Is low entry cost a barrier to online success?

Posted by stuart as

I wrote a while ago about the fact that we might struggle to treat our online endeavours as a proper business because the cost of entry is so low.

Let’s take a look at the main costs that any bricks and mortar business must face when starting up:

1. Labour
2. Equipment
3. Infrastructure
4. Marketing
5. Premises
6. Delivery
7. Administration

I’m sure I’ve missed a few, but you get the point, right?

Now let’s look at those costs, and how they relate to an internet marketer starting out on their online travails. (I’m aware that you can do this for free if you really want, but let’s assume that you’re even half-way serious about your new online business)

1. Labour - Free! (Of course, you’ll be doing all the work)
2. Equipment - the PC you’re reading this on will do the job nicely. If you don’t have a PC, you can go to the library and use theirs or pick up an old pentium for under $20.
3. Infrastructure - An internet connection, which you probably already have, if not, cheap dialup is good enough
4. Marketing - Free (you can pay for PPC ads if you like, but we’re being cheapo’s here). you’ll be doing your own SEO and marketing through blog comments.
5. Premises - Wherever you lay your hat……
6. Delivery - Web hosting can be had for as little as a couple bucks a month, which is more than adequate for simple blog hosting.
7. Administration - it’s all you baby!

So we’ve worked out that for effectively no startup cost, and spreading your domain name and hosting costs over a year we’re looking at around $3 a month to keep the whole shebang running.

Pretty cheap, huh?

I’ve been letting a lot of domains go over the last twelve months. Most of these were names I’d registered either after a few beers, or late at night when an idea struck me. Some of these domains have never even had the DNS delegated to my server, let alone had any actual HTML on them. These domains cost me about $8 each. If I’d had to pay, say, $50 each for them I:

1. Would have been much less likely to have bought them;
2. Would have tried a damn site harder to at least earn their purchase price back.

The point I’m trying to make here is that were the startup and running costs considerably higher than they are, I’d be mich more likely to put in the work to make some money back.

I wonder whether only allowing myself to “cash the cheque” or spend the money I make online when it reaches a certain level would motivate me to work harder?

Let’s say I can only spend it each time it ticks over $500. I reckon I’d work a bit harder to reach the goal quicker.

What about you?