What’s an investment quality domain?

When I look at a domain as a possible investment, I am looking for something about that domain that is unique.

Another way to put it is ‘how easy is it to find a substitute for this domain?’.

I want to have pricing power with my domains.  I want there to be something unique about the domain I own, so that if a potential buyer wants that unique quality then the buyer needs to buy that domain.

That’s why I like .Com domains.  Any buyer who is serious about building a brand online will want the .Com extension and there is no substitute.  If I own a .net, .info, or .us it may have some value, but the maximum price is set by the price the other extensions are fetching.

That’s why I like acronym domains.  If my initials are ‘NEC’ then owning “MEC’ or ‘NED’ doesn’t help me.  The acronym is unique and only the exact match acronym domain will provide the full benefit.

It’s why I like concept domains, such as Create.com, Promote.com, Random.com, Identity.com etc.  If someone cares about branding on that concept, then they’ll need that domain and there won’t be many good substitutes.  Maybe Creator.com is a substitute for Create.com or Promotion.com is a substitute for Promote.com, but these are equally valuable domains so there is still pricing power with Create.com and Promote.com.

It’s why category killer domains are universally desired, because in some sense if you own the domain you own the category, and there is no substitute.

If my domain is one of 100 similar domains, then I have no pricing power, I am competing against the owners of the 100 other domains in a race to the bottom for who will accept the lowest price.  For example (and not intending to pick on this particular domain) BestWomensShoes.com is available for sale at BuyDomains.   Yet FineWomensShoes.com and GreatWomensShoes.com are unregistered and available for $10.  So how much pricing power does the owner of BestWomensShoes.com have?*

When I was a 13 year old kid who was getting into stamp collecting, I was given the advice to buy the highest quality I could afford.  That was good advice and I’ve tried to follow it ever since.

The highest quality assets tend to appreciate more in good times and hold their value better in bad times.  The price for an acre in the Mojave desert probably hasn’t increased much over time, but you’d have done better buying a building on Park Avenue even if the price seemed high at the time.

* After picking BestWomensShoes.com as an example for this post, I discovered that it was owned for several years by Zappos.  Maybe it really is a good domain…  But they let it drop, so maybe it isn’t  🙂