With over 366 million domain names now registered, it’s getting harder and harder to find the right domain name for a project, or new venture. Yet, you may see on Crunchbase that a startup has just launched using an ultra-cool premium domain. Since 2018, the following startups have launched on highly valuable domains:
All these companies bought their domain names from their respective existing owners, either via the domain name aftermarket or via a private unsolicited offer. In many cases, companies used a domain buyer broker to get the best possible domain name for their venture.
But why does anyone invest a four, five, six, or even seven-figure fee in a domain name? These intangible objects that just exist on the Internet are each worth more than a house in some cases? Yes.
Honestly, many businesses do not need to invest significant funds in a domain name, but you may consider doing so if you meet any of the following criteria:
- Your primary customer contact point is your website
- You’re building a brand that places a high value on your website
- You’re building a brand that needs to be trustworthy
- You’re building a brand in the financial or legal industries, where data security is vital
- You have raised significant funds from a Series A, B, or C funding round but you don’t own your best domain
These are some of the reasons why you may consider buying a premium domain name. If you are considering buying a premium domain, and you have very little experience with domain names and how to go about acquiring them, you’ll benefit from using a buyer broker.
What Does a Buyer Broker Do?
A domain buyer broker essentially helps an entrepreneur, startup, or established company to acquire a domain name. The broker will likely have significant experience working with domain names and can give advice and digital strategy input.
The domain buyer broker doesn’t represent a domain name seller, like most typical domain brokers. A domain buyer broker is employed by the buyer to help them buy one or more domain names within their budget. They should act with the buyer’s best interests in mind. That means no kickbacks or commissions from the domain seller for closing a domain sale at a certain price point, which has been known to happen.
A buyer broker can either go after a specific domain name or can suggest domain names to acquire, especially if the company or entrepreneur is in the very early stages of a project. Usually, a buyer broker’s workflow may look something like this:
- Identify the domain name and the budget for the domain purchase
- Independently perform research into the current owner of the domain
- Contact the current owner of the domain name on your behalf. Usually, the broker will not reveal the identity of their client.
- If the domain owner is amenable to a sale, the buyer broker will negotiate a purchase price (or another agreement such as a lease).
- Once the purchase price has been agreed, the broker will facilitate a domain transaction, perhaps using Escrow.com or another service to act as the mediator for the exchange of funds and the domain.
- The buyer broker will help to get the domain securely into your domain account at a registrar of your choosing, ready for you to start using the domain.
While you may have some knowledge and expertise in online technology or domain names, using a buyer broker to help you secure a domain name can be advantageous, especially when dealing with higher value domains. Here are some ways that using a domain buyer broker can be advantageous:
- Imagine this scenario. You’ve just secured a $10 million Series A funding round, and you’re looking to upgrade your domain name. If you contact the owner of the domain name yourself, they’re likely to do some research and find out that you have just raised $10 million. Many domain owners might be tempted to add an extra zero on to their asking price.
A domain buyer broker can keep your identity hidden throughout the negotiations and acquisition process, ensuring that a fair price is paid for the domain. The buyer broker will likely approach the owner using their real identity and reputation as a means of opening discussions. Many domain owners will not respond to an anonymous @gmail.com, @protonmail.com, or @hotmail.com email.
Does Using a Buyer Broker Guarantee That My Domain Will Be Acquired?
No. No domain buyer broker can guarantee that a certain domain can be acquired. There are several variables involved that make the whole process unpredictable:
- Is it actually possible to contact the current owner?
- Is the owner open to selling the name at all?
- If they are open to selling, is the name within budget?
- Are there any legal restrictions stopping the owner from selling?
These, and more, are reasons why domain deals sometimes aren’t possible, even when using a domain buyer broker.
How Can a Buyer Broker Help Me?
A domain buyer broker can help at several different stages throughout the lifecycle of a company:
- Initial branding: A domain buyer broker can advise on the naming of your company or brand with their advice influenced by the availability of certain domains within your budget. At this point, the buyer broker may also help to form a roadmap to determine a strategy for potentially upgrading that domain in the future.
- Domain acquisition: A buyer broker will be able to advise on the best course of action for a domain name acquisition. If there is a specific domain that the buyer is interested in, the broker will use their sleuthing techniques to track down the owner and attempt to negotiate an agreeable deal within the buyer’s budget. They will then work with the buyer until the domain is safely in their possession.
- Strategic domain purchases: If there are any domain names that aren’t vital to an existing company’s core digital strategy, but are desirable from an SEO viewpoint or get a significant amount of targeted web visitors, then a buyer broker will be able to help you acquire these domains.
- Upgrading: if you launched your company on the best domain you could get at the time, but you’re now in a position to spend more on a domain purchase, a buyer broker can help to acquire the best upgrade domain for your company. This can be especially useful as a buyer broker will usually
Can a Buyer Broker Help Name My Company?
Yes. A buyer broker can certainly help in the early stages of naming a company. Whilst the actual naming process should ultimately be down to the founder and their team (perhaps including outside branding consultations), a buyer broker can help you from a domain name point of view.
The buyer broker will be able to offer advice on current domain name options that may suit your budget, as well as potential upgrade options in the event of securing a significant funding round.
How Much Do Buyer Brokers Charge?
That’s a difficult question, as different buyer brokers often work on a number of different fee structures. The most common are:
- The flat-rate commission: Some buyer brokers charge a percentage commission based on the final purchase price of your domain. Let’s say you buy a domain through your broker for $100,000. If the flat-rate commission fee is 10%, then you’ll end up spending $110,000 (the domain purchase fee, plus the broker fee).
- The up-front fee: Buyer brokers may charge an initial retainer fee to work with you. This may be $500, or it may be more. In this scenario, you’ll also likely be charged a commission fee upon a successful purchase, too.
- Split the difference: This structure gives a real incentive to the broker to get you the lowest price possible. If you have agreed on a budget for a domain purchase with a buyer broker, the broker will use that budget as a basis for their commission fee. Let’s say you have a budget of $100,000, and the buyer broker manages to get the domain for $65,000. The buyer broker may ask for 15% of the difference between $100,000 and $65,000. In this case, that would be 15% of $35,000, which equals $5,250. The higher the purchase price, the less commission the broker makes. If the budget was $100,000 and the broker secures the name for $85,000, the broker would only make $2,250 in this scenario.
- The hybrid: Sometimes, a buyer broker may include an up-front fee, and propose a “split the difference” commission structure. This is known as the hybrid. If your budget is $100,000 for a domain, the broker may charge an initial $500 retainer fee, and then 15% of the difference between your budget and the purchase price.
Typically, buyer brokers are flexible with their fee structures, so they will find a way of structuring a fee that suits both parties.
Is GoDaddy’s Buyer Service Worth It?
GoDaddy, the world’s leading domain name registrar, offers a domain buyer service that will enable GoDaddy to act as your buyer broker. For an upfront fee of $69.99 and then a 20% commission rate, GoDaddy will employ one of its aftermarket sales reps to go out and help acquire your domain name.
For the amount that GoDaddy charges in relation to other domain buyer brokers, their fee seems high. GoDaddy’s service may also be incentive-based, with the sales rep pushing to close a deal with you to ensure they fulfill their own internal targets.
Using an independent buyer broker will offer a more reasonably priced, and more personal service without targets-based closing.
How Much Should I Expect to Pay For a Domain?
That very much depends on the type of domain name you’re planning on buying. Here are some rough guides, but each domain is entirely different. Your buyer broker will be able to help with more specific valuations:
- A two-letter .COM (like NA.com): These are an exclusive band of domains, and will likely cost upwards of $600,000. Some domains will cost far more. Facebook, for example, paid $8.5 million for FB.com.
- A three-letter .COM (like NAM.com): Typically between $30,000 and $200,000. In some cases, they may cost more.
- A one-word .COM (like Name.com): You should expect to pay at least $50,000, with many highly desirable one-word .COM’s reaching six-figures, with some at $1 million or more.
- A two-word .COM (like BlueName.com): These are usually a lower cost, but will still typically carry prices of anywhere from $1,000 to $35,000 in most cases.
- A “brandable” .COM (like BluNa.com): Brandable domains are invented words. They are usually an amalgamation of two words or a play on one word, such as Namez.com. Some of these may be available to register, whereas some will command aftermarket prices. Expect to pay anywhere from $10 to $15,000 for one of these.
How Reliable are Automated Appraisals?
The short answer is, not very. Appraisals from services such as Estibot are useful for some things, but not giving an accurate representation of a domain’s value. While appraisals can give a rough idea of overall value when analyzing larger portfolios, automated appraisals should never be used to determine how much you should be paying for a domain name.
Using data from websites such as DNJournal or NameBio, as well as expert consultations – particularly from a domain buyer broker – will help to give you a better view of a domain’s potential value.
Which Buyer Brokers Are Recommended?
There are a handful of expert domain buyer brokers who you may wish to contact when looking to hire someone to pursue your desired domain.
1. Name Ninja
Name Ninja is another dedicated buyer broker service, working purely with startups and entrepreneurs on domain name purchases. Founded by Bill Sweetman, Name Ninja has a track record of working on acquiring valuable domain names. Most of Bill’s acquisitions are entirely under the radar, but he has publicly disclosed buys such as Carrot.com, and Files.com.
2. Media Options
Media Options is primarily a sales broker that has won Escrow.com’s “Master of Domains” award for two years running. The company has sold domains such as PX.com, CT.com, and WallStreet.com. Aside from sales, Media Options does offer acquisition services and has worked with countless startups and entrepreneurs to secure domain names.
If you’re looking to learn a little bit more about domain names and why anyone would pay such a vast amount for them, then I can recommend a few different resources.
I have interviewed over 40 end-users to see why they acquired their specific domain names. In some cases, these companies have paid in excess of $5 million to acquire the perfect name for their business. These interviews are available in two different locations.
Firstly, is NamePros, where there are 38 interviews that I have performed with buyers of domain names from the $2.1 million acquisition of 37.com to a company’s rebranding of Gogobot to the succinct Trip.com.
There are also several interviews on the Media Options blog. I teamed up with Media Options to produce some more end-user interviews in a series called “On the Record”. My personal favorite was a chat I had with Extend CEO Woody Levin about how he acquired the Extend.com domain name within 48 hours of realizing it was first available.
Domain Sales Data
Are you looking to have a firmer grasp on the potential value of a domain name? Fortunately, there are several different resources for this.
The first recommended website is DNJournal, the industry’s most reputable website that provides a regular sales chart that compiles the most recent publicly disclosed domain sales. Here, you’ll be able to browse the charts to find relevant comparable data.
The domain name industry also has a domain sales database. NameBio should be used when you’re looking for something more specific. Thanks to its many filters, NameBio can narrow down domain sales search results from the 800,000+ sales recorded.
I have also compiled a list of recent one-word .COM domain sales that may be of interest to you if you’re looking to value a one-word .COM.
This guide is updated periodically with new data, advice, and input. Last updated: 4th June 2020.