What Every Startup Founder Should Know About a Purchase of Domain Names
March 21, 2016
For start-up founders planning to purchase domain names, it is crucial to start by choosing the right name. Typically, the right domain names are closely related to the business niche and the target market. The names must also be simple, short and memorable. Equally, domain names should be registered with reputable web-hosting providers.
Are you a start-up founder planning to buy a domain name? Here is what every start-up founder should know about a purchase of domain names.
(a) Know the registry or domain owner
Registries are companies that trade in domain names. There are several of them online with some such as the America Registry, WMD and RU Center being so popular in their regions. Make sure to pick a registry that has been in the business for long and is less likely to be susceptible to cyber-attacks and human error due to inadequate experience. The registry should not just be a reputable one with a superb track record, but also one you can contact when you need help with the domain.
There are two types of domain owners: cybersquatters and domain investors (domainers). Cybersquatters are individuals violating existing trademarks or buying typos of popular brands in order to damage the brands or extort. In contrast, domain investors are people who lawfully own and sell domain names. Make sure to identify a real domain investor before you start negotiating for a deal. And to identify the owner of a domain name, use a WHOIS service. There are several WHOIS services that will not only indicate the owner of a domain, but also show the total number of domain names owned by an individual.
(b) Conduct your own research
Once you identify a domain name and establish its owner, you should conduct a meticulous research to determine whether the domain is for sale, actively in use, its current selling price and the number of similar domains that have been sold recently. The research should actually be done for free and should be completed within 5 minutes. For instance, you should first check whether the domain name is already listed for sale in a popular marketplace, such as Sedo, Flippa.com or Afternic.com. Secondly, you should use a browser to check if the domain name is already linked to a blog, website or company. A blank page should indicate that it is not actively in use while an association with a site indicates that it might be actively in use. Dig a little deeper to know more if you find that the name is actively in use.
Thirdly, you should visit different registries to check the prices of similar domain names. Just like in buying anything else, knowing the prevailing market price for similar domain names will allow you to set realistic expectations and approach price negotiations with more confidence. Some sites that can help you to know the prices of different domain names include NameBio.com, DNJournal.com and Flippa.com. In fact, before reaching out to the domain owner, make sure you know whether the domain name is actively in use, the price he/she has in mind and the price at which similar domains have been sold.
(c) Contact the domain owner
Once you have gathered crucial information about the domain, it is time to reach out to the owner and strike a deal. The strategy you use to negotiate for a good deal should depend on the owner of domain. Usually, there are 3 categories of domain owners: individuals who purchase domain names for personal use, companies who buy domain names to potentially use in future and domain investors who buy the names as investment. The price of a domain heavily depends on the category of the owner, with individual domain owners usually having sentimental attachment and wild price expectations.
When you call or email domain name owners, inform them that you are interested in buying the names and would like to know the price. You may be lucky to just find the domain owner ready to sell and within your budget. Often, however, the negotiations are not this straightforward and you will need to persuade the owner not only to sell to you, but also to sell at a certain price. This is the time to be armed with information, especially the prices at which similar domain names have been sold. Moreover, some domain name owners are so difficult to persuade that you will need to hire a broker to help you see out a deal.