To get the right domain name that will be a key asset to help your startup, you need to understand the importance of domains and the role they play.
Only then will you appreciate their value, and why they’re such prized assets that are worth many tens or even hundreds of thousands of dollars.
Lots of entrepreneurs make the mistake of refusing to pay ten thousand dollars for the right domain, only to invest many times more to build the company around a $10 domain with weak foundations.
Read on to discover the importance of choosing the best possible domain name to brand your startup, and how to acquire a domain that’s taken already.
This article will share insights on what you can do and what to expect when trying to purchase a premium domain name from the existing owner.
#1 Good Branding is Essential to Help Startups
There are many things startups need to get right to succeed.
Some are much harder than others. Some are more unpredictable than others. Many carry an ongoing amount of unknown risk that needs to be managed.
Compared to product development, user acquisition, and customer retention, branding is an area which can be refined without as much external uncertainty.
Finding a solid name with a matching .com domain is something that can be achieved from the outset. All that’s required is for the founders to recognize the significance of having a smart branding strategy and to use their domain name as a core brand asset.
Startup companies need all the help they can get to establish credibility. Building your business on a .com domain that matches the name of your product or SAAS will definitely help to reinforce the brand.
Apart from acquiring customers, having a strong brand also makes a big difference in plenty of other areas needed to support the growth of a startup. From establishing strategic partnerships and recruitment, to capital raising and vendor management — counterparties are all greatly influenced by your brand.
#2 Domain Name is Central to Tech Startup’s Brand
Any venture that needs to establish a successful online presence, should have the best website address possible. And that means having a .com domain name that’s the perfect fit for your startup’s name.
If you’re reading this, you probably already know how it’s critical for your startup to own and use the exact match .com domain name for your product.
If you’re not sure why it’s so important, take a look at Paul Graham’s fantastic essay on startups and dotcoms – he explains it very clearly.
Unfortunately, far too many founders treat their domain name as an afterthought or fail to understand how much it defines your brand, especially for web-based businesses.
They don’t realize what message is sent by having a cheap second-rate domain. If you can’t even get your naming right, it makes people wonder about your product, customer service and everything else.
In contrast, a top notch domain wows potential customers, making them want to discover more about other ways you may impress them.
#3 Understand the Premium Domain Aftermarket
There’s a great deal of misunderstanding and false expectations surrounding domain names.
Unregistered .com domains can be purchased for $10. This makes some people think they should only pay that amount for all domains, even if someone else registered the domain 20 years earlier and paid hundreds of dollars in renewal fees over the years.
Or, ignorant people may feel frustrated someone else has taken something that (they think) belongs to them. That others have no right to own ‘their’ domain, even though it was registered years before their business was even conceived.
These faulty beliefs are unproductive. And can only have negative consequences.
Entrepreneurs need to understand the market for quality domain names to appreciate and capitalize on their value.
#4 Quality Domains are Strategic Investments
People who undervalue domain names think they are just tools to serve a purpose. Much like how a spreadsheet crunches numbers, domains are needed to have website and email addresses.
This misses the point on the critical part domains play as the foundation of every digital brand.
Just like brands and brand names, domain names are strategic assets that can contribute greatly towards the operational success of a business.
Treating them only as a website address doesn’t account for all of their value and the benefits they will bring to a business. This is why there’s normally a big mismatch between the prices asked for premium domains and the prices entrepreneurs are willing to pay.
In order to acquire top grade domains, end-user buyers need to treat the sizeable purchase price as a strategic investment that will generate returns continually into the future.
When it is amortized over 10 years, a $100,000 domain only costs $10,000 a year, and less than $1,000 per month. That’s an extremely affordable amount compared to typical marketing expenses.
#5 Manage Expectations & Have a Realistic Budget
Buying a domain name that’s already registered by someone else can be time-consuming and frustrating. It can also be an emotional experience as a lot of money may be involved.
But it’s not just the money — the name of your company, website and email address is on the line.
If you’re able to buy the domain for a few thousand dollars or less, you’re in luck. Although you may be upset — or feel you’re being extorted to pay for something that should be yours — just be glad you’re able to solve the problem for a relatively affordable amount.
If the name of your app is very short or a popular keyword, the domain owner may only be willing to sell for a five or six figure sum. That’s way too much for most budding app companies. But the more successful ones will know the value of the domain and may use the proceeds of subsequent funding rounds to make the purchase.
The real problem arises when the domain isn’t available for sale at any price. Or where the owner is so large that only a multi million dollar valuation may make sense. In which case, there’s no realistic hope of getting the domain and you’ll have to consider alternatives.
