Nothing in life is free. At one time, however, domain names were. Twenty years ago – in 1995 – Joshua Quittner penned this historic piece for Wired Magazine and registered McDonalds.com for free.
But, as the expression goes, today is different. A good domain name is hard to find and, when you find it, can cost hundreds of thousands of dollars. Even bargain hunters are often hard pressed to find anything of superior quality for less than $10,000 USD.
Why are domain names valuable?
If you start by trying to answer this question then you’re already approaching the answer wrong. Before trying to understand the value of domain names it’s critical to understand what your brand means to you. Ask yourself:
Are you building a global or local presence?
Are you planning to conquer the world or looking to serve a section of Utah? For many companies the world is their customer which means a brand name has to be authoritative, memorable and social.
How valuable is your brand name?
Your domain name is the billboard for your brand. It’s how people talk about your brand, how they find you on the Internet and how they remember you. Settling for a second-tier name should never be an option.
Do you want people to remember you?
Of course you do. Consistency is one of the golden keys of advertising. Brand confusion appears when your company name is one thing and your domain name another. Visual.ly is a prime example of a brand where the average Joe will likely remember the brand as visually. But what happens if someone builds a site at visually.com — a lot of brand value may have just disappeared.
Let’s look back at history for a moment.
The most valuable area code in the world is likely New York’s 212. Today it’s almost impossible to get it without paying a tidy fee. So let’s visually look at the authority that a 212 number brings you.
The 212 number shows a certain pedigree which spills over into the expectations people have for your brand. These are good expectations, such as: you are established, experienced, trusted etc. The 646 is just another number. While it does the job it doesn’t have those intangible benefits that a 212 number has.
800 numbers are the same. Let’s compare:
Both numbers work the same. The owner of the 844 number, however, is likely never going to get a call from someone misdialing the 800 number. The 800 number owner should end up getting lots of calls from customers of the 844 number.
Why?
All toll-free numbers are commonly referred to as 800 numbers. Not 866, not 844 – most people collectively group all toll-free numbers into a group called 800 numbers. This is also why 800 numbers are much more expensive than other toll-free extensions. Supply and demand, just like New York’s 212 numbers.
As for Domain Names…
The comparison above still holds true. A higher quality name speaks to a higher quality brand. Take our company name for example. We have more than twenty years of experience but what if we choose to start with namecorpllc.com?
First we certainly wouldn’t have as much brand value. Second, people would email us @namecorp.com instead of @namecorpllc.com. Third, our brand could be exposed to potential dilution from somebody starting a company at namecorp.com. Trademark laws exist but the odds are not always as they seem.
What about New Domain Name Extensions?
This is where branding gets very interesting. In early 2014 hundreds of new domain extensions became available, such as .link, .tattoo, .guru, .photography, .club and more. Some are meant to be generic while others are very industry and/or community specific. Let’s take a look at two domain name examples:
Which one has more authority? It’s a fascinating question if you consider a future perspective.
While .com is king today this doesn’t mean it will be the only extension to provide authority in the marketplace. Over the next couple years many great companies will build on these extensions. Not only do they provide higher relevancy but they also provide at least four fewer characters, which is huge when trying to market within the text limitations of social media. Plus they are memorable — if you know how to choose one. Take the example above. Both domain names have sex appeal: however FlyFishingToday.Fish is just not going to have the same charm.
Building a brand requires a commitment to detail, whether it’s a local phone number, a toll-free number or a domain name. And it’s critical to understand the intangible value before securing a domain name.
What is the Real Value of a Domain Name?
Only you can answer that question.
The price of a domain name can range from $10 to $1,000,000 or more. This all depends on quite a few variables:
- Owner Expectations
- Demand for the name
- Strength of the wholesale market
- and more.
However, every domain name is unique and every situation is different.
It’s near impossible to define why domain names are valuable other than simple supply and demand. What makes them unique are owners have an emotional and intangible investment — often the very same reason why a brand wants to acquire a domain. So, you need to understand how valuable a domain name is to your business plan before asking for a price.
Many companies spend tens of thousands on logo designs, advertising, brand consultations, proposals and more. The domain name needs to be part of that conversation.
Only when you can define how much having the very best version of your brand name is worth to you are you ready to buy a domain name.