Should Your Business Spend Thousands of Dollars on a Strong Domain Name?

Let’s face it. Domain names are getting expensive. If you’re lucky, and you’re trying to get a domain name that’s long, strange or not hotly contested, you can probably pick up the name for just a few bucks. But if you want something short, attractive and marketable, you could end up shelling out several thousand dollars — or even millions for the most lucrative opportunities.

Is this really worth the money? Or is it better to pick up a cheap domain name and invest the money in something else, like marketing or infrastructure?

What’s the point of a good domain name?

It’s hard to overstate how influential a good domain name can be on the course of your business.

Consider:

• Type-in traffic. The bulk of your web traffic will likely come from organic search, referral links, social media posts and other external sources. But let’s not forget about direct traffic that comes from typing in your web address. First-time visitors, curious browsers and others will all have a much easier time finding your site and exploring it if you have a short, easily memorable domain name.
• Marketability. Some domain names also lend themselves to better marketing and advertising campaigns. Short domain names are cheaper to market and are much more memorable for your audience. Additionally, some effective domains have “hooks” that make it easy to write jingles or persuasive copy. A marketable domain name could easily multiply your results.
• Perceived authority/reputation. Which website would you trust more, assuming you knew nothing about them: Books.com or OnlyTheBestBooksFoundHere.com? Generally speaking, people assume that a shorter, more definitive domain name would be associated with a more authoritative, trustworthy company. This isn’t always the case, and your reputation won’t hinge on this fact, but it’s a nice advantage worth noting.
• SEO and search engine benefits. Your domain also has a significant impact on your search engine optimization (SEO) strategy. Short domains that feature competitive keywords have a distinct advantage over their counterparts; they have a higher likelihood of ranking highly for those terms, ultimately generating more brand visibility and organic search traffic over time.

The most expensive domain names

Those benefits all sound great. But how much are they worth paying for?

You have to draw the line somewhere. The most expensive domains ever sold include things like Business.com (for $345 million), LasVegas.com (for $90 million), and CarInsurance.com (for $49.7 million). Clearly, someone thought the benefits of these domains would eventually outweigh the upfront costs.

For the average business owner, the benefits aren’t sizable or immediate enough to justify such a transaction — especially considering the risk.

The central problem here is competition. Business owners, investors and digital marketing experts all have a solid understanding of what makes a domain valuable — and they’re all aggressively bidding on the most marketable and memorable domains, artificially driving the prices up and making the trade-off harder to calculate.

Alternatives to overpaying

If you search for an ideal domain name and it’s available for a reasonable price, congratulations! You have nothing further to contemplate. Make the purchase, and enjoy your valuable new domain.

But if that domain isn’t available, if it’s overpriced, or if there’s just too much competition for it, you’ll need to come up with an alternative option.

• New names and alternative angles. You could tinker around with different variations of the domain you’re searching for, different spellings or alternative phrases. Of course, to do this, you might need to compromise your SEO keyword targeting. You might also be weakening the strength of your chosen domain in the process. But if it saves you thousands of dollars, it might be worth it.
• A different TLD. There are many different TLDs available these days, and many of them are uncontested or sparsely populated. If you can’t get a .com extension for your domain, something slightly more obscure might be available. There’s a tradeoff here; it’s not a strictly beneficial move, but you might have the potential to preserve your central target keyword without much compromise.
• Plans for future upgrade. You can also buy a cheap, non-competitive domain for now, with plans to upgrade it in the future. Transferring your content to a new domain is a bit of a pain, and it takes time and money, but it’s certainly manageable. If you’re starting a company on a shoestring budget, or if you’re not sure what your domain needs will be in the future, this could be a viable move.

Is it worth it?

So what’s the bottom line?

Domains are incredibly valuable. Getting the right domain for your business could instantly increase its chances of long-term success. But that shouldn’t automatically justify a high price tag, especially if you’re bidding on a domain for a highly competitive keyword. Consider the costs and benefits carefully before making any final decision.

Originally appeared in Entrepreneur