“This domain name can be developed into a great website!” This popular phrase amongst sellers is laughable to many buyers and developers who would argue that ANY domain name can be used for a great website. What some sellers don’t realize is the actual time and cost of building a profitable website. This can cause a disconnect between domain sellers and buyers.
For many buyers who plan to develop their domain purchases, the right domain name is essential, but contingent upon the price. When buying a domain name for a specific project, the buyer knows his overall budget (based on expected returns). In the budget, he allocates funds based on the approximate cost of the project, the cost of marketing, the cost of technical management, hosting, and other incremental costs. He also knows what he can afford to spend on the domain name. Most of the time, a buyer is willing to spend a bit more than he really wants on the right domain name, but there is a limit to the overage.
Developers typically think differently than domain investors. Developers believe that if they build a great website, visitors will find it no matter what the domain name is. Domain investors believe visitors will find the website more easily (and more quickly), and they will be able to recall the website much quicker if it has a memorable generic domain name. Both lines of thought are accurate, which can make bridging the gap more difficult.
In my opinion, the time to spend the money on a generic domain name is if you have a “category killer” product or service, and owning the domain name of that category will instantly make you the industry leader. If you are building a city directory for example, you want to spend the extra money and buy the city .com name rather than a “brandable” domain name. It gives you instant credibility when speaking with potential advertisers, and Google loves targeted domain names!