September 23, 2019

Domain Name Investing: Invest in Premium Domain Names

written by

Joe Uddeme

Joe Uddeme

Domain Name Investing: Invest in Premium Domain Names

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There’s more to a premium domain name than a high price tag – a great one can accelerate business growth and promote long-term financial stability. NameExperts.com Director Joe Uddeme explains why landing a beauty could be essential for your company.

 

Here’s a question for every company to tackle. Small businesses and startups in particular need to consider if it is worth investing a quarter of their funding, say, on a premium domain name rather than better office facilities or company cars.

The answer to that question is seldom simple. That’s because it is dependent on the kind of business the domain name will be used by, together with a number of other aspects.

A domain name is critical because, quite simply, you can’t run a website without one. It will be the title of your site and email – and will play a crucial role in your marketing strategy once you’ve purchased it.

In this guide, we’ll study everything there is to know about premium domain names so you can decide whether you should buy one for your business.

Even if the name you want ends up costing $10,000 or more (LOTS more, in some cases), it might prove to be one of the best investments you make for your company.

Two rolls of dollar bills on white table to denote high cost of premium domain names

 

When is a Domain Name Considered a Premium Domain?

The process of buying domain names usually involves several disappointing moments. Such as when you first think of an especially excellent name… only to search for it and discover it was bought in 1999 and is currently up for sale for $100k.

The crazy thing is, these domains do nothing special. There’s no rocket science involved with coming up with them – which is kind of the point. Premium domain names with a high price tag are familiar-sounding and catchy. Everyday words. It’s why cars.com sold for almost a billion dollars.

A great domain name will help your site gain more traction much faster – and will prove to be one of your greatest investments if you have chosen wisely. This is the reason why a domain becomes a premium one.

 

The Precise Definition of a Domain Name

The cost of a domain name will give away that it’s a premium one. Usually, a regular premium domain name is a domain name that is already owned by a registry or a person. If you want it, it’ll cost you.

The name’s costs are exponentially higher than a typical domain and can vary from a few hundred dollars to millions. This is because of the perceived value which it might have for a company within a particular industry.

In order for a name to achieve a high sale price, there has to be somebody who believes it is worth it. Until a domain name is sold, technically speaking it is worth virtually nothing. Try getting a million bucks for a domain name if the internet permanently goes down!

A domain name is considered premium due to its brandability, keywords and overall desirability. All these are highly valuable for a business that wishes to branch out on the internet.

Not every premium domain price is set by a person. On occasion, the relevant registry (such as .info or .design) sets the cost for this.

 

The Potential Problems With Choosing a Not-So-Premium Domain

There are a few issues a company might run into if they don’t choose the best domain name they can. Here are the main difficulties:

  • Trust and Branding Issues. Often, having a .com domain is the best way to show that a company is serious and trustworthy. A good deal of experts say to always go with .com, but there are lots of other options too, including .org, .co and .io. A trusted domain name consultant can guide you on the best choices here.
  • Little Potential to Grow. When you’re stuck with a lemon, you can limit your business opportunities. Numerous businesses end up thriving after purchasing a premium domain name for around $500,000, particularly if it matches with their institution’s name.
  • It Might Confuse the Client. If a business opts for an inferior domain extension, they may lose lots of customers. Some of these would-be visitors might believe the support is down or that the site doesn’t even exist because what they have actually done is visit domain.com rather than your site – domain.co.

Cute puppy dog looking confused

How a Premium Domain Name Can Help Your Website

The fantastic thing about ultra-premium domain names is the fact that they are pretty much household names – so you don’t have to make additional investments in making them known. As a result:

  • You’ll have to spend less money on internet PPC advertisements. Why? Because you are going to get organic visitors to your website as soon as you’ve launched it.
  • You’ll enjoy better SEO and site rank – resulting in more traffic. Individuals are already searching for your website and will be glad to find it.
  • There are more trust and authority involved using a premium domain name, which will make reliable companies link to your site. This can further boost SEO.
  • A short, catchy name functions really well on social media and people will remember it.
  • The domain will provide prospective clients with a strong indication about what they will find on your website, so you don’t have to invest money and time describing it to them.
  • Simply speaking, it is much simpler to make a premium domain popular. You’ll have to devote a good deal less money on advertising it.

Summing up

If you’re doing business in a market where word of mouth is essential, than premium domains are definitely something to consider – whatever the cost.

Not all small business owners and startups, however, should start with a premium domain name. A business can definitely be effective with a less-than-perfect domain name if it is catchy enough.

If the domain name you’re considering matches your branding, sometimes that is all you’ll need. It can work well even if it doesn’t match your business’s name.

If you can’t get the .com extension you want, it is possible to go with .co, .ai or many other top-level domains (TLDs).

But when you start to hit it big, securing a premium domain name could be a very wise move – because there’s a high possibility it will pay off handsomely within the next few years.

 

About the author

Joe Uddeme is Director and Principal of Name Experts, one of the world’s leading domain name brokerage services. He has overseen domain name sales and acquisitions totaling more than $150 million and is renowned worldwide as a go-to expert in buying and selling premium domains. Contact us at: [email protected]

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With enough attention and audience, you can proceed to the next step and start thinking about selling the domain. Step 8: Determine Your Domain’s Value You have successfully attracted attention to your domain and are ready to sell. First, you must determine a fair value for the domain. You don’t want to underprice the domain and leave much money on the table or, inversely, overprice the domain and not find a willing buyer. Here are critical questions to help you determine your domain’s value: Does the domain receive any traffic? The higher the volume of traffic to a domain name, the more valuable it is. Showing proof of high traffic can fetch your domain a substantial price. Does it generate any income? If your domain name already generates income from advertising or any other method, it becomes easy for an interested buyer to value it. You can sell the domain for many multiples of its revenue. Does it have any search engine authority? Your domain’s search engine visibility largely contributes to its value. Domains with quality backlinks have more value than those without. Check your backlink profile to evaluate how much your domain name can fetch. If you feel they aren’t enough, you can build more backlinks before listing the domain for sale. Is the domain name brandable? You’re more likely to fetch a higher price for a domain that’s easily brandable. Such domain names tend to be short and easy to recall. Businesses pay top dollar for brandable domains because they draw more online traffic. Does it have a popular TLD? Domain names with popular TLDs like “.com,” “.net,” and “.org” are more valuable than those with less popular TLDs. Pro-tip: If the answer to all the above questions is yes, you’re on the right path to flipping domain names for profit!   Step 9: Selling Your Domain Name You’ve determined a fair price. Now it’s time to sell. Consider how you want to sell the domain and evaluate which route will give you the optimal price. Your best options for domain name flipping include: Private Sale: Sellers can negotiate one-to-one deals with prospective buyers. You’re free to approach any individual or business you think might be interested in your domain name and negotiate a price. Marketplace: You can list your domain name on a dedicated domain name marketplace. It’s easier to find buyers this way because the marketplace already has domain name investors looking to buy. The marketplace will take a cut of your sales for their service. With a Broker: Another effective way is to hire a domain name broker like Name Experts to negotiate a deal for you. Domain brokers are experienced in evaluating the value of domain names and can fetch you the best possible price. The broker handles the negotiations, and the only thing you will have to do is authorize the domain transfer. Auction: Auctioning your domain name is another way to sell it. You’ll place the domain up for auction on a marketplace, and the intending buyer with the highest bid will buy it. Domain auctions usually last several days, so there’s ample time to find a willing buyer and profit from domain name flipping.   Step 10: Use An Escrow Service It’s advisable to use a third-party escrow service when selling your domain name. The escrow service holds the money paid by the seller and releases it after confirming that you’ve transferred the domain. It prevents you from falling victim to fraud, e.g., a buyer refusing to pay after you’ve transferred your domain.   Step 11: Transfer the Domain The last step – all you have to do now is transfer the domain as agreed to the buyer. You’ll need to request an authorization code from your registrar and transfer the domain to the buyer’s registrar account. Note that most registrars require a domain to be at least 60 days old to be eligible for a transfer.   Domain Flipping Tips Building Your Domain Portfolio You can become an expert investor specializing in domain names if you’re willing to learn about the marketplace and create long-term value. Domain names are like any other asset to invest in, but you must do it carefully. Follow these tips to build a good portfolio and make money flipping domains: Understand your strategy: Domain name investors either follow the “quick flip” or “buy and hold” strategy, and these phrases are pretty explanatory. Choose which strategy you want to follow, or use a mix of both. Diversify your portfolio: The portfolio’s value should not be tied up in a single or few domain names because of concentrated risk. If possible, acquire more domain names to balance your risks. Never overpay for an asset: Don’t be the inexperienced investor who overvalues and pays excessively for an asset. Ensure you get third-party evaluations before paying for a domain. This will help you to maximize your profit when you sell the domain. Study and gain knowledge: The domain name investment scene is flexible and dynamic. New events occur every day that affect the value of domain names, so ensure you stay up to date with industry news to avoid getting left behind. Domain Flipping Risks Domain name flipping doesn’t guarantee profits. It carries risks, just like any other type of investment. The main risks include: Low Liquidity: Domain names don’t have as much demand as other assets like stocks, bonds, and commodities. You’ll likely need to wait a while after listing a domain before you find a willing buyer. It’s not something to invest in if you want short-term liquidity. Unexpected Valuations: Domain name valuations can swing high or low on a whim. You might buy a domain, wait a while and list it for sale – only to find the offers are significantly less than you paid for it. Domain name valuation is not as technically grounded as in other assets like stocks and bonds; the value depends significantly on a buyer’s intuition, so be aware of the risks. Other Ways to Make Money with Domains Buying domain names to resell isn’t the only way to profit from them. You can make money in other ways, such as: Domain Leasing: Rent your domain name to another party for an extended period. You’ll be paid at specific intervals such as monthly, quarterly or annually, giving you steady income for as long as the lease lasts. Parked domains: You can keep a domain and make money by placing ads on the homepage with a strategy called “domain parking.” You might also redirect the parked domain to an existing website you operate that generates revenue.   About the author Joe Uddeme is Director and Principal of Name Experts, one of the world’s leading domain name brokerage services. He has overseen domain name sales and acquisitions totaling more than $150 million and is renowned worldwide as a go-to expert in buying and selling premium domains. Contact us at: [email protected]

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