It’s High Time to Redefine “Sea Level” in Domain Name Pricing!

by Edwin on June 9, 2011

Ever since I started in the domain industry in the mid-1990s, the resale price of domain names has – perhaps inevitably – been compared to the “registration fee” that would be incurred if one were obtaining a fresh, unregistered domain name instead.

For example, a name being sold at US$2,000 is frequently seen as “costing” 200x the nominal value of a registration (Shock, horror, swoon!)

This makes for a compelling analogy, especially for a buyer trying to get a better price, but it’s a fundamentally flawed comparison as the conceptual model of the domain name industry that it invokes disappeared a long time ago.

Here’s the bottom line: all the good domains are gone.

There are simply none left to register. And therefore, any comparison to “registration costs” is both misleading and irrelevant.

(Aside: We could split hairs about the exact definition of “good” in the concept of domains, but let’s keep things simple: generic, descriptive, commercially valuable, exact match domains in desirable extensions, whether .com or the .cctld of a country with a strong online economy. Now back to the main point.)

As such, the modern domain name industry actually resembles the property industry closely (all commercially relevant land is already owned by somebody; all commercially relevant domains are already owned by somebody).

But that means that, just as you would never expect to compare the value of a house today with the original price it commanded when it was first sold however many hundreds of years ago – what a pointless exercise THAT would be – you also shouldn’t compare the value of a domain name today with the original registration fee it commanded when it was first registered (however many years or decades ago).

Those hypothetical “starting values” are an amusing anacronism, but nothing more – the only thing that matters is the value that the market places on those assets (whether physical or virtual) right now.

You see, unless you’re talking about completely made up “brandable” domain names (of which there are a near-endless number still available) there are only a handful of ways to describe a given product or service in a generic way.

And since inevitably all the good domain names corresponding to each of those ways of describing that particular product or service have already been taken, probably long ago, the only possible logical comparison is “If we want to secure a domain name that covers this niche, how much will it cost me to buy DomainX vs DomainY vs DomainZ?” (assuming they’re even on the market, and not already held by a competitor).

So take a deep breath, and cleanse your thoughts of any mention of “registration fee”! It may have been a lovely pipedream, but there was never any real chance that you could have picked up that great domain name for registration fee

Indeed, why not resolve to deal with the realities of TODAY’s domain market head on? Your business will thank you for it…

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