Ask ten founders what it costs to start a startup, and you'll get ten different answers. Some will say they launched with $500 and a laptop. Others burned through $2 million before their first customer. Both can be true—the variance is enormous.
The real answer depends on what you're building, how you're building it, and how much you're willing to do yourself. This guide breaks down the actual costs of launching a tech startup, with specific numbers and real-world ranges.
Before diving into costs, make sure you understand the product you're actually building. If you're still defining your minimum viable product, start there. If you're validating technical feasibility first, read our proof of concept guide.
The Reality Check: What Startups Actually Spend
Let's start with real numbers. Here's what tech startups typically spend in their first year, based on funding stage and approach:
| Startup Type | First-Year Budget | Typical Approach |
|---|---|---|
| Bootstrapped Solo | $5,000–$20,000 | Founder builds everything, minimal tools |
| Bootstrapped Team | $20,000–$75,000 | Small team, outsourced development |
| Pre-Seed Funded | $100,000–$250,000 | Early hires, professional development |
| Seed Funded | $300,000–$750,000 | Full team, aggressive go-to-market |
| Series A | $1M–$3M | Scaling team, paid acquisition |
The median tech startup spends $50,000–$100,000 in year one. But here's the critical insight: spending more doesn't correlate with success. Many of the most successful startups launched on shoestring budgets and stayed lean until they found product-market fit.
Cost Breakdown: Where Your Money Actually Goes
1. Product Development (40-60% of Budget)
For most tech startups, building the product is the biggest expense. Here's what development typically costs:
| Option | Cost Range | Timeline |
|---|---|---|
| Build it yourself | $0 (your time) | 2-6 months |
| No-code/low-code | $100–$500/month | 2-8 weeks |
| Freelance developers | $15,000–$60,000 | 2-4 months |
| MVP agency | $10,000–$75,000 | 2-8 weeks |
| In-house team | $150,000–$400,000/year | Ongoing |
Our recommendation: For first-time founders, an MVP-focused approach with an agency or experienced freelancer often provides the best balance of speed, quality, and cost. You get a professional product without the overhead of full-time hires.
2. Infrastructure & Tools (10-20% of Budget)
Modern startups rely on a stack of SaaS tools. Here's a realistic monthly breakdown:
- Cloud hosting (AWS, Vercel, Railway): $50–$500/month
- Database (Supabase, PlanetScale): $25–$100/month
- Email/Auth (Resend, Auth0): $25–$200/month
- Analytics (Mixpanel, PostHog): $0–$100/month
- Customer support (Intercom, Crisp): $0–$100/month
- Design tools (Figma): $0–$75/month
- Project management (Linear, Notion): $0–$50/month
Realistic monthly total: $100–$1,000/month for an early-stage startup. Most tools offer generous free tiers that cover early growth.
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Get Your Quote3. Legal & Administrative (5-10% of Budget)
Often overlooked, but necessary:
- Company incorporation: $500–$2,000 (Delaware C-Corp via Stripe Atlas, Firstbase)
- Trademark registration: $300–$1,000
- Terms of service/privacy policy: $500–$2,500 (or use templates for $50–$200)
- Accounting setup: $500–$2,000/year
- Business insurance: $500–$2,000/year
Pro tip: Use Stripe Atlas or similar services for incorporation—they bundle legal templates and banking setup for under $1,000.
4. Marketing & Customer Acquisition (10-30% of Budget)
Marketing costs vary wildly based on your strategy:
| Channel | Monthly Cost | Best For |
|---|---|---|
| Content/SEO | $0–$2,000 | Long-term organic growth |
| Social media | $0–$500 | Brand building |
| Paid ads (Google, Meta) | $1,000–$10,000 | Quick validation, scale |
| Cold outreach | $200–$1,000 | B2B direct sales |
| PR/influencers | $1,000–$10,000 | Launches, credibility |
Early-stage advice: Before you've found product-market fit, spend minimally on marketing. Focus on direct customer conversations and manual outreach. Paid acquisition before PMF is burning money.
Runway Planning: How Long Can You Survive?
Runway is how many months you can operate before running out of money. It's the single most important number for early-stage founders to track.
Formula: Runway = Cash in bank ÷ Monthly burn rate
Here's the math for a typical bootstrapped startup:
- Starting capital: $50,000
- Monthly burn: $3,000 (tools, contractors, misc)
- Runway: ~16 months
That's enough time to build an MVP, launch, iterate based on feedback, and (hopefully) reach product-market fit or early revenue.
Runway Rules of Thumb
- Minimum: 12 months before you need to fundraise or pivot
- Comfortable: 18-24 months for meaningful iteration
- Start fundraising: When you have 6 months of runway left
- Emergency mode: Under 3 months—cut costs or close shop
How to Reduce Startup Costs Without Killing Quality
Every dollar you save extends your runway. Here's where smart founders cut:
1. Start With a True MVP
The #1 cost overrun is building too much. A real MVP is the smallest possible product that validates your core hypothesis. Not a feature-complete v1. Not "what we'd want if we had infinite time." The absolute minimum.
2. Use Free Tiers Religiously
Almost every developer tool offers free tiers that cover early-stage usage. Vercel, Supabase, Resend, PostHog—you can run a startup for months without paying for infrastructure.
3. Delay Hiring
Every hire is a ~$100,000/year commitment when you factor in salary, benefits, and overhead. Delay full-time hires until you have proven traction. Use contractors for specialized work.
4. Outsource Strategically
Don't outsource everything—that creates coordination overhead and quality issues. Outsource specific, well-defined projects: MVP development, logo design, legal documents. Keep core product decisions in-house.
5. Negotiate Annual Contracts
For tools you know you'll use (email, hosting, analytics), annual contracts often save 20-40% versus monthly. But only commit once you're confident in the tool.
The fastest way to reduce costs? Ship faster. A 14-day MVP gets you to market before you've burned through your runway. Get a fixed-price quote and know exactly what you'll spend.
5 Cost Mistakes That Kill Startups
1. Building before validating
The most expensive mistake is spending $50,000 on a product nobody wants. Validate demand before you build. Pre-sell. Get letters of intent. Build a waiting list.
2. Hiring too early
Every premature hire is a 6-12 month commitment that accelerates your burn rate. Hire only when the pain of not hiring exceeds the cost.
3. Fancy office / remote stipends
WeWork spaces, expensive equipment, generous perks—these feel good but don't move the needle. Work from home. Use your existing laptop. Save the perks for when you're funded.
4. Paid marketing before PMF
Spending money to acquire customers who churn is the fastest way to burn runway. Find product-market fit first, then pour fuel on the fire.
5. Building custom when off-the-shelf works
Don't build a custom auth system—use Auth0 or Clerk. Don't build custom analytics—use PostHog. Save your engineering time for what makes you unique.
Frequently Asked Questions
How much does it cost to start a tech startup?
Tech startup costs range from $5,000 for a bootstrapped MVP to $500,000+ for a well-funded launch. The median first-year cost for a SaaS startup is $50,000-$100,000, covering MVP development, basic operations, and initial marketing. Your actual costs depend on whether you build in-house or outsource, your tech stack complexity, and your go-to-market strategy.
How much runway should a startup have before launching?
Most experts recommend 18-24 months of runway to find product-market fit. At minimum, have 12 months of operating expenses saved or funded. This gives you enough time to iterate, pivot if needed, and reach key milestones that unlock further funding.
What is the biggest cost for most startups?
For most tech startups, the biggest cost is salaries and contractor payments—typically 60-80% of total burn. This includes developers, designers, and any early hires. The second largest cost is usually cloud infrastructure and SaaS tools, followed by marketing and customer acquisition.
Should I build an MVP myself or hire developers?
If you are a technical founder, building yourself saves money but costs time. If you are non-technical, your options are: find a technical co-founder (free but requires equity), hire freelancers ($15,000-$50,000), use an MVP development agency ($10,000-$75,000), or use no-code tools ($0-$500/month). The best choice depends on your timeline, budget, and product complexity.
How do I reduce startup costs without sacrificing quality?
Focus on these high-impact strategies: (1) Start with an MVP, not a full product—ship the minimum needed to validate your idea. (2) Use existing tools instead of building custom solutions. (3) Outsource strategically—use agencies for specialized work, not everything. (4) Delay hiring until you have proven traction. (5) Negotiate annual contracts for tools you know you will use.
Know Exactly What Your MVP Will Cost
Stop guessing. We provide transparent, fixed-price quotes for MVP development. No hourly billing. No scope creep. Just a clear price for a launched product.
Related Resources
What Is an MVP?
Understand what makes an MVP effective before you budget for one.
Product-Market Fit Guide
Learn when to scale spending and when to stay lean.
Proof of Concept Guide
When to invest in a POC before building your MVP.
MVP Calculator
Estimate your MVP development costs with our free calculator.