing costs involved that we don't often hear about.

There's no such thing as free traffic... either way you pay for it in time or outsourcing. You need a hosting and most likely a website.

So I'd be interested to know, fellow Warriors...

What do you believe to be a realistic amount of cash you need to get your IM biz off the ground?

And is as affordable as it's made out to be, if you want to make a good $2k plus per month to start with?

Discuss.
#business #cost #real
  • Profile picture of the author ASCW
    I would say considering the alternative

    Renting office space
    buying and shipping actual product
    hiring employees
    etc....

    IM business costs next to nothing to start up.
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  • Profile picture of the author JennSpencerIM
    We started with less than $40 in our bank account...but luckily my hubby got paid just a few weeks later so that gave us some additional funds! But our first site, product, everything to start cost just under $800 if I remember correctly. Now we know better and only spend about $300 to launch new products! It can be done, just need to be resourceful...for example, we didn't have a video camera and wanted to do a video to sell. Soooo we used a credit card to get a camera and had 30 days to return it! Just got the video filmed in that time and returned it (since we couldn't afford to keep it!)
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    • Profile picture of the author Matthew Duggan
      Originally Posted by JennSpencerIM View Post

      For example, we didn't have a video camera and wanted to do a video to sell. Soooo we used a credit card to get a camera and had 30 days to return it! Just got the video filmed in that time and returned it (since we couldn't afford to keep it!)
      Lovin' your work Jenn. Where there's a will...

      Personally, I think you can start a business online for the cost of hosting and a decent designer (if you can't do it yourself).

      However, I think the real cost associated with IM is the knowledge. As Jenn demonstrated with her product launch example, if you know how, you can launch products for relatively little money. Getting the knowledge has been the costly part for me. Now that I have it (although I'm always learning), my costs are falling.
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  • Profile picture of the author Kevin_Hutto
    It really depends on what IM business model you want to pursue - but the previous post is right... Compared to starting a franchise, it is a real bargain. If you are looking to build out a niche blogging network and do all the work yourself, then you can do it for very cheap - if you are looking to get into product creation and outsource most of it and driving paid traffic to it, then you will need some coin.
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    • Profile picture of the author sal64
      Yes, it is a bargain, and that probably wasn't what I was asking.

      It's more about ongoing costs.. and if anyone was surprised or shocked that it cost more than was made out.

      My view is that you need about $300 per month set aside for promo and other activities... let alone product creation.

      And you need to reinvest at least 70% of sales revenue back into your business.
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  • Profile picture of the author williamrs
    It depends on what type of business you are planning to work on. There are many models and costs can vary a lot.

    I personally think that if you learn a lot for free (forums, blogs, etc), buy just a few very specific CHEAP products and put a lot of effort on a specific traffic source you can start seeing some profits after investing $1,5K or even less, depending on how lucky and smart you are.

    The problem is that people are always jumping from one thing to another, buying dozens of random products and expecting to make money overnight. If you realize that there is no magic button and treat internet marketing as a real business I do believe that it can be much less expensive than any type of offline business.


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  • Profile picture of the author Paul Buckley
    As has been said, your monthly "nut" will vary depending on your business model and scale.

    I'm an offline marketer with clients both local and nationwide. I have two main business websites and a few smaller related sites BUT I don't use my sites to acquire new clients. That is done by initiating contact myself. The websites are just for branding and to showcase my skills.

    The basic, must hhave expemses for my businesss:

    An 800 phone number
    A cell phone
    A Skype phone number
    A laptop air card (mobile internet access)
    3 hosting accounts (one is a reseller)
    Several domain names
    An Aweber account
    2 essential, for my business, monthly membership subscriptions

    These things run me about $400/month. I'm in the process of simultaneously expanding and simplifying my business and will soon be outsourcing much of the grunt work. I expect to pay about $1,000/month for outsourced labor.
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  • Profile picture of the author sbucciarel
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    I have 3 hosting accounts, 300 domains, an autoresponder account. I don't spend money on "courses", so that's not a factor. Don't spend money on traffic either. Assume you already have computer equipment or you wouldn't be reading this anyway.

    If you're into web flipping, you'll need some developer licenses for themes, stock photos (but there are free sites for that) and plugins and fees for listing sites.

    Occasionally I hire a programmer or article writer, but I started out with 1 hosting account and a couple of domains. Much cheaper startup costs than an offline business, that's for certain.
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  • Profile picture of the author Hoopatang
    $10 for a keyword-rich niche domain name
    $10/mo for hosting - get a host with unlimited domains on the account (not subdomains)
    $87+ for Market Samurai (depending on where you buy it)

    Do the keyword research yourself.
    Write the content yourself.
    Create the backlinks yourself.
    Write more content yourself.
    Get organic traffic through SEOs and social networks by providing good content focused on your keywords.

    Then once you have some traffic, add:
    $19/mo for Aweber

    Write the "free report" or record the "great video" yourself.
    Write the autoresponders yourself.
    Keep building content and backlinks and articles and organic traffic.

    Eventually, you'll have enough traffic or a nice enough sized list to start generating some real buzz.

    Startup cost?
    $100 and some elbow grease. (You don't even need Market Samurai, but it sure saves you hours and hours of time.)

    *That's* a startup.
    Talking about launching a product, buying traffic, outsourcing work, etc... that stuff isn't startup cost. That's "down the road once I find out my niche is profitable and I'm getting some good traffic from my growing stable of sites" cost.
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    • Profile picture of the author sal64
      Originally Posted by Hoopatang View Post

      $10 for a keyword-rich niche domain name
      $10/mo for hosting - get a host with unlimited domains on the account (not subdomains)
      $87+ for Market Samurai (depending on where you buy it)

      Do the keyword research yourself.
      Write the content yourself.
      Create the backlinks yourself.
      Write more content yourself.
      Get organic traffic through SEOs and social networks by providing good content focused on your keywords.

      Then once you have some traffic, add:
      $19/mo for Aweber

      Write the "free report" or record the "great video" yourself.
      Write the autoresponders yourself.
      Keep building content and backlinks and articles and organic traffic.

      Eventually, you'll have enough traffic or a nice enough sized list to start generating some real buzz.

      Startup cost?
      $100 and some elbow grease. (You don't even need Market Samurai, but it sure saves you hours and hours of time.)

      *That's* a startup.
      Talking about launching a product, buying traffic, outsourcing work, etc... that stuff isn't startup cost. That's "down the road once I find out my niche is profitable and I'm getting some good traffic from my growing stable of sites" cost.
      What value do you put on your time?

      I absolutely agree that you can start with next to nothing... but to get it to a decent level will cost you in time or $$$.

      Some interesting perspectives.
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      • Profile picture of the author Hoopatang
        Originally Posted by sal64 View Post

        What value do you put on your time?

        I absolutely agree that you can start with next to nothing... but to get it to a decent level will cost you in time or $$$.

        Some interesting perspectives.
        That's kinda tough to answer Sal... there are so many different perspectives, you know?
        I feel that people who are just starting and who are working a job that they desperately want to leave, but need to keep for the money, have a limited number of hours that they *can* work at that job.

        So you can't really put a value on their free time. Saying that the time they're spending is worth, say, $16/hour is false thinking... because they're not taking time off of work to do this. They're doing it during their free time. If they *could* take those hours and go to work for $16/hr then the boss would certainly expect them to be there working. But there's limits on the number of hours you can work per week. All the rest is your free time - that you don't get paid for and will never get paid for unless you get a second job.

        Now if you're actually planning to quit your job in order to startup an online business -which I wouldn't recommend, it's a dangerous risk- *then* you could put an actual value on your time. At that point it's not free time you're spending, it's actual time you COULD be working at your job and getting a guaranteed paycheck.

        See where I'm coming from?
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        • Profile picture of the author VanessaB
          Originally Posted by Hoopatang View Post

          That's kinda tough to answer Sal... there are so many different perspectives, you know?
          I feel that people who are just starting and who are working a job that they desperately want to leave, but need to keep for the money, have a limited number of hours that they *can* work at that job.

          So you can't really put a value on their free time. Saying that the time they're spending is worth, say, $16/hour is false thinking... because they're not taking time off of work to do this. They're doing it during their free time. If they *could* take those hours and go to work for $16/hr then the boss would certainly expect them to be there working. But there's limits on the number of hours you can work per week. All the rest is your free time - that you don't get paid for and will never get paid for unless you get a second job.

          Now if you're actually planning to quit your job in order to startup an online business -which I wouldn't recommend, it's a dangerous risk- *then* you could put an actual value on your time. At that point it's not free time you're spending, it's actual time you COULD be working at your job and getting a guaranteed paycheck.

          See where I'm coming from?
          My 'free time' is worth 1,000,000,000 x INFINITY what any 'employer' would value it at, because it's what I have the 'least of.'

          I spend 2 hours a day investing 'time' into a 'stream of income that will pay me $200 a month for life,' the value is not even possible to quantify.

          -Dani

          P.S. I am not one of the 'start an internet business for free' crowd. My time has a value, and I calculate it. I spend money to advertise in warm markets, I spend money to put my products in affiliate marketplaces like Clickbank, I spend money to buy ads to build my list.
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  • Profile picture of the author Scott Kennedy
    These are my costs so far for my main business;

    $9 domain name
    $120 hosting for one year
    $14 theme
    $50 custom PHP script

    Time spent creating site + learning html = 5-7 hours
    Time spent promoting online + working as an admin = 1 hour per week
    Time spent promoting offline = 1 hour per week

    Opportunity cost of working on my site and not at my part time job = $16p/h.

    So start up costs were $305. Monthly costs are $128 in forgone employment. Pretty good considering these are less than 10% of my total revenue per month.

    Originally Posted by JennSpencerIM View Post

    We started with less than $40 in our bank account...but luckily my hubby got paid just a few weeks later so that gave us some additional funds! But our first site, product, everything to start cost just under $800 if I remember correctly. Now we know better and only spend about $300 to launch new products! It can be done, just need to be resourceful...for example, we didn't have a video camera and wanted to do a video to sell. Soooo we used a credit card to get a camera and had 30 days to return it! Just got the video filmed in that time and returned it (since we couldn't afford to keep it!)
    So if you were selling a product which had a 30 money back guarantee I could buy this from you, use it intensively for 29 days and then return it for my money? This wouldn't annoy you at all?
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    • Profile picture of the author bay37
      Originally Posted by Scott Kennedy View Post

      So if you were selling a product which had a 30 money back guarantee I could buy this from you, use it intensively for 29 days and then return it for my money? This wouldn't annoy you at all?
      Ouch. Haha. :p
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    • Profile picture of the author Tina Golden
      It can be done, just need to be resourceful...for example, we didn't have a video camera and wanted to do a video to sell. Soooo we used a credit card to get a camera and had 30 days to return it!
      Sorry, Jenn. That's not being resourceful, that's being a thief and it is illegal to do so purposely. Would you buy a dress for a special occasion and then return it the next day?

      Sal,

      I have never considered the costs quite the way you are so I'm not sure how to answer. While my time is a cost, it never feels that way to me because the hours I'm putting in now are so that I don't have to work so many hours later. It's an investment right now.

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      • Profile picture of the author Scott Kennedy
        Originally Posted by TMG Enterprises View Post

        Sorry, Jenn. That's not being resourceful, that's being a thief and it is illegal to do so purposely. Would you buy a dress for a special occasion and then return it the next day?

        Tina
        Whilst I don't agree with what she did, it is not theft in anyway shape or form as the item is returned and she has complied with all terms and conditions. Unless the TAC stated that the camera MUST be returned within 30 days unused, she did not break the law.

        It is ethically wrong, not legally wrong. I would be very careful about making such accusations in the future Tina.
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        • Profile picture of the author Tina Golden
          Originally Posted by Scott Kennedy View Post

          Whilst I don't agree with what she did, it is not theft in anyway shape or form as the item is returned and she has complied with all terms and conditions. Unless the TAC stated that the camera MUST be returned within 30 days unused, she did not break the law.

          It is ethically wrong, not legally wrong. I would be very careful about making such accusations in the future Tina.
          It is against the law to purposely use something with the intention of returning it. Look it up. I wasn't making any accusations - she stated outright that she did so and I doubt that she realizes that it is against the law. Is it difficult to prove? Sure. Doesn't make it legal. I was just giving her a head's up that she should be aware of the facts.

          NOTE: This could be only true in the US. I do not know the laws of any other country.

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          • Profile picture of the author Crew Chief
            Originally Posted by sal64 View Post

            I think you raise a valid point which goes to the crux of my OP... The theory is that it's cheap and you don't need money etc spun by many gurus and wannabe gurus.
            Actually, certain individuals have been pushing the BM "Bum Marketing" concept hard and heavy for a number of years. They teach that IMers can make a killing spending virtually none of their own money... with the implication, since it's all free, "Why spend?"

            I know people who adamantly swear by this teaching and absolutely refuse to purchase domain names, hosting or spend any money on their IM dreams.

            But here's some info you're going to LOVE!

            As a case study, I've been tracking a number of these BUM marketers using the IM footprints they leave.

            And then one day I had an epiphany!

            One of the BUM marketers in my case study, [who once was a WF member but got banned] had some prime BL sites as part of his BM network. Once I noticed that, I started using these Bum Marketers to find sweet Do Follow BL sources for me.

            I detect their footprints and then track their BL sources.

            There services don't cost me a dime!

            Think about it; these guys spend hours, days and weeks finding places they can place their content for free and get free BLs and they find some gem dandys!

            Is that something like poetic justice?

            Giles, the Crew Chief
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          • Profile picture of the author sal64
            Originally Posted by TMG Enterprises View Post

            It is against the law to purposely use something with the intention of returning it. Look it up. I wasn't making any accusations - she stated outright that she did so and I doubt that she realizes that it is against the law. Is it difficult to prove? Sure. Doesn't make it legal. I was just giving her a head's up that she should be aware of the facts.

            NOTE: This could be only true in the US. I do not know the laws of any other country.

            Tina

            This is off topic. But if you do that with the intention of returning it... in other words you deliberately set out to do it, then it's just plain wrong... ethically or otherwise.

            Let's stay on topic, thx.
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  • Profile picture of the author Manie Amari
    If you are looking into affiliate marketing here are the cost for my business:
    *$10 Domain name (godaddy.com)
    *$120 for the year for Hosting (hostgator.com)
    *$228 for the year for Aweber (Auto-responder)

    Everything else is free sources, which include squeeze page creation and traffic generation.

    As an affiliate marketer a list of 500 people is enough to start making a nice $300 a month; if you build the relationship up with your suscribers well and offer them related products to their interests.

    Kindest


    Manie
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  • Profile picture of the author Andyhenry
    I'd say you need a few hundred dollars so that you have reliable hosting, a decent template for Wordpress (or your favourite site builder), a decent email system and some money for outsourcing content, links, graphics etc...

    Sure you can start with zero cost and spend your time - it's definitely doable, but starting out cheap tends to foster a cheap mentality, whereas I think if you approach your business as you would an offline one and expect to pay for good quality - you're much more likely to be open to high-leverage opportunities that you'd ignore if you tried to do everything on the cheap.

    Obviously the normal caveat applies - it depends on your niche and your business model. If you want to sell videos you probably want decent equipment/software, whereas if you're starting a blog about poodle grooming you can probably get away with much less

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    • Profile picture of the author sal64
      Originally Posted by Andyhenry View Post

      I'd say you need a few hundred dollars so that you have reliable hosting, a decent template for Wordpress (or your favourite site builder), a decent email system and some money for outsourcing content, links, graphics etc...

      Sure you can start with zero cost and spend your time - it's definitely doable, but starting out cheap tends to foster a cheap mentality, whereas I think if you approach your business as you would an offline one and expect to pay for good quality - you're much more likely to be open to high-leverage opportunities that you'd ignore if you tried to do everything on the cheap.

      Obviously the normal caveat applies - it depends on your niche and your business model. If you want to sell videos you probably want decent equipment/software, whereas if you're starting a blog about poodle grooming you can probably get away with much less

      Andy
      I think you raise a valid point which goes to the crux of my OP...

      The theory is that it's cheap and you don't need money etc spun by many gurus and wannabe gurus.

      I remember the old "ugly websites are good" chestnut.

      So I think that many (myself included) buy into that IM lifestyle perception.

      But in reality, I don't think it's as easy as it is sometimes made out to be.
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  • Profile picture of the author aspiepower
    I guess I spend £2000/year on domains, hosting, IT equipment, electricity.

    It's worth it though!

    If somebody had started out by saying "Give me just £2k/year and I'll give you a full-time income and you can work when you want", I'd have never started

    I started with one domain and some hosting ... the rest followed.
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  • Profile picture of the author Kevin_Hutto
    I agree with you Sal & Andy. Many get stuck in the free traffic, do everything on the cheap syndrome - and you will never make it big that way... I have a buddy who is spending 12k a day just on FB ads... He nets 3Mil a year.

    But... I do understand that some people HAVE to start on the cheap... Especially if they are in a developing country... But, at some point you do have to decide whether its a real business or not and whether you are willing to spend the money necessary to make it grow...
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  • Profile picture of the author Dr Livingston
    IM has leveled the playing field so more people can start their own business. The entry level is next to nothing or you can start out big and spend alot.

    Depends what you want to invest, time or money.
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  • Profile picture of the author Michael Mayo
    OMG! Are you Guys/Gals kidding me?
    We have to pay for all of the stuff we have online?

    Damn-it, That Goober lied to me when I bought his $197 how to do it all for Free ebook.

    You can't trust anyone any more...

    Lets see what I'm up to...
    72 sites @ approx 7.50 each domain a year.
    Hosting for the sites approx $670 a year.

    VA's approx $425 a month times 12 months.

    Product creation $1400. a year to date.

    Time reading and posting on the Warrior Forum and my own sites $1,176,598.37

    For a total of oh $hit... Gotta go and cut my losses now, bye!

    Have a Great Day!
    Michael

    Disclaimer: All claims of expenditures listed above are in jest.
    No Warriors or Trolls were harmed in the production of this post.
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