Deano’s answer to: “How much should I be spending on a domain?”

$10, or whatever the going rate is with GoDaddy for a brand new, available domain name.

Okay, okay, you're unconvinced. You won't or can't ideate through possible names until you hit a winner, and you just "gotta have that existing name". Well then, here is my simple guide for purchasing existing domains:

Step One: Who is the Seller?

This research will pay dividends later. Are they a domain squatter, a failed business, a procrastinating dreamer, what? Here's how we find out:

http://whois.domaintools.com/

Do a lookup on the address, and then examine the result of the first entry, "reverse WHOIS lookup".


As you can see, our "wily example seller" owns 13 domain names… Probably more than a Business Owner would carry for a single business (including past failed businesses, call it 8 domains), and not nearly enough to be a true Domain Squatter (100+). Yup, we've got a real loser here – someone who thinks up cool names, buys them, and never does anything with them, the Procrastinating Dreamer.

Step Two: What's It Worth?

Again, $10. But that's hardly fair for even our example owner above… In addition to buying the domain (let's assume at my favored $10 figure), the registration must be renewed each year. So, we should really add at LEAST $10/year for each year the domain has been owned. Again, going back to whois.domaintools.com, and looking at the registration tab, we can see:

We can ballpark the length of prior ownership using the "Created" field, in this case, September 2000. This coming September, navidate.com will have been registered with GoDaddy for 11 years (and for simplicity's sake, let's assume the current owner, though that's not actually the case here*). $10 x 11 = $110.

A Procrastinating Dreamer would probably consider that figure, or a simple round-up or doubling to between $200-220. That gives you a total range of, say, $100-$225.

Business People and Domain Squatters? Remember what I said about 10x returns – ~$1100 is probably your minimum budget to ensure a sale. Isn't my first answer looking better and better all the time?

Step Three: "Right Sizing" the Offer

In reality, even if you could get the domain for a grand, that's a big enough dent in the wallet to warrant trying to lowball without causing the seller to be so offended that they cut off talks entirely. To that end, I'd offer half my initial estimate, say $500, and tie it to a limitation of some kind (see below).

You may try one or more of the following, as these tactics have proven positive effect on final pricing/willingness to sell:

  • Say the domain purchase is for a school project or experiment at your local community college (helps frame your maximum possible bid)
  • Indicate the use of "extraordinary funds", like a cash birthday check from an old relative, further emphasizing a lack of regular income/ongoing source of potential payments/financing
  • Indicate that you, the buyer, are female, young and/or 'struggling' (I know, I know!)
  • If the seller tries to counteroffer, ask for documentation of site traffic, revenues, and expenses to help justify the higher amount – almost no one will have this information readily accessible, and even if they do, it's more work for them producing and sending it to you… Which is why you must also
  • Put your "final" offer into escrow as soon as possible, even before they agree to the deal. Everyone is more likely to sell if at least 3-5x their total expenses for the domain are sitting in a third party account just waiting to be picked up after a DNS transfer. It's no guarantee, but it shows you're not a tire-kicker, and they can always reinvest what they take off your single domain and buy up another 10 or even 100!

Step Four: Don't Do It!

Finally, another sincere request that you re-evaluate the situation, and buy a new domain if at all possible: The difference between a $10 name with a $4990 marketing campaign and a $5000 name usually works in favor of the $10 domain.

Whatever you choose, good luck and good hunting!

-deano

(*navidate.com was purchased from its previous owner more recently, according to NaviDate CEO Dean Blackburn)

How much should I be spending on a domain?

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One Response to Deano’s answer to: “How much should I be spending on a domain?”

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