There are still millions of domain names that can be registered via a domain registrar for as low as $9.99. A company that’s launching a new website, or is redesigning an existing one will eventually get to the point where they will have to consider which domain name to use.

They will start brainstorming the different domain possibilities, and make a decision to register a new domain name, use their existing one, or buy a premium domain name.

It is now extremely difficult to find an unregistered domain name of any brandable quality. Some reputable companies clearly didn’t put much thought into the domain name they chose to use a few years ago. It means that if a company wishes to have a top quality brandable domain name, they will mostly likely have to acquire a premium domain name from the domain aftermarket (for example, eBusinessDomains.com).

The main obstacle that some companies face today, is how to justify the expenditure required for a premium domain name. Why buy a premium domain name for $25,000 when they could simply register a new domain name for as low as $9.99 at a domain registrar such as Widest.com?

In a nutshell, a premium domain name will help you improve Your marketing/branding and visibility, build credibility and trust, build your brand, protect your image and acquire more traffic/sales leads. A quality domain is an investment.

You can learn more of the benefits mentioned above by reading our “Choosing Domains” article.

Let us look at the cost of a domain name by analyzing the cost that you could incur in your attempt to promote your business without the use of a premium domain name.

We will illustrate this with the cost of paid per click advertisements. A company has the choice of registering a useless and horrible name for $9.99 or buying a premium domain name for $25,000.

The premium domain name has the keywords that the company pays a $4 cost per click for. The exact keyword phrase generates approximately 250,000 searches per month. If this company acquires this premium domain name, they could build a new website, with each page designed carefully with search engine optimisation (SEO) in mind.

Because the domain already has the keywords, and pages were optimised for those said keywords, it is highly likely that the website could get a number one, two or three organic search engine ranking. This could result in over 50 percent of all of the clicks. Even if they only had a number two or number three ranking, we could expect at least 15 percent click-through ratio.

50 percent of the clicks from 250,000 searches at a $4 cost per click would equate to $500,000 (50% x 250,000 x $4). This means that the company would effectively get free advertisement worth $500,000 per month.

By obtaining a premium domain name and optimising for the keywords, the domain would not only pay for itself within a month, but it would substantially increase revenues, and minimise marketing costs.

When buying a premium domain name, do not only consider the financial costs, but take into consideration the opportunity costs as well. A premium domain is only worth what a buyer is willing to pay for it. However the seller would never sell a domain for less that what the domain is worth to the seller. So really, a domain name is worth what the buyer and seller can agree on to make a deal.

How much a domain name is worth to a buyer depends on the benefits, whether it be financial or marketing advantage, that the buyer is able to obtain from its use.

Domain sellers should study every possible use of their premium domains and be sure not to sell gold bars for peanuts.