As a domain investors, we can safely say that we have a professional flaw: the fact that we tend to attribute far more importance to the domain as far as the development process is concerned that reason would dictate.

Now don’t get me wrong, a domain can definitely represent an edge. Personally, I do my best not to use low-quality domains for my own projects. For example, DomainingTips.com is an excellent domain for a domain blog. AffiliateMarketers.com is an excellent domain for an affiliate marketing news aggregator, MegaSites.com is an excellent domain for a development service which focuses on large/content-rich websites. The list can go on and on but I’m sure you get the point. I practice what I preach and for the most part, only publish websites when I have a really good domain.

However, as someone who has been involved in quite a few online projects, I can pretty much guarantee that the domain is less important than you think. A lot of domainers are baffled by the fact that a startup which has received let’s say $2 million in funding is not willing to shell out half of that amount for an amazing domain. I cannot help but smile whenever I read such comments on blogs or forums because they make it clear that the person who is making them doesn’t exactly have a lot of experience when it comes to developing websites and running businesses.

Let me make one thing perfectly clear: spending as huge of a percentage of your budget as 50% on a domain would be ridiculous. Why? Simply because there are lots and lots of other expenses which can and do at up. As someone who has a fair amount of hosting industry experience, I can tell you that once a website starts receiving considerable amounts of traffic, the hosting costs can end up being impressive.

Furthermore, websites frequently get hacked, you need programmers on watch to make sure your survive. You also need programmers to ensure that new features are added and so on. Let’s not even talk about the most important expense of them all, marketing. For these reasons and many more, you have to keep the percentage of your budget that you allocate towards domain acquisitions reasonable.

If a startup receives let’s say $40 million in funding and spends $2 million on a category killer dot com, then I am the first person to congratulate them. Spending 5% on your budget on acquiring the best possible domain for your business is extremely savvy. You’re left with more than enough money for everything else and all in all, your decision is wise. Balance is the name of the game. This is perhaps one of the biggest mistake domain investors make when developing websites. They expect to receive good results with a minimal financial investment. I’m sorry but that’s not going to happen. I find it amusing how a lot of investors are willing to pay let’s say five figures or even more for an amazing domain that they want to develop but when the time comes to actually spend money on development, they’re irritated at the thought of spending even let’s say low four figures. Then, the same people wonder why they’re not receiving the traffic and results they would have expected. They end up saying that development is no longer feasible or that the developer that they have worked with wearing professional enough and so on, when the actual reason was much, much simpler. They simply didn’t invest enough money.

If you spend let’s say $50,000 on an amazing domain but are only willing to spend $5000 to develop it properly, then in my opinion, you’re better off not developing it altogether. Keep it as an investment, wait until the right end user comes along or until the right flipping opportunity arises and limit yourself to that. If you do decide to develop a domain name, do it properly or don’t do it at all. This would be my advice for 2015 and beyond. The more the Internet matures and the better a place it becomes for the average user, the less people can get away with making money off low-quality websites. Again, there is absolutely nothing wrong with choosing not to develop. It is actually a great choice for most domain investors. What I am trying to say is this: understand the nature of whatever it is you’re doing before even thinking about developing a domain. Go big or go home 🙂