Having an idea for an industry-changing startup doesn’t change anything unless you can bring your vision to life. Even if your plan includes raising venture capital funding, you’ll likely have to cover some costs yourself first. 

So, how much money does it cost to start a business today?

The truth is: Figuring out how much it costs to start a business is a lot like asking how much it costs to plan a wedding or raise a child. The answer depends on a lot of different factors. Every situation is unique. 

Even still, understanding some of the most common startup costs will give you an idea of what it might take to get your own startup off the ground and help you plan more accurately. 

Here’s what we’ve learned from growing Bubble and working with thousands of startups building on Bubble about the average costs of starting a business, where expenses come from, and how to determine what funding you’ll need to get started. 

Average cost to start a business

In terms of startup costs, let’s break down businesses into three categories: online services businesses, digital companies, and storefront operations. 

Online services businesses can be as simple as a solo operation with one person offering services, such as consulting or web design or larger consultancies and agencies. These businesses have the least initial costs. You can often get started with just a laptop and some basic software subscriptions. About 43% of small business owners can get started with less than $10,000, especially if you’re operating completely online. 

Digital companies are businesses that have a digital product, an app, and usually a team of employees or contractors involved in building and running the product. These businesses spend an average of $35,000–$92,000 in startup costs over the first year. 

Storefront businesses require the most startup funding due to increased overhead costs, products, employees, and so on. The average storefront business owner spends $100,000+ in the first year of business. 

Across all types of businesses, there are some commonalities: 

• 76% of startups used personal funds to finance their business, at least early on (aka “bootstrapping”) 
• Employees are one of the biggest startup expenses. The cost of adding a new, full-time employee to your team is generally between $4,000–$20,000 in addition to the cost of salary and benefits. (This can vary widely based on industry, employee skills, and location. For example, the average salary for a software developer based in San Francisco is around $160,000 annually, vs. a software developer based in Minneapolis will cost around $80,000 annually.) 
• Startups can expect to pay $300,000+ for five employees in the first year. 
• 50% of startup owners say they underestimated how much they’d have to spend on their startup in the first year. 

Average startup costs by industry 

Along with business type, your industry and product are major factors in how much it costs to start a business, too. 

Here’s some of the average startup costs by industry: 

(Sources: LendingTree, Bankrate, Upmetrics)

For digital products and tech services, a large amount of startup costs are related to development. Upmetrics estimates that for SaaS startups, development alone can cost between $15,000–$45,000 in the first year. Building with no-code can drastically cut down those ‌costs — around 5–6X less compared to traditional development.

Factors that impact startup costs

There isn’t a universal answer to how much it costs to start a business. Startup costs are infinitely variable, so founders need to consider a lot of different factors to accurately estimate what your own actual costs will be. Juggling these costs can be a struggle for any founder — no matter the industry. It can help to use a cost modeling tool that you can customize for your specific circumstances. 

Here are some of the biggest factors to consider: 

What kind of business are you starting?

The type of business you’re starting impacts your costs a lot, as demonstrated above. Consider your: 

• Product type: Are you starting a business that’s going to offer physical products that require development, production, storage, transportation, and shipping costs? Or are you offering a digital product or service? 
• Development costs: Can your product be developed and maintained by a small, lean team of a few developers? Or do you need a larger team to get it built and off the ground? 
• Storefront: Are you launching a digital or mobile-first business with an online store? Or do you need to have a physical location as well? 
• Overhead and operations: How many employees do you need to get your business off the ground? Do you need in-person employees with physical office space, or can you build a remote team? 

The time and money tradeoff

Another major factor that influences your costs — and is often overlooked — is the time vs. money tradeoff. 

Time is money. 

It’s common for startup founders to wear many different hats to mitigate expenses. For example, if you build your app yourself using no-code, you can save hundreds of thousands of dollars by not hiring a development team. You can also save loads of time by building your app in just a few weeks instead of taking months or even years.

However, the DIY approach often comes with tradeoffs. 

Say you spend three months designing your logo and branding. This work would have cost $5,000 if you paid someone else to do it in two weeks. Was the time you spent really worth it? Just because you didn’t pay yourself doesn’t mean that work was free. When you’re building your startup full-time and using savings or debt to cover your personal living expenses, time can be more valuable to you than money.

Consider how to leverage your own skills and time to your best advantage, and don’t be afraid to spend money outsourcing the rest. 

Take Farie, an auto marketplace startup built on Bubble. With a tight deadline, they hired an agency to help them get their idea off the ground. COO Tobias Peschke estimates that this investment saved over a year of development time. That decision paid off: They were able to quickly iterate on a successful go-to-market strategy, which allowed them to raise a $4.5 million Series A round of investment funding.

Risk tolerance and desired runway

Risk tolerance and runway are also major factors in considering startup costs. 

For example: 

• What runway length do you need? The first month? Six months? First year? Until you can quit your job? Until you’re profitable? Timeframe makes a major difference in considering how much runway you need. 
• What level of risk are you comfortable with? A higher risk tolerance means you can take on more debt or work with less runway. A lower risk tolerance usually means that you need to become profitable sooner and might need a higher runway before you get started. 
• What are your funding options? You have dozens of startup funding options, but not all of them will be right for you. Are you hoping to bootstrap or take out business loans? Are you a good candidate for raising VC capital or crowdfunding? The types of funding you’re looking at will change how much you can budget for your upfront costs. 

Standard business startup costs

Let’s get into the nitty-gritty. How much do common startup expenses actually cost? Considering common expenses can help you determine your initial budget. 

Guaranteed costs for any business

Incorporation, licensing fees, and permits. These fees are necessary to legally launch your business, but they can vary depending on: 

• What state your business operates in 
• What type of business you form (e.g., LLC, Corporation, S-Corp, etc.) 
• Types of licensing/permits needed (based on industry) 

Average costs: $300 - $500 

Taxes. Any cash flow you generate will be taxed, but determining and budgeting the exact amount to budget can be difficult. Taxes depend on the type of business you have, your revenue, and your expenses. 

For a baseline, you can estimate based on the current federal corporate tax rate. As of 2024, the federal corporate tax rate is 21%. State taxes can vary, and if you’re not a corporation, tax rates can vary as well. 

Working with a CPA will provide a lot more clarity — and can reduce your tax bill significantly! 

Common taxation rate: 21% of revenue

Business insurance. Almost every type of business needs some form of business insurance. The type of insurance you need is dependent on the type of business you have and your industry. 

Business insurance can cover everything from legal liability and lawsuits to worker protections, equipment and property insurance, and more. 

If you have a physical space or a physical product, you‌ may need higher insurance coverage for business property and general liability. 

However, digital products with competitive IP may need higher D&O and E&O coverage. You’ll also want to make sure your general liability policy covers things like advertising injury.   

Average business insurance costs: $1,200 annually 

Common business expenses 

Aside from the obvious startup costs, there are plenty of other common business expenses that may not apply to everyone, but certainly apply to most. This includes things like: 

Creating or obtaining a product. Unless you’re a services business, where your skills or your people are the offering, there will be some cost associated with creating your product. How much that costs varies widely based on your product and development strategy. 

• Are you selling physical products that you need to obtain from somewhere else? 
• Are you designing and producing your own physical product? 
• Are you creating a digital product? Do you need a development team or can you build using a no-code tool? 

Average costs: varies significantly 

Creating and hosting a website. A website is a must for pretty much any business today, from a sole proprietorship to a major corporation. Brick-and-mortar stores need websites just as much as digital services and products. 

If you build a website or web app on Bubble or another no-code or low-code website builder, this cost might only be a few hundred dollars per year. If you don’t want to DIY it, a hired web designer could cost several thousand even for a somewhat basic business site. 

Average cost for hosting: $350 annually 

Accounting and bookkeeping services. While you can DIY this, most of the time, you really don’t want to. This goes back to the time vs. money trade-off. Although it adds a line item to your expenses, hiring a good accountant can save you tons of money and time in the long run. 

You don’t need to hire a full-time bookkeeper when you’re first starting out. Working with an accountant or CPA monthly or quarterly can give you the support and expertise you need without the cost of a full-time employee. 

Common amount spent: $1,000–$3,000 annually 

Labor and employees. This is often the biggest expense for new startups — to the tune of 25–50% of your overall budget. 

According to some surveys, the average startup spends about $350,000+ in the first year on employees and payroll. Remember that employees cost more than their base salary. You also need to factor in things like: 

• Hiring and onboarding costs 
• Bonuses and commissions 
• Overtime pay 
• Paid time off 
• Insurance and benefits 
• Competitiveness within your industry 
• Location and employee skills

A good rule of thumb is to assume that each employee will cost 1.25X–1.5X their base salary. So if you’re paying an employee $70k annually, the actual cost to your company will be $87,000–$105,000. 

And don’t forget to factor in your own labor as a founder. Even if you don’t take a paycheck in the early days, it’s still worth it to factor into your own expenses. It can help you understand what to outsource and what’s worth your time to take on. 

Average cost: $300,000+ 

Software subscriptions. Building your startup tech stack often requires several — if not dozens — of software subscriptions. These include software for things like: 

• Communication and collaboration (i.e., Slack, Notion) 
• Productivity and project management (i.e., Asana, Airtable) 
• Development tools (i.e.,Bubble, Github) 
• Customer service tools (i.e., Zendesk, Salesforce) 
• HR tools (i.e., Rippling, Gusto) 
• Payroll and accounting software (i.e., Quickbooks, Ramp) 
• Analytics tools (i.e., Mixpanel, Segment) 
• Marketing and sales (i.e., Hubspot) 

To keep costs down in this category, make sure you’re doing regular (i.e., quarterly or annually) audits of your tech stack to remove products you’re not using regularly or efficiently, and combine products when possible. If one product can do the job of two, consolidate where possible! 

Average cost: $12,000–$20,000 per year (varies significantly based on number of employees) 

Equipment and supplies. These are very variable costs. You’ll need some supplies to produce your product(s) or services. For a company making a digital product, that will be laptops, software, licensing, etc. For a retail business, it includes the cost of producing, shipping, and storing your goods. Average cost: $10,000–$200,000 

Rent. If you have a physical office space and/or a physical storefront, you’ll need to budget for rent for these spaces. Many startups mitigate these costs in the beginning by building a remote team. Allowing employees to work from home can result in significant cost savings for you, and offer a major benefit for your team as well. If employees are working remotely, you may consider offering a home office setup stipend or a coworking space stipend as an added benefit. Even these costs will be much less expensive than renting a physical office space. 

Average cost for office space: $5,000–$12,000 / employee annually 

Utilities and other costs. If you have in-person spaces for your office or your storefront, there will be other costs that come along with rent. This includes things like utilities, water, internet and phone service, and so on.  

As with rent, the costs for these utilities varies significantly depending on where your offices are located and the size of your team. 

Average costs: Around $25/year per square foot of office space 

Additional costs you may encounter in your first year (and beyond), such as: 

• Legal fees and advisory services 
• Raw materials for physical products 
• Marketing and sales costs 
• Office furniture and supplies 
• Travel for your team 
• Shipping and storage costs for goods or products 

Sample annual startup business costs 

What does all this look like practically? Let’s break it down. 

In this example, we’re going to consider a digital tech startup that’s developing a digital product and building a remote-first team. Here’s how their costs break down for the first year of building their startup and launching their product: 

Does this mean that every startup needs $350k+ to get started? Of course not! However, it does demonstrate how costs can add up even for a lean team. 

How to estimate your startup costs, step-by-step 

The only way to know how much it’ll cost to launch your small business is to sit down and crunch the (estimated) numbers. 

Here’s how.

Step 1: Figure out your business details and cost philosophy

First, you need to clearly define what kind of business you’re starting and what your cost philosophy is. Defining these two elements will help you understand how to project your costs and how you’ll deal with them as they come up. 

There are two main types of spending philosophies among small business owners: 

1. “Don’t spend what you don’t have.” Founders who take this route opt to only spend actual cash their business brings in, whether that’s bootstrapped funding, crowdfunding, or some other funding source. 

2. “Don’t spend what you can’t make.” The other major philosophy is to be open to taking on expenses that you can’t directly pay for now, but that you expect to be able to pay for later. This option frees you up to take on bigger expenses soon, but also introduces more risk. 

As with most things in the startup world, there isn’t a right or wrong answer — only what’s right for your own business. 

The key here is to consider your spending philosophy upfront, and understand how it will align with your key funding sources and upfront expenses. 

If you’re planning to scale fast and hire quickly, but you don’t want to spend money you don’t yet have, you’re going to have a cash flow problem pretty quickly. Your strategies need to be aligned so you can make smart and realistic decisions about budgets and spending.  

Establish your minimum viable income

Next, figure out what your baseline is for the business. Not every small business owner expects or needs to be able to live off their business revenue, at least at first. 

However, it’s important to ask yourself: 

• What’s my financial goal for this business? (i.e., How much money do I need to make for it to be worth it?) 
• How much runway do I have? (i.e., How long can my business survive without being profitable?) 
• What’s the potential revenue of my business? The potential revenue of a VC-backed AI startup is very different from a local coffee shop. Understanding this will help you make smarter decisions about funding and spending. 
• How quickly do I need to be able to cover costs and turn a profit? This is related to runway, but also addresses your personal income needs and the needs of your employees. 

Estimate your costs

We’ve outlined this in more detail above. As you estimate your costs, make sure to keep two key cost differences in mind: 

• One-time vs. recurring expenses. Some startup costs will be a one-time expense (such as incorporation fees or select legal counsel). Other expenses (i.e., employee salaries, marketing costs) are ongoing. Budgeting for both one-time and ongoing expenses will help you plan better beyond your first year in business. 
• Fixed expenses vs. variable costs. Fixed costs recur; they’re the same month to month or year to year, such as rent or insurance. Other expenses are variable — they change based on your needs, team size, or other factors. For example, software costs, development costs, even employee costs can vary a lot as you grow and your needs shift. 

As you estimate, it’s important to consider which expenses are fixed, which are variable, and which are simply one-time expenses. This will help you project much more accurate costs and get a clearer vision of the budget your company will need.

Estimate your company’s revenue 

This can be the most difficult step of all. For many startups, estimating revenue is simply a shot in the dark. 

After all, most startups are simply experiments — they might take off incredibly quickly, or they may never really get off the ground. 

With that in mind, a revenue projection is still helpful, even though it’s really just an estimate. 

And when it comes to early-stage startups, revenue may not even be the most important number when considering cash flow. You may also want to project numbers for outside funding, loans, grants, or other sources of “income” that aren’t directly tied to your product or sales. Or, if you plan to look for venture funding, you may be working with investors and analysts on a valuation of your company based on drivers like your opportunity, technology, competitive environment, and team. 

Considering cash flow and startup funding more broadly can give you a better idea of the types of funding you’re working with, especially if you’re opting for a “don’t spend what you can’t make” philosophy. 

Inventory your funds

With your minimum viable income, costs, and projected revenue in mind, you can then do an inventory of your funds to see what kind of runway (i.e., advance funding) you have and if you have enough cash flow to cover the “starting a business” phase. 

Remember: many small businesses aren’t profitable until at least 18–24 months after starting. Most businesses take anywhere between 2–5 years before turning a steady profit — or turning a profit at all. 

It’s ideal to have at least two years of runway in place before you launch your startup. This will give you time to develop your product or service, grow your audience, and cover costs until you hit the break-even point and begin to turn a profit. 

Come up with a plan for how you’ll finance your company

Most small business owners don’t just have loads of cash lying around that they can dedicate to the first few years of a new startup. 

However, there are plenty of other funding options you can consider that can help you cover any gaps in your runway and launch plan. Some of the most common funding sources include: 

• Business credit cards or loans. A business credit card or business loan can help give you additional runway and help create a stopgap for the funding you need. Business credit cards are better for smaller amounts, such as day-to-day and ongoing expenses. They’re easier to qualify for and faster to get. Business loans are better for larger amounts (say, >$100k), but they’re harder to qualify for. 
• Venture capital. VC funding is a popular option for startups that have the potential for high growth and revenue. It’s a great way to raise large amounts of money, in exchange for giving equity in your company to investors. 
• Crowdfunding. For consumer-facing products, crowdfunding platforms like Kickstarter or Indiegogo can be great ways to build an audience and raise the cash you need to develop and launch your product. 
• Startup incubators. For early-stage startups, an incubator can be a great way to receive funding, training, and mentorship to give your business a solid foundation. 

Build your app on Bubble for less 

Starting a business is not for the faint of heart — and it’s not inexpensive, either. 

But if you have a big idea and the drive to make it a reality, Bubble can make it easier, faster, and more affordable to build and launch your product. 

Bubble is a full-stack, no-code development platform that lets anyone build fully-functional web pages and apps. Traditional development for new apps can often cost hundreds of thousands of dollars and take months to complete. Founders using Bubble can build and launch their apps in a matter of weeks, and with far less financial investment. 

If you’re looking to cut startup costs, build an audience faster, and start bringing in revenue sooner, Bubble gives you the freedom and the platform to do it. 

Build an MVP, iterate, launch, and grow — and do it all faster on Bubble. Even better: You can build on Bubble for free until you’re ready to launch.