Is $75,000 Too Much for a Good Domain Name for a Small Business?

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Should you buy a really good domain name for your business?  If so, how much should you spend?  We suggest that you should and why it might pay off.

A few years ago it was reported that someone purchased the domain name www.Wingman.com.   I was curious to know if it was for a place that sold chicken wings, offered flying lessons, or was a dating service.  It looks like the domain is just parked for now - guess we'll find out soon enough.     It’s not important what it is used for,  what's interesting is that someone paid $75,000 for the domain name. It's not working now, so don't bother clicking on it.   That is not an exceptional amount of money.  Some domain names sell for millions of dollars.   In fact, for a name that is so easy to remember, it’s quite cheap.  If I were opening up a chicken wing business, I'd consider it a must have.  There's all kinds of publicity that can be generated from that - possibly using a superhero with a cape and a big W on it.  It's an image and name that's easy to use.  Of course it'd be nice to own 1-800-Wingman as well. 

Great domain names must be easy to remember and relevant to your business.  The domain name Wingman, for example, would be very easy to remember if it sold buffalo wings.   In a major metropolitan area, with hundreds of thousands of students, a domain name like that would pretty much guarantee business, if properly marketed, and backed up by a good quality product.  Traffic would naturally gravitate to that website.

How much is the traffic worth?  Consider that a good domain name is similar to a piece of real estate.    In the real estate business, as the saying goes; three things matter:   location, location and location.   If your business has a great location, like a busy corner, with a lot of traffic that goes by and great visibility, you’ll get people coming in to try you.  (Note: If the product is good, the customer will come back – if the product is mediocre, then a great location or domain name won’t overcome the problem with the quality.) 

A great domain name is like having a great location.  People will remember it and cruise by it regularly.  At both www.barcode.com and www.pointofsale.com,  visitors stop by simply by typing the domain name into the browser (known as "type-in" traffic).    Yes – we have thousands of links to our sites, and it comes up tens of thousands of times in searches, but equally important is that people find it on their own.  wingman2

Another area of potential value is in SEO.   Is the name useful in SEO (search engine optimization)?  – I’ve read articles where people claim varying amounts of usefulness.  It’s hard to know.   Google frequently changes their SEO algorithms.   Whereas search engine results were once more strongly based on the amount of links, millions of people got into the link building business and started badly skewing the results.  Google seems to have tweaked that component down.  Many factors apply – hundreds of them supposedly.  But experts agree that a good domain name that explicitly includes your niche cannot be a bad thing.  (See this 2015 article by YCombinator co-founder Paul Graham on the importance of having a domain name that matches your business).

How much are domain names worth?   Well, like so many other assets, they are worth different amounts to different businesses.    But here are a few examples of what people have paid for domain names.   Click on the link below for a list of the top 100.

VacationRentals.com - $35 million (purchased by competitor Homeaway.com)

Privatejet.com - $30 million (source: http://www.shoutmeloud.com/top-10-most-expensive-domain-names-ever-sold.html)

Insure.com  - $16 million dollars – reportedly had a fully developed website included in the sale price.

Sex.com  - $13 million

Bill.com - $15.5 million – included a business.

Cooking.com - $15 million – included a business

Diamond.com - $7,500,000

Beer.com - $7,000,000

Hotdog.com - $150,000  - (reported sold in 2015)

Bluestar.com - $90,000 (reported sold in 2015)

Diapers.com - $545 million dollars – purchased by Amazon.com in 2010.   Sales were estimated in the low 200 million area at the time of purchase.   The owner of the business rated the “type-in” traffic as very important.  (That means the people who just type in the domain name to get to the site).  According to the owner, type-in traffic accounted for one-half their customers!  Wow! Of course, once you type it in, and purchase, you are extremely likely to come back. At least for a couple years.   Click here for an interesting interview with the founder of Diapers.com .

    In conclusion,  if you have long term plans to build a solid business, investing in a great domain name may be one of the best things you can do.   A great domain name will complement your marketing efforts, aid your SEO activities, reinforce your brand and bring type-in traffic.

Click here for a list of top prices paid for domains (these are just the domains without an underlying business)

Click here for some top prices paid for domain names.

Click here for info from Wikipedia on the highest prices paid for domain names.

Do you have a story about your own domain name?  Tell us about it!


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