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Domain Buying & Investment Guide

There are two ways of going about buying a domain: one is to hand-register an available domain at a registrar, or purchase it from the current owner in an aftermarket auction, through a broker, or directly. There are also two main reasons for buying domains: the first is to use the domain to develop a web property (or use it in some other manner), and the second is to buy it as an investment in hopes of selling it for a higher price in the future. Depending on what you are trying to do with the domain, your budget, and the importance of the domain to your venture, your choice of marketplace will be different. Generally, domains are purchased for business, organizations, or personal websites, in which case it is important to have a short and memorable domain. Whether you are an investor, or end user, the fundamentals of buying a good domain remain the same. There are several things that you need to keep in mind when buying a domain, and we discuss them below.

Brandable Domains

Brandable domains are ones which can be easily turned into a recognizable brand. They are generally short, easy to pronounce, and have no alternative spelling(s). The brandability of a domain is highly important, especially for enterprises which are designed and expected to reach an extremely large audience. This is not to say that brandable domains are not useful for other projects, but the general high cost (unless they are hand registered) of such domains will put them out of the reach of most small entrepreneurs.

Brandable domains can also be an easy way to get into domain investment, as they are generally less expensive than other premium domains (assuming they are not single-keyword domains). By putting in a bit of time and expending creativity, a diligent domain investor can come up with good brandable domains for hand registration, or scour databases for domains which might be for sale at a reasonable price, or get these domains at auction.

Things to keep in mind when evaluating the brandability of a domain are:

Keyword Match Domains

Keyword match domains have always been popular and continue to lead the market in desirability and price, especially if they are single-word domains of highly valuable categories. The reason for the popularity and importance of keyword-based domains is not only the ease of branding (mostly in case of single-word domains), but the ability of those domains to become category defining web properties with the ability for high search engine rankings (assuming proper SEO implementation and high end content and marketing strategy).

Things to keep in mind when buying or investing in keyword-based domains are:

Numeric Domains

A numeric domain is one where it is comprised of numerals exclusively (no letters or dashes). Currently, the popularity of one-, two-, three-, four-, and five-character numeric domains is due to the demand from Chinese investors, but has the market for such domains has the potential to collapse if the Chinese demand dries up, so it is important to understand the risks before investing in numeric domains for a future (profitable) sale. If you are looking to buy as an end user or an investor, you can expect to pay several hundred to several thousand dollars for four- and five-character numeric domains. Prices for three-character numeric domains can range from tens of thousands to hundreds of thousands of dollars. Two- and one-character numeric domains are very rare, and if available for sale have prices reaching into the millions of dollars.

Things to keep in mind when buying numeric domains:

4 & 5 Letter Domains

Like numeric domains, the 4-letter domain market is mainly comprised of Chinese investors, so it is important to keep in mind the needs, and wants of those buyers when investing in such domains. Of course, if you are purchasing the domain as an end user, then the considerations fall more under the branding section criteria.

Things to keep in mind when buying (investing) in 4- and 5-letter domains: