Cost of Setting up an Online Business


When Lana got engaged and started preparing for her wedding, she  decided to quit her job and start an online business to fill her free time. Armed with a laptop, a wireless modem, and zero knowledge on e-commerce, she convinced herself that she would make it like many of her friends.

Little did she know, when she started her journey, how difficult it was going to be.

Before you start investing your time, energy and money like Lana, find out the costs you need to prepare when setting up a  virtual store.

Creating a website

“The barriers (to have a physical store) have made small enterprises turn to online business,” says William Tanuwijaya, co-founder and CEO of Tokopedia, one of Indonesia’s most prominent online marketplaces. According to him, there are currently hundreds of thousands  entrepreneurs who sell their products online through Tokopedia.

Besides using free online marketplaces, e.g.  TokopediaSatuTempat, creating an online shop can be done through other platforms like social media or your own website.

[Try this quiz: Are You Ready to Start Your Own Business?]

Here is the breakdown of costs for creating a website:

Item Action Price ranges
Website design
Buying template or services from Shopify or similar site From USD 29 to USD 179
Web-hosting  
Hosting with Masterweb
Up to Rp 2 million per month
Shopping cart Enable buyers to shop on website Free
Bank account      Setting up business account Minimum deposit
Email account Creating email address for team members or employees From free to USD 4 per month
SSL certificate
If the site is offering credit card payments (may not be necessary if your customers are likely to pay via bank transfer) From USD 56 per month with GoDaddy

The importance of name

Although you can get a free domain name from Shopify or other web services, having a domain name will give you more freedom to develop the site functions. The cost of registering a domain name ranges from Rp 95,000 per year to unlimited amount.

“Creating a brand name is easy yet difficult to do. If we are talking about cost, it depends on how much you are willing to invest,” says Natali Ardianto, co-founder and CTO of Tiket.com.

For Natali's startup, it was important to have a short, catchy and relevant name that would help in branding and build awareness faster than competitors in the  travel and ticket-booking business.

“The company invested more than USD 30,000 for the domain name alone,” Natali says.

Marketing cost

"Sometimes business owners assume that customers will automatically come through SEO, even without any promotion. The truth is, a business should always promote its product. One must allocate budget for non-aggressive and aggressive marketing," Natali says.

As the business grows, you cannot fully rely on family and friends to spread the word about your online business – even though that is a good place to start.

[Read: Should You Do Business With Your Friends?]

There are a few ways to drive potential buyers to your site:

  • Facebook ads

    These are paid social ads to help you effectively engage with your audience on Facebook. According to  Statista.com, as of the third quarter of 2014, Facebook had 1.35 billion monthly active users. In order to advertise on the site, you need to create a Facebook business page.

  • Search engine marketing

    This entails promoting your website's visibility on google search results through optimization and advertising.

There is no “formula” in budgeting for marketing cost on internet because it varies by type of product and market. You can experiment with as little as Rp 50,000 and increase the budget as you get more understanding about your target market and what works best for them.

Now that you are ready to start an online business, remember that "Rome was not built in a day".

“The most common mistake is to consider online business like a magic; that after we post an item on the internet, it will automatically become a hit. Just like any business, it requires commitment, hard work and patience,” William says.

*Note: Price ranges are based on personal research when this article was written.

Read more: How I Prepare Myself to Become an Entrepreneur

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