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Why a Premium Domain Makes Sense

The domain name you want is registered. Is it worth paying a lot of money to buy it from the current owner?
We recently outlined why some companies paid big bucks to buy their domain name. Owning a great domain name—a “premium domain”—can pay dividends for your company in the long run.
But how can you convince your marketing team that it’s worth the cost when new domains can be registered for less than ten dollars? And if you don’t have the money on hand, how can you get a domain name now and pay later?

Premium domains can boost your company’s bottom line

A great domain name comes with a lot of benefits. For instance, premium domain names:

  • Boost word-of-mouth marketing because the premium domain is easy to remember.
  • Establish instant credibility—when you visit a site on a great domain name, you give it more trust than one on a bad domain name.
  • Create instantly-recognizable branding (think Google.com).
  • Avoid confusion from hard-to-spell or tricky domain names.

Justifying the Cost

Once you’ve determined that a premium domain has value to your company, you still have to contend with the purchase price. How can you justify paying $10,000, $100,000 or more for a domain?
Let’s consider a $10,000 domain name that you want to buy for a new product launch. That figure might seem crazy. However, ask yourself how the cost compares to your other expenses for the product: your marketing budget, product development costs, etc. It might be that $10,000 might be small compared to other costs. If getting the right domain name contributes to the product’s success, it’s a small price to pay.
Also consider that the $10,000 cost is a one-time expense. Renewal fees are much less. If you think you’ll use a domain at that cost for ten years, your annual cost is really only about $1,000.
What about upgrading to a new domain name? At first blush, it might seem like West Monroe Partners paid a lot when it bought the domain name WMP.com for $275,000. But consider that the consulting firm has 1,000 employees. So it paid a one-time fee of $275 per employee to buy the domain name, which is much shorter than its existing WestMonroePartners.com domain.
Think about the value the firm will get. It will now be able to tell people “go to WMP.com”. When employees give their email address out over the phone, they’ll be able to do it without spelling out the email address because it’s short. That’s a big time saver and will avoid confusion in the long run.
Indeed, WMP.com was well worth the cost for West Monroe Partners.

Coming Up with the Cash

You’re convinced that buying a premium domain is worth it but simply don’t have the cash? There are a few ways to get the domain name you want and spread out the payments.
One option is to work out a payment plan with the seller. See if they will let you pay the domain name off over time. This gives you instant access to the domain name and spreads out the cost. SumoMe entered into a payment plan to buy the domain name Sumo.com.
Some domain owners will also offer a lease with an option to buy. This way you can make sure your business idea is going to take off before spending lots of money on the domain.
Domain name escrow companies offer services that “hold” the domain name until all payments are made.
Another option is to finance the purchase. You can use an existing line of credit. There’s even a company that specializes in lending money for domain name purchases.

A Long-Term Investment

The key takeaway is that owning a great domain name can be a good long-term investment for your company. It can mean better name recognition, instant credibility, and more profits.
By all means, try to find an inexpensive domain name first. But it might be easier than you think to justify the cost of a premium domain.
When you’re looking for your next domain, be sure to check out Namecheap’s wide range of domain options.

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Andrew Allemann avatar

Andrew Allemann

Andrew is the founder and editor of Domain Name Wire, a publication that has been covering domain names since 2005. He has personally written over 10,000 posts covering domain name sales, policy, and strategies for domain name owners. Andrew has been quoted in stories about domain names in The Wall Street Journal, Washington Post, New York Times and Fortune. More articles written by Andrew.

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