Some business owners still think domain names are too expensive, however, I want to put some myths to rest today and prove that domain names are a bargain. First, let’s analyze the real costs of domain names. According to a search on namebio.com, within the last 12 months there have been 104,220 domain names sales reported with an average sales price of $1,333 for a total volume of $138.9 million. Here’s a break down by price, keeping in mind that the highest transaction was voice.com which sold for $30m.
- 103,176 domains sold for $1 – $9,999 with an average sales price of $613 for a total volume of $63.3m
- 975 domains sold for $10,000-$100,000, with an average sales price of $21,540 for a total volume of $21m
- 64 domains sold for $100,000 – $999,999, with an average sales price of $271,875for a total volume of $17.4m
- 5 domain names sold for $1m or more, with an average sales price of $7.4m for a total volume of $37.2m
removing the voice.com transaction, there were 104,219 domain names sold for an average sales price of $1045 for a total volume of $108.9m. Either way you slice it, good domain names are not cheap. Now I will compare both advertisement and operational costs for a small business, show that those sunken costs do not drive revenue to to the business for the lifetime of the business. I will show you that a domain name is an asset that drive revenue to small businesses.
COMPARING ADVERTISEMENT COSTS AND COST OF A DOMAIN NAME
Let’s analyze the cost of some types of advertisement in 2019.
- a superbowl commericial costs $175,000 per second
- radio advertising cost $200 to $5000 per week (depending on the size/locale)
- a full-page newspaper ad costs between $2700 and $163,000 (depending on size/locale)
- a magazine ad costs between $500 to $20,000 (depending on local/national publication)
- a billboard ad costs anywhere from $250 to $14,000 per month (depending on local)
And that’s just the tip of the advertisement iceberg.
Let’s ask some pointed questions about advertisements
- Which of the ads above are an ASSET? More precisely, which of the above forms of advertisement can you resell or will generate revenue for your business long after the ad stops running?
- Which of the ads above run for the lifetime of your business at the above price?
- Which of the ads above can generate revenue from for the lifetime of your business?
The answer to all three of these questions is none; however, a domain name can do all three. This alone proves that domain names are a bargain, but I’ll take it a step further comparing operational costs to the cost of a domain name.
COMPARING OPERATIONAL COSTS AND THE COST OF A DOMAIN NAME
Now, a few more questions for business owners:
- how much does it cost to rent, lease or buy a brick-and-mortar building to house your business?
- how much does it cost to pay for basic utilities (phone, water, electric, gas, trash collection) over the lifetime of your business (or even a single year)?
- which of the above generate revenue for your business all by itself?
The answer to both questions are none, and both will cost you more than acquiring a good domain name, which could easily be your primary revenue generator over the lifetime of your business.
A CASE STUDY
Let’s do a real-life case study of a fictional small business. The name of this business is Tri-State Used Cars, they have a small car lot with 2 employees. Bob, the owner, owns the land and has three employees. Here’s an overview of some of his basic costs, with some estimates on the low side:
- employee salary and benefits – $75,000 annually
- his lease or mortgage on the property – $15,000 annually
- insurance – $1,000 annually
- utilities (electric, water, phone) – $5,000 annually
- advertising – $5,000 annually
Which of these generate revenue by themselves?
Bob needs all of these things to sale cars from his car lot, without them he cannot run his business. Bob’s annual costs are $101,000 per year for just these five things. None of these five things by themselves generate revenue for Bob’s business. Bob wants to build a website and read my article about the 14 Things You Must Know Before You Buy a Domain Name. He locates a good domain name in tristateusedcars.com, and is astounded that a domain investor wants to sell it for $7,500. Bob, like many people who want to buy a domain name from a domain investor, thinks this is way too much money.
DOMAIN NAMES ARE AN ASSET
What Bob is not considering is that he would be buying an asset, and it’s a one time cost. Additionally, there are many used car lots with the name “Tri-State Used Cars”, and he could easily be the number one search result anytime someone typed in “Tri-State Used Cars” into google. He could easily get customers to his car lot that would have never considered coming to his car lot before, even some from out of state. More, when Bob retires, he can sell that domain for more than what he bought it for, much like he will sell his property where the car lot once resided. A domain name, like the land the car lot is on, is an asset that will drive business to his website. It is worth far more than any local ad he runs in the newspaper or television – in fact, a domain is not advertisement, it’s a asset!
three reasons domain names are a bargain
- Domain names most often cost less than a single year of operational or advertising costs.
- Unlike the sunken costs of business operations and advertisement, a domain name is an asset that has value and can be resold.
- A Domain name is a one-time-cost that drives revenue to small businesses throughout the lifetime of the business, unlike advertising.
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