How Do I Buy a Domain Name?

Q: I'd like to buy a domain, but I discovered that it's already registered by a bulk domain buying company (just check negres.com). I tried to contact them but I have received no answer.

Do you know how much these companies charge in average for a domain? Or are they focused on the traffic and clicks and will not let it go?

Any recommended approach to bid for the domain?

A: This is a tough one because domain names, unless you have a legal claim on them, exist in a pure commodity marketplace. What I mean is: the value of a domain is defined solely by its perceived value to the buyer.

If you wanted to buy one of my unused domains (for example, "BABY.NET" which is for sale, actually) then I might ask $20 for it, or I might ask $200,000 for it, or, who knows, $2mil. What's it worth? Well, that depends. If you're a huge company with a massive marketing budget and are passionate about obtaining this exact domain then $500,000 might be a fair market price for it. But then again, maybe $100 would be more than it's worth.

Economics books talk about pricing strategies where you charge "what the market will bear", and you can see where in domain names, well, that's almost impossible to figure out without a specific buyer involved.

There's no third party, no standards organization, no reference point for what domains are worth. I've bought domains from others for $200 and I've paid $8000 for one domain. My most recent domain purchase, BLOGSMART.COM, was about $500.

I should note that I have never bought a domain from a scalper (some people call them "squatters", or "domain squatters") or domain resale agency, however: My impression is that domain resellers encourage domain owners to set unrealistic prices and hold out. For the individual domain owner who doesn't know any better, it seems like a good deal and if offers at lower price-points roll in, well, they're easily ignored.

Then, three, four or even five years later, the domain owners with dozens or even hundreds of domains suddenly realize that they really aren't worth much after all because it's clear at that point that the market isn't valuing the domain the way that the reseller is.

But even without that disconnect, domains aren't typically worth what you may think they are. To see what I mean, pop over to AfterNIC, one of the top resellers in this space, and browse their 'recently sold' and 'featured' domains lists.

A few tips on valuation, before we get there, though: '.com' are worth more than other top level domains, dictionary words are worth more than multiple word amalgamations (think 'car.com' versus 'myfavoritecartodrive.com'), and that domain names with hyphens are worth less than those without. Further, remember that if you get a singular name, you need the plural, if you get a hyphenated name you need the unhyphenated too, and so on.

Unsurprisingly, the closing bids for "tiny-treasures.com", "yourbetterhalf.com", "onenet.us" and "2EB.com" aren't very impressive, but there are a few that shine as particularly good domains: "america.org" (sold for $20,000), "maple.net" ($5,000), "x360.com" ($5,000), "itoldyouso.com" ($15,000) and "searchme.com" ($15,500). Based on that, "baby.net" should certainly be worth at least $20,000, don't you think?

I believe that the best domains change hands in private transactions, however, and that if you've a third-party involved, it will unquestionably complicate the situation.

Anyway, back to your specific situation, I would try one more email message to the domain owner, and if they don't respond, well, it's probably time to do some creative synonym brainstorming and come up with a different name entirely. If they respond, but are asking for far more than you're willing to pay, keep dickering: I've been surprised how quickly potential buyers vanish, when I'm just negotiating a price.

Good luck to you!

Dave Taylor is an internationally recognized expert on business and technical topics and is the author of 18 different books and thousands of magazine articles. His Q&A Web site is http://www.askdavetaylor.com/