It Company

How Much Does It Cost To Start An It Company? (In 2024)

Updated: July 21st, 2024

Looking to start an IT company?

But curious about:

  • how much it costs to start an IT company?
  • what are the typical IT company startup costs?
  • or the actual cost of starting IT companies?

Well, we have the data to prove it, supported by real IT companies and how much they actually cost to start.

Let's go over it.

What is the average cost of starting an IT company?

Based on our data reported by actual IT company founders, the average cost of starting an IT company is between $150 and $1,200,000.

Additionally, our data shows that the the median startup costs for an IT company are around $3.2K.

Remember, though, not all IT companies are the same - and neither are people's budgets. It's important to distinguish between different levels or types of IT companies

Real World Examples: How much does it cost to start an IT company?

We asked real IT company founders and business owners how much it actually cost to get started?

Here is what they said:

Maanda Mulaudzi

Founder of Common Sense Holdings ($10K/month)

"I only have enough six months of money saved to live on. But since I cannot get a job, the only commonsensical thing to do was to start my own company.”

Maanda Mulaudzi is the founder of Common Sense Holdings, a technology solutions provider that specializes in mobile apps, web-based applications, and IT consulting.

Read by 5,962 founders

Md. Yousuf Ali

Founder of Rank Trends ($6K/month)

"At the initial stage, we did not do a massive investment to start our project. Just developed a simple website by myself, wrote content, and optimized it."

Md. Yousuf Ali is the founder of Rank Trends, a digital marketing agency, and Khan, a grocery business that provides various digital marketing services and quality grocery items.

Read by 12,156 founders

Ivan Ladan

Founder of Marine Digital ($500/month)

"The hardware development and company establishment is not an easy task, the minimal cost to test something starts with 150K for the equipment, experts, laboratory, etc."

Ivan Ladan is the founder of Marine Digital, a deep-tech company focused on big vessel performance optimization by leveraging digital twin and AI algorithms.

Read by 4,626 founders

Alexander Yagovdik, Andrey Pankov

Founder of Twelvedevs ($100K/month)

"Our starting costs were only $3,000 from the 2 co-founders."

Andrey is the co-founder of Twelvedevs, an IT consulting and custom software development company that has grown to generate over $100k in revenue per month.

Read by 2,615 founders

Mumtaz Kazi

Founder of iDigitize ($14K/month)

"Since it's an online business, you don't have to worry a lot about financing. It's just the annual licensing cost that you need to worry about."

Mumtaz Kazi is the founder of iDigitize, a tech-savvy business focused on leveraging low-code/no-code technologies for organizations looking to invest less and gain high ROI quickly.

Read by 2,703 founders

Enjoyed reading these real world examples?

Our platform is full of case studies of successful IT companies that you can learn from.

Starting an IT company - what you should know:

When planning to start an IT company, understanding the nuances can help manage costs effectively.

Initial Setup Costs

The initial setup costs can vary widely based on your business model and scale. A small-scale IT business might expect to spend between $5,000 to $10,000 on essentials like software licenses, domain registration, and initial marketing. In contrast, a larger enterprise-level setup could easily run into the tens of thousands, specifically around $50,000 to $100,000, especially when considering hiring experienced developers and purchasing advanced technology.

Office Space and Equipment

Whether you choose to operate remotely or from a physical office also significantly impacts your budget. Renting office space in a major city can cost between $3,000 to $5,000 per month for a small team. On top of rent, budget for furniture and equipment—expect to pay around $1,500 to $2,500 per employee for quality laptops, desks, and chairs. Conversely, opting for a remote setup can save a substantial amount, although you'll still need to invest in high-quality remote collaboration tools.

Employee Salaries and Benefits

Salaries for IT professionals are one of the largest ongoing expenses. Entry-level developers might start at around $50,000 to $70,000 annually, while experienced software engineers can command salaries upwards of $100,000 to $150,000. Additionally, consider the cost of benefits, which can add an extra 20-30% to the base salary. Outsourcing to freelancers or international developers can reduce costs, but it requires careful management to maintain quality and adherence to deadlines.

Marketing and Customer Acquisition

Effective marketing is critical to gain traction in the IT space, with costs that can vary widely. Digital marketing campaigns, including SEO, PPC, and social media ads, might range from $1,000 to $5,000 per month for a modest effort. If you choose to engage a specialized marketing firm, those costs can escalate to between $10,000 to $20,000 monthly, depending on the scope and scale of the campaigns.

Legal and Compliance

Navigating legal and regulatory compliance is essential to avoid costly pitfalls. Initial legal fees for company formation can range from $500 to $2,000. Additionally, recurring costs for ongoing compliance, such as data protection laws and licensing fees, can add several hundred to a few thousand dollars annually. It's wise to consider hiring an in-house legal advisor or retaining a law firm, costing anywhere from $250 to $500 per hour, to manage complex legal matters as your company grows.

Being aware of these cost elements can help you meticulously plan and allocate your budget, ensuring your IT company starts on a strong financial footing.

Potential Costs of Starting an IT company

Starting an IT company involves several potential costs, which can vary widely depending on the size, location, and specific needs of the business. Below is a detailed breakdown of these potential costs.

Category Item/Description Cost Range ($)
Legal and Administrative Legal Fees for Company Formation 500 - 5,000
Licenses and Permits 200 - 2,000
Accounting and Bookkeeping 500 - 3,000 / year
Insurance (General Liability, E&O) 500 - 2,500 / year
Office Space Office Rent 1,000 - 5,000 / month
Utilities (Electricity, Water, Internet) 200 - 1,000 / month
Office Supplies and Furniture 1,000 - 5,000
Technology Computers and Hardware 5,000 - 20,000
Development Tools and Software Licenses 1,000 - 10,000 / year
Cloud Hosting and Storage (AWS, Azure) 100 - 2,000 / month
Cybersecurity Measures 1,000 - 10,000
Human Resources Salaries and Wages (Developers, Admins) 60,000 - 150,000 / employee / year
Recruitment and Training 5,000 - 15,000
Employee Benefits (Health, Retirement) 5,000 - 20,000 / employee / year
Marketing and Sales Initial Marketing Campaigns 1,000 - 10,000
Website Development and Maintenance 3,000 - 15,000
CRM Software 500 - 1,500 / year
Additional Costs Contingency Fund 5,000 - 10,000
Miscellaneous and Unexpected Costs 2,000 - 5,000

By understanding and planning for these various costs, you can better manage your budget and ensure a smoother launch for your IT company.