The domain registration process is now automated and, for almost 25 years, domains have been registered with one thing in mind – profit! And Domain investors are individuals that envision the future increase in the value of a domain name.
As the majority of such domains have already been taken, investing in premium domain names is an engagement with the secondary domain market, often called “domain aftermarket.”
What are premium domain names?
Most agree that the TLD or extension should be .com, although other extensions, both generic and regional (ccTLDs), can be used. The primary requirement is that the domain keyword itself is a dictionary word that holds certain qualities, such as:
- a positive word with no negative references
- short in length, e.g. 12 characters or less
- preferably a noun or verb
Premium domain names can command a price tag ranging from a few thousand dollars to several million, depending on the qualities mentioned above.
As most of these premium domains were registered early on, between 1992 to 2000, one has to dig hard in order to discover gems outside that range. Prices vary and a domain investor’s skills come into play when negotiating a price for a domain with its owner.
Some solid advice coming from seasoned domain investors indicates that, instead of targeting multiple purchases, one should focus instead on the best possible domain name that can be acquired with existing capital. While one can get cheaper domains with less capital, the quality drops substantially when targeting multiple domains on a fixed budget.
With that in mind, there are several reasons why premium domain names present an attractive opportunity for entrepreneurs and companies to invest in.
5 reasons why investing in premium domain names is a smart financial strategy
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1. Premium domains appreciate in value
Unlike stocks and other inflationary assets, premium domain names not only retain their value, they also appreciate in value over short periods of time. Due to their uniqueness – unlike stocks, for example – domain names are one of a kind. A domain’s value increases as time goes by and the asset’s scarcity results in the appreciation of value.
2. Premium domain names make excellent brands
Cherry-picking domains out of a larger lot ensures that the quality of these select assets surpasses the average quality of related domains. Therefore, companies wanting to launch a product, brand or a corporate website will seek to acquire such assets from the domain investors that hold them, making the best choice in line with their branding expectations.
3. Premium domain names leverage liquidity
Unlike domains that are related to news, events, or others with a limited lifespan, premium, generic domain names are highly liquid. Domain investors can refer to such domain assets as “vessels” of wealth that can be cashed out by selling without much of a wait. Not only are generic domain names highly liquid, they can deliver a return on investment (ROI) at short notice and at a holding cost of a few dollars per year in renewal fees.
4. Premium domain names help build status and trust
Domain investors with solid portfolios consisting of premium domain names build an improved status. These domain assets of premium quality can be “demoed” to potential buyers, as a solid indication of success in the field. Buyers often become repeat customers by perusing the domain portfolios past that initial acquisition. In this way, the domain investors gain the trust of their peers and customers, repeating these domain investment feats to further elevate their status.
5. Premium domain names can often deliver huge returns on investment
Throughout the past 25 years of the commercial internet and domain usage, many small domain investments, in the range of a few thousand dollars, have been converted into solid, multi-million dollar sales. Only premium domain names offer this unique advantage and, while these domains have long been registered, they often enter the aftermarket at prices that present an opportunity.
Domain investors with the insight and the ability to spot these opportunities can achieve huge returns on investment – as long as they focus on acquiring premium domain assets.
In a nutshell: Premium domain names represent the highest class of digital assets that appreciate with time, instill trust and status, are highly liquid and have the potential to become sizable sales. They should be the strategic goal of domain investors that take the game of domain investing very seriously.