The difference between a great domain name and other marketing expenses is that you are acquiring a permanent, valuable and potentially resalable brand, which helps future customers define you - as opposed to renting keyword traffic from a search engine.
Owning a more meaningful domain name has become expensive with the average price of a common phrase or saying, ending in the dominant .COM extension, hovering between $9,000 and $30,000. In fact, the collective domain name industry consistently sells an estimated $5-10 million of domains each and every week at prices buyers are more than willing to pay.
Why are Good Domain Names Priced High?
Are they priced high? The debate about why domain names command so much value is never a debate between people who understand the value of them. Those who do not understand the premium value of domain names simply need to brush up on their understanding about the scarcity of the underlying asset and put jealousy aside.
If one were to compare the price of almost anything to its “original” cost we could classify “everything” as expensive. A $3 bottled water costs how much to produce? A $300 pair of designer sunglasses probably cost less than a cup of coffee to manufacture!.
How Much is a Domain Name Worth?
The business of selling land has been around for nearly a millennium. The Internet is merely 15 years old. Domain names are certainly property in the online context, and many generic names are owned by astute investors who saw the future value of these properties long before it was popular to poke, tweet or surf. Just like traditional real estate, these individuals should be recognized as smart people who were in the right place at the right time.
Unless you have a registered trademark on a particular name or someone is intentionally capitalizing on a typographical variant of your registered trademark, no one is really “squatting” on a domain name. Everyone pays for the privilege of occupying their name via renewal fees. Those who wrongly complain that “some nefarious party is squatting on their name,” without a trademark, are equivalent to telling grandmother that her foresight in purchasing that beach acreage makes her an evil natured women rather than a smart investor. Real estate ownership is accepted by public opinion and so should domain name investing be.
A domain name is worth what anyone is willing to spend. Sales routinely go unreported in the millions of dollars, however most domain name re-sales occur between $5,000 to $80,000 Premium domains, category-killer domains and short-meaningful names frequently command “hundreds of thousands” or even “millions” of dollars, depend- ing on a wide range of parameters. Look past the broad value spectrum and consider how a single $10,000 domain name’s cost compares to the value proposition of traditional media.
Had you spent $10,000 on a meaningful and generic domain name your only future expenses are just $8 per year in registration renewal fees - less than $1 a month. And that name would continue to deliver a din-level stream of type-in visitors until such time as you were ready to develop or resell it! resell was frequently the domain name of the company which failed!
There are other nominal expenses related to developing domain names, but all of those expenses are merely “investments” which go directly toward building brand value into something you already OWN – not airtime or billboard space you lease!
Then you have the intangible elements such as the brand-authority domain names command, that traditional media cannot aspire to. Imagine owning a domain like testdrive.com or crosswordpuzzles.com – Domains like these are intuitive and descriptive. They define your role as a leader relating to the subject which the name describes and the cost is a rounding error in comparison to traditional brand advertising. Many .COM domains have even proven they can command $1,000,000 or more - even at a fire sale.
After the last dot com bust the only asset left to resell was frequently the domain name of the company which failed!
The quantity of meaningful compound-word names, while remarkably limited, is wrongly perceived to be plentiful. Despite this, most names routinely sell at a take-away cost well below annual rental costs of a single type of traditional advertising (radio, newspaper and the like).
The real question is not how much a domain name costs but how much value the right domain name can bring to your business. Take a look at your marketing budget and see what $10,000 buys you. Not a whole lot – well, you can own and resell a generic .com name-brand forever for that cost.
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