The other day, I was negotiating the sale of a domain name with a prospective buyer. After sharing the price of the domain name with the buyer, I was sent what was considered to be a comparable domain name at a much lower price. In reality, the domain name that was sent and priced less was a non .com domain name that matched my .com domain name.

The prospect asked why my domain name was so much more expensive than the comparable non .com listed for sale on several marketplaces. Although I think it should be pretty obvious to most people why the .com domain name is worth many times more than the non .com domain names, I used a real estate analogy to keep things simple.

I described a new 5,000 square foot home located in the middle of South Dakota. The price might be somewhere in the $500,000 range give or take. The price may or may not seem expensive to you depending on your own location, but when compared to a 5,000 square foot apartment in a doorman building in Manhattan, that $500,000 would be cheap. In fact, you might be looking at well above $10 million for that 5,000 sq. ft. home in NYC.

For many businesses, particularly those that rely on their online presence for sales and marketing purposes, having the brand match .com domain name is critical. This is the case whether it is a one word .com or even a four word .com. I think a non .com domain name is less desirable for many reasons, and the value will be reflective of the lower demand and interest. Non .coms work fine for many people and companies, but there is a reason for the gulf in value.

I have found that people don’t always understand domain names. That may be why I see $100 offers on my 25 year old domain names on a weekly basis. People tend to understand real estate a bit more. It’s all about the location. When educating someone about the value of a domain name, I like to illustrate it with something that resonates. I have found that discussing real estate with someone who doesn’t seem to get it helps them understand.