First things first: If you have less than $500 to spend, go look at my list of tools that will let you build your online empire for free (and don’t forget to read the awesome suggestions in the comments).

Now, if you’ve got the $500 and want to know what to do with it, or you just want to know why I think you need $500 to really do a self-hosted website, read on. It’s time to look at some paid services to help you run your online business.

What to do with your first $100

OK, I said this in a previous post, but it’s really worth saying again:

Your first purchase should be a domain name.

This will cost approximately $10 per year. So if you have $20, you can either buy one domain for two years, or two for one year.

My recommendation: Your first $50 should be spent on one domain name. For up to 5 years. If you really want to (or if there are variations on the name, common misspellings, hyphenated versions, and the like), then use the next few increments of $10 to buy multiple domain names. Up to $100.

Just go to GoDaddy (although their checkout process is obnoxious, they’re cheap and reliable. Just don’t buy any add-ons or extras. You only want to spend $10 on your domain name, remember?).

If you’ve got more than $100, you can start planning for the next paid step (keep reading).

But for heaven’s sake, don’t wait until you have $50 or $100 so you can implement a complicated domain hierarchy. Just spend your first $10 on the first domain name as soon as you’ve got it.

No, your domain name doesn’t have to be perfect. You may well change it later (when you’re rolling in cash and can buy all the domains you want, that is). But start with something now. Your name. Your company’s name. Your goldfish’s name. Just register something already!

Now you can plug that domain into your free Blogger.com blog, which will instantly raise your professionalism score by twenty points. And carry on with your free online empire (or, I guess it’s now a $10 online empire).

The bare minimum: No safety net

So let’s say you’ve got more than $100. You’re ready to move beyond Blogger. You see someone like me, crazy enough to offer WordPress installation for $99. You think “Great! I can buy this and still have $1 left over!”

Not so fast.

First, do not spend your family’s grocery money on your website. Please.

Second, that $99 pricetag is not your total cost. Before I can install WordPress for you, you’re going to need the aforementioned domain name, plus a little thing called web hosting (that’s essentially renting space on a backed-up, secure server so that your site is accessible to the whole world).

And that’s the bare minimum. Figuring $10 for your domain name and $120 ($10/month) for web hosting, that brings us to $130.

A digression about the cost of hosting: You may have heard that it’s possible to get free hosting. There really isn’t any such thing, except for Blogger.com (which I discussed in my post about how Blogger is a perfectly valid place to build a website). So-called free hosts put ads on your site, ads over which you have no control. Don’t fall for that.

It’s much safer to simply buy web hosting, which you can get for less than $10 per month (often much less, but I use the $10 figure to calculate conservatively).

So, the thing about that $130 bare minimum? It’s pretty bare. You can spend $130 and have a working website, but you will have to totally and completely do-it-yourself. If you can, by all means go for it, but if you need any kind of help, you may find yourself panicking (or spending money you don’t have, or other inadvisable practices).

An annual technology budget for cheapskates bootstrappers

So that’s why I give the $500 figure. Yes, it’s a nice round number, hefty enough that you can feel really good about having saved it up, a number that you can speak aloud confidently (try it: “My technology budget this year is $500.” You may not believe it yet, but what if it were true?).

But mostly, it gives you a nice cushion beyond the bare minimum.

If you’ve spent $130 on your domain and hosting, you have enough of that $500 left over to do one or two of the following:

• Buy premium services like AWeber (for mailing list management) or AudioAcrobat (for recording and publishing audio clips and files), each of which is about $20/month.
• Upgrade your shopping cart capabilities by using a paid shopping cart service (my favorite, and the one I use, is E-Junkie, which starts at $5/month, but there are many others).
• Buy a premium theme for your blog (any premium theme worth its salt should come with some amount of tech support, by the way).
• Start a pay-per-click campaign with Google AdWords.
• Hire a graphics wizard to design your logo and header.
• Purchase a guidebook or do-it-yourself WordPress class that you can use as a reference as you build your own site.
• Have someone like me install and configure WordPress for you since that’s a one-time task that you may not want to waste time learning.
• Hire a tech-savvy VA for a few hours, or a business or marketing coach for one or two intense sessions.

And even $500 isn’t enough to do all of these things. You’ll still need to pick and choose carefully. You might notice that I didn’t mention web design at all, which is because truly custom design will cost at least $1000, and often much much more. You can do a lot with a highly customizable theme and a unique logo, though.

The bottom line is to think carefully about your support needs. And when you’ve figured out exactly how much support and training you’ll need? Double it.

And if I’m wrong, and you survive just fine on the bare miminum? Fabulous! Good for you! At the end of the year you’ll have $370 to spend on whatever your heart desires, and wouldn’t that make a nice holiday gift for yourself and your business?