Falling U.S. dollar makes domain names cheaper to those outside the United States.
Domain name sale prices seem to go up and up, but that’s not necessarily the case. The cost of buying domains may have decreased for people in countries with currencies appreciating against the dollar (and that’s just about everywhere).
I first wrote about this issue in April 2005. At that time, the Euro was roughly 40% higher than five years prior compared to the U.S. dollar. Over the past two years the dollar has fallen against a number of foreign currencies including the English pound and Canadian dollar.
So how do exchange rates affect domain name buyers and sellers? It works like this. Assume you live in London and travel to the United States on vacation (or should I say ‘holiday’ as the Brits like to say). When you reach the U.S. you exchange your pounds for dollars at a rate of $1.96 per pound sterling. But five years ago each pound exchanged for only $1.43. People in Britain buying things from the United States are basically getting things cheaper than five years ago.
Here’s an example. Assume you were to buy one of my domains, Suspects.com, for $25,000 USD. If you live in Britain this is equal to about Â£12,755. But five years ago it was equal to Â£17,483. If the price was the same then as it is now, the cost of the domain has actually decreased by 27%.
Simarly, the Canadian dollar has increased from about $.63 USD five years ago to roughly $.86 USD today. (The EURO has held steady since the 2005 article.)
This is good news for both United States domain sellers and foreign domain buyers. It’s bad news for United States domain buyers trying to buy domains from people overseas (and bad news for overseas domain sellers).
When you read domain name sales figures on sites like DNJournal, keep in mind that all prices are converted to U.S. dollars at the time of sale. It’s hard to determine how big of an influence these exchange rates have on domain name prices. How many domain transactions occur across borders? I’m unsure, but I know there are a lot of Canadian domain buyers jumping for joy over the past few years.