Why not just use a free account, then? Does it make such a huge difference in attracting readers if they're going to myblog.com instead of myblog.wordpress.com or myblog.blogspot.com?
I guess I could have asked this in the other blogging thread, but I didn't want to derail it over the financial question.
The biggest difference is in your choice of themes/plugins... and in the amount of revenue that you receive.
WordPress.com greatly restricts the plugins & themes that you can use on their site-- like blogging with training wheels. There are still plenty of choices, but inevitably you'll chafe at being locked out of some really cool tool that you'd like to try. Their WordAds revenue program is pretty lame, but it's improving... and it's free.
Here's a comparison of my blog between WordPress.com and WordPress.org:
http://the-military-guide.com/2013/01/03/2012-blog-revenue-report/If I recall correctly, Bluehosts's "$5/month!!" means "... with a multi-year contract".
I know many of you blog-- and most who do seem to have gone the MMM route of rented hosting and your own domain. I have a simple question: does it pay for itself? If so, how much traffic does it take to offset the cost of hosting/domain with ad revenue and/or change in the tip jar? And how do you get that much traffic?
I'm averaging $100/month AdSense for 400-500 hits/day. The first three months paid back the cost of the move (and all the bells/whistles that I splurged on). My revenue might be a function of the keywords associated with "military financial independence" or it might be related to the number of hits. However there are many other techniques (affiliate sales, credit-card offers, contact lists, eBooks to name a few) to generate more revenue.
Traffic is a function of how popular your niche is and how hard you work at it. Content at least 2-3x/week for at least two years, along with guest posting on a half-dozen other blogs and thoughtful comments on another couple dozen.