Buying domain names

domains and dollar signToday I answered a question on LinkedIn about buying domain names and using third parties to assist with it. Here goes…

Daniel,

We purchased domains with and without Sedo’s help.

Are you dealing with a professional domain seller? If this is the case, entering the name in a browser will usually redirect you to a page where it is offered for sale. Be prepared to pay a lot more than just the regular registration fee and parking costs. Don’t get shocked by a ridiculously high first offer though. The real price is often much lower and will mainly depend on three factors:

1. Size of your organization

Bigger organizations are assumed to have bigger budgets for domain purchases. The seller will therefore always try to find out who you are.

2. The domain name itself

Domains containing brand names are sold at higher prices, and .com versions in particular.

3. Number of potential buyers

If there is a certain amount of competition for a name, the seller will only sell it at a low price after several high price attempts were unsuccessful. So if your budget was too low, you could try again after some time.

The price of a domain is no more and no less than what a buyer is willing to pay for it. I know, having to pay a premium for “just a name” is painful, but bear in mind that selling domain names is a legitimate business, intellectual property right issues aside.

If the seller is not a professional “domain grabber”, the domain usually either goes nowhere or loads some sort of “coming soon” page. You may be able to bag yourself a bargain, but you may also not get the domain name at all if the current owner really wants to use it themselves. We once tried to buy a domain name for one of our products which happened to have the same name as a small German IT company. They kindly told us that the name is not for sale unless we were “prepared to pay a ridiculously high amount”, which we weren’t.

Contacting the seller anonymously can help if you represent a larger organization or if you want to buy a domain for your brand. However, at some point during the buying process you need to reveal your identity and there is no guarantee that the price will then not increase again. If you want to remain anonymous during the entire process you need to ask a third party to do the purchase for you. Often this is a company employee who buys the domain name in private and then transfers it to their employer. Be sure that this person cannot be associated with your company by simply searching Google. And as with all anonymous buying, also observe your company’s policy for conducting business.

If you want to buy SomeBrand.com and your company is the most logical single interested buyer for that name, the seller will suspect that you represent it. Using a third party just to remain anonymous may therefore not work. In a situation like this we nevertheless used Sedo.com to successfully buy a domain name. Sedo did a great job to independently evaluate the domain name and negotiate with the seller on our behalf. The initial price was 20,000 USD. Sedo was able to convince the buyer that our maximum budget was MUCH lower and that it would be difficult for him to sell the name to somebody else. They finally managed to buy this name for us within the small budget we had.

Our organization owns hundreds of domain names. Buying them is a rare exception though. I often recommend to use a different top level domain (.net, .info) or a variation of the name like …..-online.com or …..-info.com.

Hope this helps,

–Walter Soldierer

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