There is a very simple answer; ROI. While it may seem inexpensive to pay $500 for a website, in the end, it costs you with not only the original investment, but also with the lack of return.

Think of it like this. If you look for a retail or office location, and you are deciding between one, that is 50 cents per square feet and another that is $1.00 per square foot, the cheaper space automatically seems more appealing. However, when you discover that you will get less foot traffic, and therefore make less money, you realize that sometimes it's better to pay more.

If you do not market your office space/retail location, you will not get any customers; the same goes for a website. If you do not optimize your website, you will likely not get many, if any customers. The same rules apply for the internet as they do in the "real world."

A cheap website is better than no website. However, the more money you put into your website, into advertising, search engine optimization, search engine marketing, etc. the more of a return you will get for your investment.