How domain names become valuable?

This question has made us think! In the past, we have heard stories of famous TLDs being sold at stratospheric amounts, whether it was because of their history, brandability, strategic meaning, age, length, and many other appraising factors. Meanwhile, other domains cost just a few hundred or thousand dollars. In this case, what changes after you purchase the domain? Will it become valuable?

It depends. For domainers, the prospect of making a profit out of the domain names they own will depend on external factors, like a surge in the popularity or competitiveness of a particular domain name. While these factors can increase the price of the domain name, price -as we know- is not the same as value.

A domain name increases its value when it is attached to a website with any form of fresh content. Search engines like Google will rank the website based on the added value and originality it offers to visitors, boosting its discoverability status.

Imagine that an entrepreneur has a company, and he buys a domain to create the online presence of a product or service. He has a business plan, builds a website, and puts in place the right branding and marketing strategy around the domain name to market its business. These actions, combined with the inherent attributes of the domain name (length, memorability, keyword-oriented, brandability, etc.), will increase its value, and the confirmed capacity of generating profits in the long term will make an additional impact on the value of the domain name.

What domain names are best?

This is a no-brainer. The best domain names

− are easy to remember,

− are easy to write, read, and pronounce

− have the potential to become a well-developed brand,

− are intuitive,

− include keywords (when possible),

− do not infringe copyright or trademark rights,

− have the .com extension, which brings authority and credibility.

Other qualities which make a domain name great are:

− if they do not have hyphens or numbers,

− if you can use the same name for your social media profiles,

− when they are not comparable to other domain names

Which domain names are free?

A popular adage says that “there ain’t no such thing as a free lunch”.

While there are some web hosting companies that offer customers the possibility of acquiring a domain for free, the truth is that as long as you are paying them a monthly fee, you have the right to use the domain name as part of their services. In case you have a business, using this solution will not make you the owner of the domain name, which could put you eventually at risk.

Some website builders offer you the possibility of creating a free subdomain, which could work in informal settings. But if you plan to build a credible reputation for your business, this is not the way to go.

There are domain registrars who also offer free domains as long as you agree to run ads on your website. The drawback is that you do not have any power over the content of the ads, including their placement, which could potentially affect your SEO rankings and hurt your online reputation.  

Can domain names be capitalized?

A document from the Internet Engineering Task Force (IETF) -the international community in charge of developing the guidelines and standards that are applied to the Internet-, states that Domain Name System (DNS) names are “case insensitive”, on account of the time when they were first developed (the ASCII era), as well as some technical and security issue. In plain English, no, domain names cannot and should not use capital letters.

Do premium domains help with funding?

Absolutely! Owning a premium domain name brings incredible benefits, from brand recognition to traffic, authority, and trustworthiness. Also, if you are looking to secure funding for your company, having a premium domain name can give you that oomph factor that will attract investors to your business.

Back in 2010, the American entrepreneur and angel investor Jason Calacanis explained that having a great company name and securing the right domain were qualities that heavily influenced backers to put their money into startups. For him, it translated to credibility and strength, qualities that he looks for in potential partners.

“If you go into a VC or angel meeting with a crappy name, they will look at it the same way they look at you unshaven with a stain on your shirt and a deck full of misspellings: that you lack focus and attention to detail.”

So, to sum it up – the domain name alone is not a magic stick that will miraculously make your business work. BUT if you have a good idea, a solid team behind it, and a great product, the right domain name will add value to your business, open opportunities, create trust and authority. Not only that, not owning the perfect name will cost you money and expose you and your clients to risks.

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We hope you will find the answers helpful. If you haven’t checked out our first FAQ blog post, you can read it here. Remember, we are here to help you build your brand. If you have any questions, please feel free to book a free consultation at MarkUpgrade, we are always happy to hear from you.