E-Commerce Tips – How Much to Spend on a Domain Name

Leave a Comment0

So right off, lets be clear,  I am biased. I sell and write about premium domains. But I think a reasonable guideline is needed.   I think operators and investors of internet or e-commerce businesses should spend up to 10% of one years sales, or if a startup at least 10% of your friends and family round, on a good domain name.

Why? Because you save so much money operating a online business, but now where will you spend the savings? If you apply the same saving money emphasis to your image, brand, internet address and first impression – you hamstring your success.  There are times to save money, and times to spend money. And I think your domain name is the one place you should overspend your natural thoughts.

Your spending on your personal brand, apparel, car, hotels you choose, where you eat and socialize. You place advertising in expensive places, and you know its worth it – but somehow yo get cheap when it comes to your domain name.

Ok, lets break it down. Compared to 20 years ago starting an old school business; you save money operating a online venture.

1) Most likely your a virtual business, no rent, no office space or extra utilities, desks and supplies.

2) Distribution – Old days you had reps or distributors taking some of the profit. You had sales managers, territories, overhead that you don’t have when your reaching the customer directly.

3)  Outsourcing – You buying apps and outsourcing services instead of having administrative assistants and other staff.

But your rent did pay for a good location. You tried for Main Street. The corner lot. You wanted to be on a an off-ramp, or Fifth Avenue.  So your expense was a chance to build prestige. You paid more to be in a good location, closer to employees, customers or downtown where business gets done. If you were a local business you became Dallas Ford. Boston Window Cleaning. It sounded official. It sounded local.

You invested in your own personal brand, clothing, atmosphere. You wanted to add credibility in your office and surroundings. You joined the Country Club, you were seen.

You also pursued Partnerships and Joint Ventures. You tried with your location, office and personal credibility to show you could partner with bigger companies.

So now with your online business, your saving money on many of the normal expenses, but where is your credibility coming from now. The answer could be your domain name.
And if your running your business with thiswasthe-bestname-icouldfind.org, your telling outsiders when you made your first choice – you went short term and cheap.

Your domain name is the first impression you will make on your customers, suppliers, investors, friends and in your industry events.  Now you may have another strength and not need the credibility boost. You may have big up front funding, or an “in” with a major player.  You may have a technology edge. If so play to your strengths, use them and maybe it doesn’t matter your branding or domain name.

But if your a customer facing business, in a competitive field; your domain name is both the address people will functionally need to remember to find you; and  one of the factors they will use in evaluation whether to visit your website; or learn about you. An by starting with your long term name right off, your links age with your best name. You not reprinting business cards, your email addresses stay the same.

So when it comes to spending on a domain, you may think any name will do, so you stay up all night, spend the $8.  But your missing a chance to improve your time to market and reduce your marketing spend with a better name.

And the number pan out. Say your name helps people remember your advertising just 10% better, and your spending $5000 a month on advertising. Thats a $500 month advantage over says 5 years, thats $30,000.

Now a made-up brand means you have to spend over and over to reinforce your brand. So even when your growth spend levels off, you still need to spend because your name wasn’t easily remembered.  An easy to remember name or a functional domain name allows you to save money on the maintenance spend.

Now lets look at relationships, directories, websites and industry trade events. As your starting out, you have a much better chance to be placed on panels, speaker positions, or directories with a name that sounds like you’ve been around – and/or an established  company.

When I had Seniors.com, I made every directory of seniors sites – even with no content. The name itself said I was a player in the industry.

Now lets look at startups, a good name will show investors your in for the long term and provide an asset that will always be part of the company. And a domain. name can be a sellable asset for the company, and that value can only be improved on with operations.

So next time your looking to save money, do it; but maybe not on your domain name.

And next up, theres never been a better time to buy a good domain name. Step 1 get help.


Leave a Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.