A common mistake made by people getting started creating web sites is spending entirely too much money. If you know where to look, and what to avoid, you can save yourself hundreds of dollars.
The first domain name I purchased was with Network Solutions. Their current rate for registering a domain name with them for 1 year is $35. They used to be one of the only choices. Now you have more companies selling domain names at a much lesser price. My personal favorite is GoDaddy.com. Their current rate is $8.95 per year.
The hosting business is very competitive right now. There are many bargains available if you shop around. A great place to start is FindMyHosting's search wizard. http://www.findmyhosting.com/searchwizard.asp All you have to do is answer a few questions and they give you several options to choose from. I ran a search for a typical business site and their needs and found the prices staring at $5 per month.
You cannot design a web site without the right tools. The basic software that you will need is an html editor, and a graphics program. If you know your way around html, there are several editors available for free. HTML-Kit is one of the best and most full-featured editors available. Incredibly it is also free http://www.chami.com/html-kit/
Don't know your HTML from a hole in the ground? What you need in your case is what's called a WYSIWYG (what you see is what you get) web page editor. The best free one available is IMS Web Dwarf by VirtualMechanics.com http://www.virtualmechanics.com/products/dwarf/
Good graphics programs range in price from free ( http://www.gimp.org/ ) to several hundred dollars ( http://www.adobe.com/products/photoshop/main.html ) In my opinion, the GIMP is too buggy and Photoshop is too expensive. Your best choice for a full featured graphics program is JASC's Paint Shop Pro ( http://www.jasc.com/products/paintshoppro/ ) Version 8 is available as of this writing for $99. Version 7 is very nice also and can be found at bargain prices now at your local software store.