Should Your Business Buy The Most Expensive Domain Name It Can Afford?

There are many different types of value in the world, but some are more readily accepted than others.

For example, we know that real estate has value. We want to live a building with a roof, windows, doors, hopefully it is secure and warm, located in a nice neighbourhood, etc etc. We understand that some locations are more valuable than others and that is just the way things are.

However, most people – including most business owners – do not seem to think the same way when it comes to the location of their website. By location I mean the domain name. Instead of locating their online shop at hydeparkapartments.com they choose smith-family-real-estate-london.net or something equally bizarre.

Why is this?

On one level it is because the domain world is not always clearly understandable. On another, it is because most of the best domain names are already taken and rather than try and get the best possible, people simply settle for a name that is a) available and b) cheap. If they took the same approach with real estate they would be living in a sixty year old wooden shack, with broken windows, at the end of an overgrown allotment, next to a railway line.

Prudence is a virtue. Being cheap is not.

I agree that most business domain names are bought when a company is just starting and money is usually tight, but still… It is hard to imagine that the best way to push your business forward is with the only vaguely relevant name still available. There will always be a case to be made for buying the most expensive domain name within your budget and if you are starting a business, let’s hope that your budget is higher than US$10.

Then there are the tech start-ups that choose meaningless words that can be “branded” somehow. Words like etsy or zynga are great examples. They are pronounceable but meaningless. It is then up to their marketing teams to inject something into the name. These days though, even these names are costing a lot to buy.

Smaller tech firms (without oodles of VC funding) have started to reach for some of the more obscure country code domain extensions. The most recent ones to be released are Mali (.ml) and Los Angeles (.la). These might enable a small firm to grab an interesting name for ten bucks, but unfortunately, Matt Cutts at Google has just kicked this idea into the long grass (watch it here) by explaining that these domains normally do not have any international SEO appeal. If you have already committed to such an extension this could be a problem…

Deliberately opaque

Over the last four months or so I have been learning about the world of domain names. Even now – and considering the background I have – I still don’t understand a lot of what is happening, but I learn more week by week. I have come to the conclusion that some parts of the aftermarket are deliberately impossible to understand and only people working inside the system will truly grasp what goes on.

Still, enough of what happens is available for all to see. And what I see keeps on amazing me.

Why? Because it is relatively clear that strong brandable or keyword rich names can provide advantages to an online business. It is also relatively clear to me that (as usual) the wrong mindset is holding smaller business owners back from reaching their full potential.

The way I see business online – and I know lots of other online entrepreneurs that would agree – is that we are engaged in competition globally and we need to take every advantage that we can find. In contrast, most small businesses view themselves as local and think that “It will do”.

This is more than a little ironic to me. We have all seen the statistics that suggest that 95% of new companies will have closed within 5 years. In that kind of environment, with those kind of odds, doesn’t a business need every possible advantage that it can get?

I say yes. It does.

And yet, most founders of new companies don’t ever investigate the availability of the ideal domain name(s) for them. I know because a number of people have asked me over the years to help them find a domain. When they learn that a name is taken, only one person so far has asked, “How do I find out about buying it?”

Having spent far more than my fair share of hours trolling through GoDaddy Auctions, the number of very acceptable names that can be bought for US$500 or less is amazing. Sure, if you need to have cars.com, expect it to cost US$1 million or more. But if what you really need is croydoncarsales.com it might be available for US$1,000 or less. It is hard to imagine that croydoncarsales.com is going to be the most expensive domain name in the world, but many people seem to think that way.

Unrealistic expectations

Also contradictory is the way in which those that do enquire about the value of a domain name seem to think. I have recently been in contact with a broker at one of the main brokerages in the world. She tells me that when people are asked if they would like to make an offer, the most common suggested price is US$100. As she explained, “Typically they have asked about a really nice name and they are amazed when I say that we were thinking that it is worth more like US$100,000”.

Something tells me that somewhere between US$10 and US$100,000 there is a name that will better suit your business. It might be the most expensive domain name in your niche, but it probably isn’t. What you need might not be as expensive as you think.

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