ROI of a Domain Name

How much would you pay for a domain name that you really want?

Probably, few hundred dollars. How about $12 million or $7.5 million? That’s how much some of the best domain names cost. According to the article in Financial Times, there are many businesses out there that make millions out of registering and selling names that might be in demand in the future.

For example, business.com was sold for $7.5 million, wheras the actual cost of the domain is probably $10 a year. Let’s calculate the ROI for this domain name. Before we do that, we need to make some basic assumptions: yearly domain name registration is $10/year and that there are no other costs involved in maintaining this domain name. Business.com was first registered in 1998. Total cost up to now is $10*9 years = $90.

The formula I will use is ROI = [(Payback - Investment)/Investment)]*100.

ROI = [($7,500,000 - $90)/$90)]*100 = 8,333,233.33%

Wow. Not bad…There is something wrong with this ROI or it could be that you just made $7.5 million by spending only $90. Cha-ching!