Startup Monday: Evening Edition – How Much Should A Startup Spend On A Domain?

Here’s a question that I’ve asked a number of times this year to a number of different startups. How much should a startup spend on their domain name? If you’re a startup lucky enough to get funding there’s a good chance your investors will panic if you spend six-figures on a domain. Five-figures feels like the right range to me, but where in the five-figure space?

In most cases I think there’s a theoretical barrier with startups. Personally I think that most startups won’t go much above $25,000. I also think that there are many many many more startups hand-registering or picking-up a name for a few hundred bucks. However, what does a startup sacrifice when it begins to brand-itself around a weak domain?

This has been the year of the “Get” domains. Brands that didn’t get their brand-name .COM so stuck the word “get” in the front. In fact this is done so commonly that many entrepreneurs look for this as their first or second try when searching for a brand online. That being said, who really wants to brand around their brand’s name with the word “Get” in front of it?

The thinking here is that once they get big and successful they can buy the brand .COM. The same happens with brandables like Fiverr.com who waited until after they made a few bucks to buy Fiver.com.

So here’s my question for you, how much should a startup spend on a domain? 

{ 9 comments… add one }

  • Adam Strong October 3, 2011, 10:42 pm

    The number that seems to be doable for most startups I’ve been working with is sub $25k but that’s not going to buy you a lot these days. The magic numbers I’ve been seeing on prices are more in the $25k-50k range and the stellar brand names are demanding much more in this market than ever before.

    If you are bootstrapping, by all means look for alternatives. I just helped a client who had a $25k-50k budget get a name for $200 + my fees.

    Be advised that save now may = pay later. If you’re looking to save, offer equity, lease to own or go after that “get” domain but be prepared that those routes mean giving up something later.

    Reply
  • Michal October 4, 2011, 1:47 am

    12 years ago venture capitalists would advise putting away between 5k to 10k for a suitable domain name. Today, the same experts suggest accounting for a spend of between 50k-100k.

    In any case, a domain name can take your business only so far…

    Reply
  • Anthony October 4, 2011, 5:52 am

    Not an answer anyone will probably want to hear but…..

    Unless the startup is buying a name that offers VALUE in terms of type-ins, SEO ranking help or true world class branding then the figure should be $7 – the godaddy discount voucher available at the time.

    Reply
  • Morgan October 4, 2011, 8:33 am

    Great feedback everyone!

    @Adam – thanks for sharing your experience here!

    Reply
  • Michael Cyger October 4, 2011, 7:41 pm

    Venture Capitalist Fred Wilson of Union Square Ventures (avc.com) suggests that start-ups that he invests in allocate $50,000 to buy a domain name. He used to advise companies to spend $10,000 or less on a domain name, and then he upped it to $25,000. Recently he upped it again to $50,000.

    Reply
  • Adam Dicker October 11, 2011, 6:37 am

    Great article, I give this link out quite often when people tell me I am asking too much for my domain that they want.

    Thanks for this.

    Reply
    • Morgan October 11, 2011, 10:27 am

      Thanks @Adam – much appreciated!!

      Reply
  • Josh Z Teng February 10, 2012, 11:25 am

    Unless the name is spectacular like a noun or something that gets a lot of traffic, anything other than that seems like total extortion..

    Reply
    • Morgan Linton February 11, 2012, 11:14 am

      It all depends on what someone is going to do with the domain. If you’re going to be building a 200 million dollar business, a budget of one million dollars is completely fair for a domain. If you’re only going to be buying the name for a hobby or side project then it rarely makes sense.

      Reply

Leave a Comment