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Why Would Anyone Pay Thousands for a Domain Name?

premium domain name for your business [1]It’s not cliche to say that today every dollar counts. Times are tight — for some, times are very tight — and business owners across the country are looking at every dollar they spend to make sure they are getting the return they need from the money they invest.

So why then, in times such as these, would anyone be willing to pay thousands of dollars for a simple domain name? The answer is easy: because those simple domains (often called premium domains) can make a difference.

THE AGE OF THE PREMIUM DOMAIN

A premium domain is a domain that has been registered previously and is back on the market for resale (it’s like a used car lot for domain names but these items have not depreciated in value — in fact, it’s quite the opposite situation).

You see, today there are about 76 million dot com names registered worldwide. That means the chances of finding a very intrinsic dot com (shopping.com [2], flowers.com [3]) are slim. These names were snapped up years ago but now, these early domain registrants are increasingly willing to part with their prized domain names for the right price. Some of these sales live in infamy (consider Pizza.com [4] that sold for $2.6 million in 2008 or Business.com [5] that sold for $7.5 million in 1999) but the average premium domain price tag ranges from a few hundred to a few thousand dollars.

SO WHAT CAN A PREMIUM DOMAIN NAME DO FOR YOUR BUSINESS?

About 80% of US adults are online. That’s an audience size that’s hard to reach through traditional offline marketing.

What’s more, the brand you build online can keep working for you long after your most recent flyer has been discarded.

So the bottom line is: what may seem like an extraordinary expense on first glance is actually not so outlandish. Consider the benefits you could reap from the right domain name.

My advice for small businesses is not to count out your domain name when you’re planning your marketing spend. Compare the return you could receive with your other marketing efforts (online and offline).  Do a little research to see if the right domain name is available for your business. Domain registrars have search tools to help you understand what domains are available to best represent your brand.

At a time when every dollar counts, a premium domain might just be the best way to put your marketing dollars to work for you.