Since those asking this question are obviously people who have not yet started a website, I should mention that this article follows my Beginner’s A-Z Guide to Starting/Creating Your Own Websiteclosely. You should consult that guide for more details so that you will have a clearer idea of what is involved in creating a site.
Cost Breakdown for Setting Up a Website

Since prices of the various components change from time to time, I have linked to the pages providing the prices in addition to mentioning a general figure here. You should always follow the links to the vendors’ sites to get the latest up-to-date prices, since the ballpark figure I list here may no longer be accurate by the time you read this. (Prices are stated in US dollars.)

1. Domain Name

A basic “must” in creating a website is buying your own domain name. There is simply no substitute. The prices for domains vary from registrar to registrar, and are (at the time I wrote this article) around $10 or so per year. You can find the exact price of a domain for some popular registrars in the article How to Register Your Own

Because a domain name is a necessity for the health and longevity of your website, this price must always be factored into your budget when planning a website. Almost everything else can have substitutes if you have no money, but my rule-of-thumb is to never start a website without a domain name. Websites that don’t have their own domain name have to use their web host’s subdomain name (eg, your-site-name.example.com where the web host’s name is example.com). Such sites are totally at the mercy of that web host. When the latter closes, your site is gone. If the host suddenly decides to charge you an exhorbitant price for hosting your site, you will have no choice but to comply.
2.Web Hosting

If you want to use a commercial web host, you will need to factor in the cost of web hosting as well. This is a monthly fee that you have to pay to the web host. Some hosts also offer discounts if you pay a year (or more) in advance. Prices vary from web host to web host but are usually (at the time I wrote this article) around $10 per month if your website is new and doesn’t have much traffic or data. You can find the real prices charged by a number of web hosts on the Budget Web Hosting page. As your website gets more traffic, or if you need to put a lot of big files on your website, you may have to upgrade your site to one of the web host’s higher-priced plans.

Those who are not earning an income (for example, students) and are merely creating personal websites or hobby sites that will not earn any money can also consider using a free web host that provides free domain hosting. Such web hosts will allow you to host your domain with them without charging you any hosting fees. In exchange, most of them will also place advertisements on your website to recoup their costs of hosting your site. (There may also be other limits, but as they say, beggars can’t be choosers.)

Note, though, that hosting with a free web host is a risky proposition. The free web hosts I have tested have frequent “down” times, times during which your site is inaccessible. One of them had a server that was down for nearly two months during December last year to January this year, the peak business period for many websites. Needless to say, when your site is down, you will receive no visitors nor make any money. If you run a web-based business or are earning from your website through advertisements, you should not use a free web host.
3. Software

The exact software you need for your site depends on the type of website you want to set up. If you are running a blog, you will probably do fine using only free software, such as the ones found on the Free PHP Blogging Software page. However, if you have sufficient funds, you may want to choose the software not based on its price tag (or lack thereof) but on its features and whether it suits your needs. In such a case, you may want to look at my brief comparison of three such software: WordPress Vs Drupal Vs Expression Engine: Which Blog Software Should I Use?

The above review is also relevant for people who want to set up a content management system, or “CMS”, for your site. CMS software allows you to manage your website directly from a web browser without using a web editor. Free CMS scripts can be found on the Free Content Management Systems (CMS) PHP Scripts page.

Whether you use blogging or CMS software, you will need an FTP client, a program that allows you to transfer files from your own computer to your web host’s computer. There are many free FTP programs available (as well as commercial ones). Naturally, if you use a free FTP program, it won’t cost you a cent.