“Wowee, I got these domains for $5 each” said a friend. And while it’s true that he paid only $5 for each of the domains, he forgot all the costs that go into it before and after he got the domains.
Here’s a breakdown:
1. Cost of renewals
Unless you develop the domain immediately, you usually have to factor in renewal costs of the domain till you do develop it, or sell it. This renewal can be and usually is significantly higher than the cost of a hand registered domain due to the various promotions being run by registries.
2. Opportunity cost
For a couple of domains this might not be a significant cost, but given people’s tendency to register a LOT of domains this could really end up being a big deal.
3. Cost of research
Whether you register one domain, or hundreds, you tend to spend (or should be spending) a fair amount of time researching available domains, drops etc for the best possible keywords. And time is money.
4. Management costs
You have to manage the domain, ensure whois accuracy, ensure timely renewals, account security, accounting, salaries, taxes and much more. All this takes time.
5. Legal liability
Probably the most underrated cost and the most important is the possibility of legal liability arising out of a registered domain, irrespective of whether you did, or didn’t know if someone somewhere has a pre-existing trademark on the exact term, anywhere in the world!
Did I miss any other cost? Let me know via a comment!