How Much Does It Cost To Start A Digital Agency? (In 2024)
Looking to start a digital agency?
But curious about:
- how much it costs to start a digital agency?
- what are the typical digital agency startup costs?
- or the actual cost of starting digital agencies?
Well, we have the data to prove it, supported by real digital agencies and how much they actually cost to start.
Let's go over it.
What is the average cost of starting a digital agency?
Based on our data reported by actual digital agency founders, the average cost of starting a digital agency is between $10 and $1,200,000.
Additionally, our data shows that the the median startup costs for a digital agency are around $2.5K.
Remember, though, not all digital agencies are the same - and neither are people's budgets. It's important to distinguish between different levels or types of digital agencies
Real World Examples: How much does it cost to start a digital agency?
We asked real digital agency founders and business owners how much it actually cost to get started?
Here is what they said:
Kaila Piepkow
Founder of Dox Design ($20K/month)
"The startup costs for me were super low (besides my four year degree… ha!) I already had my computer and design software so the only other costs I had to take on were billing/contract software. That is the nice thing about offering a service over a product to start: the overhead is super low."
Kaila Piepkow is the founder of Dox Design, a design agency focusing on pet businesses and animal lovers that started in 2016 and has grown significantly since its inception.
Billy Ash
Founder of Todays Business ($500K/month)
"Today’s Business is 100% self-funded. We started with $400 in my business partner’s basement and bootstrapped everything."
Billy Ash is the founder of Today’s Business, a full-service digital marketing agency that has grown significantly, even making the Inc 5000 list as one of the fastest-growing private companies in the United States.
Hailey Brooke McFadden
Founder of Power Move Marketing ($22K/month)
"Thankfully, the marketing business has small overhead costs so I just submitted my LLC and got to work!"
Hailey Brooke McFadden is the founder of Power Move Marketing, a digital marketing company that makes $22,075 per month and is projected to make almost $300,000 in its first year.
Ilija Brajkovic
Founder of Kontra agency ($80K/month)
"All we had was two laptops and some money, which Ilija's family left to him, which was just enough to open a company here in Croatia legally."
Ilija and Petar are the founders of Kontra, a full-service digital agency that focuses on driving results, operating primarily in digital marketing and web design/development.
Jeff Pedowitz
Founder of The Pedowitz Group ($1.5M/month)
"We had just moved into a new house, we had three young (and hungry!) kids, and so our first job was working on redesigning an environmental company’s collateral."
Jeff Pedowitz is the founder of The Pedowitz Group, a sales/marketing consulting agency that has grown to over $20M in revenue annually.
Kevin Miller
Founder of GR0 ($1.8M/month)
"In regards to financing, Jon and I put in $20,000 each to bootstrap and launch GR0."
Kevin Miller is the founder of GR0, an SEO-focused agency that launched in 2020 and has grown rapidly to become a major player in the digital marketing space.
Marcos Rivera
Founder of Pricing I/O ($250K/month)
"Financially, I had six months of reserves in the bank and no credit card debt; all by design."
"Another important step financially was to separate my personal and new business accounts so I can keep my nose clean when it came to taxes."
"I whipped up a website using Wix for less than 50 bucks, then I showed up at numerous networking events and conferences (mostly for validating, not prospecting), and then I started writing about the most common struggles with setting a price or crafting a bundle; and that is when people started to notice."
Marcos Rivera is the founder of Pricing I/O, a pricing consultancy that helps B2B software companies capture value and unlock growth.
Aaron Dicks
Founder of Impression ($650K/month)
"When Tom and I launched Impression, we didn’t have the luxury of savings or a bank loan, instead started slowly and profit-funded the business from day one."
Aaron and Tom, university friends and co-founders, started Impression, a digital marketing agency, in late 2012.
Janet Camilleri
Founder of Front Page SEO ($12K/month)
"Fortunately, I already had a computer and a mobile phone, so didn’t have much in the way of start-up costs; plus the redundancy payout helped. I got a website (built it myself), some business cards, and brochures and that was about it."
Janet Camilleri is the founder of Front Page SEO, a boutique digital marketing agency specializing in search engine optimization, which started in 2012 after she experienced a shock redundancy.
Jade Pruett
Founder of HelloSEO ($25K/month)
"Financially, there was very little investment in my business. The only thing I purchased initially was a membership for Ahrefs, which allowed me to track things for my clients. Everything else was managed through Google Suite."
Jade Pruett is the founder of HelloSEO, a boutique SEO agency business that serves small to medium-sized businesses across the US and beyond.
Enjoyed reading these real world examples?
Our platform is full of case studies of successful digital agencies that you can learn from.
Starting a digital agency - what you should know:
Embarking on the journey to start a digital agency requires a clear understanding of various cost factors that will impact your initial and ongoing expenses.
Initial Setup Costs
The initial setup costs can vary significantly depending on your approach. For a basic home-based setup, you might spend between $1,000 and $5,000. This includes essential items such as a computer ($500 to $2,000), software subscriptions ($100 to $500), a reliable internet connection ($50 to $100/month), and basic office supplies ($50 to $200). If you opt for a more professional setup with office space, expect these costs to rise sharply, potentially reaching $15,000 to $25,000 when factoring in deposits, furniture, and comprehensive equipment.
Legal and Administrative Fees
Registering your business and ensuring you have the necessary licenses can also impact your budget. Filing fees for forming an LLC typically range from $50 to $500 depending on your state. You might also need to invest in legal consultations or services, which can cost around $500 to $3,000. Additionally, budgeting for business insurance (around $500 to $2,000 annually) and accounting services ($100 to $400 monthly) is crucial to ensure compliance and protect your agency.
Marketing and Lead Generation
Expect to allocate a significant portion of your budget to marketing and acquiring clients. Initial marketing expenditures may range from $1,000 to $5,000. This budget typically covers website creation and hosting ($500 to $5,000), SEO services ($500 to $1,500/month), and initial paid advertising campaigns ($300 to $1,000/month). Properly investing in these areas ensures your agency can attract and retain clients early on.
Hiring and Payroll
If you plan to hire staff rather than operating solo, payroll becomes a critical part of your budget. For example, hiring remote or part-time freelancers can cost anywhere from $20 to $100/hour depending on expertise and location. Full-time employees demand a more substantial investment, with entry-level positions starting around $40,000 annually and more experienced roles costing upwards of $70,000 per year.
Software and Tools
Running a digital agency mandates investing in various software tools. Essential subscriptions might include project management tools like Trello or Asana ($10 to $25/user/month), design software like Adobe Creative Cloud ($50/month), and CRM systems such as HubSpot or Salesforce ($50 to $300/month). Depending on your offerings, investing in specialized tools for SEO, analytics, or social media management can add another $50 to $200/month to your budget.
Understanding these cost factors can help you plan more effectively and allocate resources efficiently to ensure the successful launch and growth of your digital agency.
Potential Costs of Starting a Digital Agency
Starting a digital agency involves various upfront and ongoing costs, ranging from software tools to marketing expenses and labor costs. Below is a detailed breakdown of these potential costs:
| Expense Category | Description | Estimated Cost (USD) |
|---|---|---|
| Domain & Hosting | Registration of domain and monthly/yearly hosting services. | $10 - $15/year (domain) + $3 - $10/month (shared hosting) |
| Website Development | Cost of website development if you don't build it yourself. | $2,000 - $10,000 (one-time) |
| Website Builder/ CMS | Subscription cost for website builders like WordPress, Wix, or Squarespace. | $5 - $30/month |
| Software Licenses | Subscriptions to software tools for project management, CRM, and analytics (e.g., Asana, HubSpot, Google Analytics). | $50 - $500/month |
| Design Tools | Subscriptions for Adobe Creative Suite, Figma, Sketch. | $20 - $80/month per user |
| Marketing Tools | Subscriptions for email marketing tools (e.g., Mailchimp, ActiveCampaign). | $10 - $150/month |
| SEO Tools | Subscription for SEO tools like Ahrefs, SEMrush, or Moz. | $100 - $300/month |
| Content Creation | Costs for content creation services (articles, videos, graphics). | $50 - $500/per piece |
| Legal & Accounting | Legal fees for setting up the business entity and ongoing accounting services. | $500 - $2,500 (one-time setup) + $100 - $500/month |
| Marketing & Advertising | Budget for online advertising (e.g., Google Ads, Facebook Ads). | $100 - $2,000/month |
| Labor Costs | Employee or contractor salaries (e.g., designers, developers, marketers). | $40,000 - $100,000/year per employee |
| Office Space | Rent for physical office space if needed. | $500 - $5,000/month |
| Miscellaneous | Other incidental costs like office supplies, travel expenses, etc. | $100 - $500/month |
These are estimated costs and can vary widely depending on the scale and location of your digital agency, as well as the specific needs of your business.
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Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
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