Domain Names Are Relatively Cheap

5

I read an Inc. article about a company called Swag, which uses the exact match Swag.com for its domain name. What grabbed my attention beyond the killer domain name was how they reportedly got the domain name:

“They also observed that no one owned the domain name swag.com, so they quickly grabbed it.”

This stood out to me, and a couple of quick searches proved this to be incorrect (I imagine it is misunderstanding). The Swag.com domain name is registered privately, but Whois records show that it was created in 1995 and owned by someone else for quite some time. A search of my Gmail shows that this domain name had been brokered before – Swag.com was listed for sale for $275,000 in September of 2015 in the Media Options newsletter. In fact, in an interview 4.cn did with Andrew Rosener, he confirmed that his company brokered the sale of Swag.com.

That really is neither here nor there, but seeing Swag.com marketed for sale at $275,000 really emphasizes how relatively inexpensive domain names are.

Just about every business has substantial startup costs. Want to start a local restaurant? A survey on RestaurantOwner.com shows that the median cost is $275,000 (coincidentally) without buying any land. Mind you, this is the cost to open an average single location restaurant in anytown USA and this is just the median. I am sure the cost would be much higher in larger cities or for higher end restaurants. Of course, different types of businesses have different amounts of startup expenses, but that is a lot of money to lay out to start a local business with a difficult road ahead.

With a domain name like Swag.com, the owners got an awesome, easy to recall brand name on the exact match domain name for around that same $275,000. Of course, there are many other expenses to take into account that would have been counted in the $275k median restaurant cost that haven’t been counted for this startup, but there are a whole host of benefits to the short domain name. For instance, the brand name already resonates and the domain name has international reach immediately. Swag.com can do business 24/7 around the world where a restaurant is much more limited.

In addition to the various benefits of a cool, short brand name with matching domain name, there is also burndown value. If a restaurant fails, the owner gets very little or nothing. If the Swag.com business were to fail, the company could sell its domain name. Unless the domain name brand was hurt by something the business did, the domain name would likely retain its value or quite possibly increase in value.

This is absolutely a simplistic view, but seeing a domain name like Swag.com, which was marketed for $275,000 and turned into a great brand, illustrates how relatively cheap domain names are.

5 COMMENTS

  1. For owners of physical businesses it’s location, location, location; for domainers it’s education, education, education.

  2. The only people who will buy into this argument is the domain industry itself.

    $275,000 for a name isn’t cheap. It isn’t land, it isn’t a pot of gold. The business owner now needs to go out and get the other 99 of 100 factors right aswell.

Leave a Reply