This post is part of my series on digital investment. See here for an overview of all the articles on buying websites.
You might drool at the idea of a website listed for $100,000 that makes $3,000 a month (based on current investment multiples). That much money in my pocket, presumably forever, probably increasing? Yes, please!
But then your eyes might water at the idea of spending $100K on something that is built out of thin air. Because how much did it actually cost to build this website? What is a website, even? How much does it cost to build any profitable website?
That's what I want to explore here — looking at the costs involved in building and then selling a profitable website.
On the face of it, building a website seems so easy. It's just a domain, hosting, and a few articles, right? And a theme? You could do it yourself for $100 or less, or buy a ready-built website for $500-1,000! Why on earth would a website cost $100K — or much more?
The reason a website can cost so much is that they're much more than just words on a page. A website doesn't really exist in a commercial sense unless it's generating traffic and revenue of its own accord. So without those things, you don't have a website.
But what does it cost to create an investible website — one that generates traffic and revenue? Read on to find out.
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The Major Costs of Building a Website
If you're building a revenue-generating website, the major costs involved are
- The domain name, Theme and Hosting — These are the bare building blocks. Without this, it's just a series of drafts in Google Docs.
- SEO & Research — This is the analytical backbone of your website
- Content generation — Outsourced labour, getting other people to write you SEO-optimised articles.
- Link building — Outsourced services to build links for you to your website.
- Administration — Signing up to the affiliate schemes, setting up the hosting, etc — another labour cost
Many of these costs are the value of your own time. This is a huge scale. I know (and am related to) doctors who charge $350+/hour for their time, and I know people in entry-level jobs earning $20 an hour.
As a (senior) consultant, I used to charge anywhere from US$400 an hour for phone calls (that rarely happened more than once a week, and usually were only 30 minutes), or $1,500 a day for on-site work (which is fairly cheap as consulting goes), or $30-40,000 a month, depending on who was asking. If I take the lowest of those it's the monthly rate, which puts my time at about $115 an hour assuming a fairly intense 60 hour week.
But that's more than a lot of people, I know. And yet, I don't think many people reading this blog would value their time at minimum wage.
So I'll assume that your net income is US$100,000 a year (say, a few years into an average career in a Western country) and that you work 40 hour weeks for 48 weeks a year, then round down slightly to US$50 an hour.
This is going to be different considering who's reading this, what country you're in, and so on. Feel free to scale accordingly.
Domain + Hosting costs in building a website
Let's take the easy ones first — the domain name and hosting. You don't need a very fancy domain name for a functioning affiliate website, so a simple $9.95 .com per year domain will be fine. Let's put it at $20 for two years to keep it simple.
Some website owners spend $2-10,000 on a really good affiliate domain name, like "BestBabySeats.com". The jury's out about whether it's necessary, but the market is definitely there.
But if you really want to sell baby seats, then head on over to my favourite domain name suggesting tool, Name Mesh. A few contenders that are available are babyspend.com, topbabyseat.com, and babyseatify.com, if you want to get a bit startup-y.
A theme usually costs something like $50 a year for a well-performing affiliate theme. You don't need a paid theme, of course, but the better websites have them. So that's another $100.
Hosting is more expensive. The first website I bought was on a $10/month Linode VPS. That would cost $240 for the two years.
Most websites are on slightly more expensive plans, but budgeting $500 for two years is more than enough.
- Domain: $20
- Theme: $100
- Hosting: $500
Total Domain, Theme, and Hosting costs: $620
Research and SEO costs
The next major cost of building a website is the research and SEO.
A well-designed website will have a series of articles all clustered around a topic. All the articles will naturally inter-relate to a degree, letting you do internal linking. For example, a website about watches will have something like 25-100 articles about watches — buyers guides, reviews, commentary — in categories, slinked to each other.
Before you generate that content, it's good to have a content plan with all the keywords you want to go after. All that keyword research takes time. It involves looking at competitors, understanding a target market, and finding opportunities for things to write about. If I'm very productive in looking for keywords and creating a content plan, I can come up with a whole article's content in about 15 minutes — that means I could do four an hour, or do the whole plan for 100 articles in 25 hours. I'd rarely do this in one sitting, but usually over the course of a month or two.
Going by the above rate of $50/hour for 25 hours, that makes this cost $1,250.
The above also assumes that you have a tool like Ahrefs or SEMrush, which typically cost from $100-300 per month. So I'll add in $100 as a minimum.
Total SEO + Research costs: $1,350
Content Generation Costs
Now the hard part — content generation.
You can either write an article yourself, or you can outsource it. For many of my first blogs I wrote my own articles. I'm still doing it for topics in which I'm heavily invested, like this one!
Even as an experienced writer, it still takes me hours to write an article. Each articl means
- Learning about the content in more detail so I can write it
- Putting the words down in a structure and organising them so the reader doesn't get bored or lost
- Putting in images, meta data, and SEO
All in, it still takes me around four hours per article.
That means one article would cost a whopping $200 — unless I did something about it... and I can!
Most people who make profitable websites don't write their own content. They usually do something like give a few keywords and prodcuts to an experienced SEO writer and say "please go write me an article on this topic". Prices for this vary, but it's typically around $50 for an article you'll have to edit later, or $100-250 for a pretty good quality one.
That might sound steep, but each article is supposed to net you around $50-100 a month when it's done. A well-designed article will do that — for example get maybe 200 clicks a month, 50 click-throughs to Amazon, 10 purchases at around $100 each (for a higher value niche), netting you ~$50 total in commissions (including the random other stuff they may have in their baskets).
So let's pick a middle ground of $125 an article. To produce 100 articles, it will cost you $12,500 in outsourced writing costs.
Link building costs of making a website
Link building is a controversial topic. There are lots of ways of doing it, and usually the cheap ones are the worst ones.
The jury is actually kind of out on whether you even need to build backlinks to a site. But that's a different topic. Suffice it to say that even Google's John Mueller says that links are not the most important thing in building SEO credibility. (You can Google that easily and find a few interesting articles.) The most important criterion in SEO always has and always will be good-quality content.
But that said, building links to a website does correlate with its tendency to rank well for certain keywords.
The ways in which people typically get links to their websites are:
- Buy PBN backlinks from various sources (easy, but will probably bite you in the backside)
- Do it yourself — write guest posts, ask for link backs, etc.
- Hire a link-building outreach person usually at $5-10 an hour (the more you pay, the better)
- Hire an SEO marketing agency (something like $1,000 a month)
- Build your own PBN for the blog (expensive and difficult)
I usually see people do 1, 2, or 3.
The danger with option 1 is that PBN backlinks are low value and have an expiry date. Sometimes, it can result in a Google penalty — which ends up being more trouble than it's worth.
The second option takes a long time. Personally, apart from just fun guest posting, I've never had the tenacity to do much of it.
Finally, hiring a link-building outreach person is a definite possibility. You can hire people on UpWork who'll do the labour for you and it can definitely yield results in links — though not necessarily in any actual authority.
I don't expect people to do options 4 or 5 — they are impractical and expensive for a small blog.
If you hire an Upwork contractor for a median $7.50 per hour for 40 hours a month for twelve months to build a good arsenal of links, that's an investment in link-building of $3,600 in link-building.
Administration and Management costs
Finally, there's administration of the website.
A lot of this is manual labour on your part — which means a time cost at the rate above ($50 an hour).
Administration costs in building a website include:
- Signing up to affiliate schemes and managing all that stuff. This can be ridiculously time consuming. It is just paperwork, but it adds up, especially if you have multiple affiliate schemes. The terms keep changing, the procedures change, there's identification requirements... it all adds up. I'd say this is roughly a 2-hour-per-month investment over two years, or 48 hours - $2,400.
- Tracking data and performance, optimising for conversions and sales. Building a website requires constant iteration. You have to analyse what posts are performing, what is selling, and constantly optimising for clicks and conversions. This is a 1-hour-per-week investment over two years, or $4,800 in time costs.
- Managing the hosting — This is more insignicant, just annoying. Over the time you have a website, you'll have to contact developers to do optimisations, and contact your hosts to fix bugs. It costs you time, and it costs you money in developer time. I'd say it's roughly a $2,000 expense all up.
So administering a website costs you $9,200 in costs, mostly your own time. It's not easy!
What does building a website cost in total?
In total, looking at the above sections, we have
- The domain name, Theme and Hosting: $620
- SEO & Research: $1,350
- Content generation: $12,500
- Link building: $3,600
- Administration: $9,200
This is a total cost of $27,270 for a website.
A large chunk of that is personal time invested into the website, calculated at $50 an hour, like I mentioned.
But another way of looking at it is that the developer wants to get paid $50 an hour for their time. If they don't get paid that, it's not really worth it.
If the website they built in these two years performs reasonably well, say producing $3,000 a month, then they could sell it for $100,000 or so. That means that they increased their pay from $50 to $200 an hour. Now we're talking!
But if you're looking to pay someone else to build a website for you, then you could expect to pay around $25,000+ to have it built and performing like you'd expect.
There's one other thing I haven't factored in here, and that's the expense of building up the knowledge and experience necessary to build a website.
My first few websites didn't go anywhere. The first website that I attempted to make a commercially viable one is performing around 1/20th where I expected it to by now — my projections were way off.
And I started that after a medium-long and somewhat successful career in professional jobs and good education. In other words, I'm not stupid. I just had (and have) a lot to learn.
Hopefully the above analysis puts the pricing of a website into perspective.
Just one follow up... the above costs are reflective of someone who
- Knows what they're doing, and
- Knows how to outsource their work.
A lot of website builders make a lot of mistakes with their first (several) websites. The costs of those failures are NOT reflected in the above.
Likewise, a first-time builder would likely spend a lot of money and find no success. That's also not reflected in the above.