Most startup founders and entrepreneurs have considered acquiring a premium domain, but relatively few may have thought about using a domain buyer broker’s services.
With over 370 million domain names now registered, it’s getting 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 an unsolicited private 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 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. Suppose you are considering purchasing a premium domain, and you have minimal experience with domain names and how to go about acquiring them. In that case, 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 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 a typical domain broker. A domain buyer broker is employed by the purchaser to help them buy one or more domain names within their budget. They should act with the client’s best interests in mind. That means no kickbacks or commissions from the domain seller for closing a domain sale at a specific price point, which has happened in the past.
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 exchanging funds and the domain.
- The buyer broker will help get the domain securely into your domain account at a registrar of your choosing, ready 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 service can be helpful:
- 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 to open 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 particular domain can be acquired. There are several variables involved that make the whole process unpredictable:
Is it possible to contact the current owner? In a surprising number of cases, the domain name’s owner isn’t contactable at all. Despite the research skills available to a brokerage service, sometimes it’s just impossible to find the owner. This could be because the WHOIS data is invalid (which is actually against the ICANN terms of service), or it could be because the WHOIS registrant has retired or has passed away.
Is the owner open to selling the name at all? Sometimes, no matter what your budget is, the owner will not sell. This may be because they are not in a position to sell the name due to other attachments to the domain (such as running email services) or simply because they’ve become so fond of their domain that they’d prefer to keep it no matter what. Here’s a tweet from expert industry researcher Jamie Zoch revealing that this seller just wasn’t interested in selling, despite receiving an eight-figure offer:
I talked to a domain owner recently, who will read this tweet actually and casually during our conversation mentioned turning down an 8 figure offer on a 3 letter .com they own, with a giggle. 8 figures and a giggle!
— Jamie Zoch (@DotWeekly) August 14, 2020
If they are open to selling, is the name within budget? This is a crucial factor. Many owners of one-word .COM’s for example, recognize the value of their domain assets thanks to numerous unsolicited offers – sometimes offers are received daily. You may find that if you’re interested in acquiring a top one-word, or two/three-letter .COM, it may be out of your budget despite having healthy funds available.
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 advise on the best course of action for a domain name acquisition. Suppose there is a specific domain that the client is interested in. In that case, the broker will use their sleuthing techniques to track down the owner and attempt to negotiate an agreeable deal within the client’s budget. They will then work with the client 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.
Can a Buyer Broker Help Name My Company?
A buyer broker can certainly help in the early stages of naming a company. While 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.
What If I Can’t Afford the Domain Outright?
Domain name purchases can be expensive — many of the top one-word .COM domains have valuations in the six to seven-figure range. Understandably, there are relatively few companies out there who will be able to acquire such domains outright.
In some scenarios, your domain buyer broker may help you acquire a domain name on a lease or a lease-to-own deal. These kinds of deals are far more common than you may think, with many opting for lease-to-own.
This means that you would get to use the domain immediately while paying monthly or quarterly installments to pay for the domain over an agreed-upon timeframe which may span from a couple of months to several years depending on several factors.
If you do hire a buyer broker, they will advise you on the best course of action for your situation.
How Much Do Buyer Brokers Charge?
As different buyer brokers often work on a number of different fee structures, that’s a difficult question. The most common structures 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 successful purchase, too.
- Split the difference: This structure gives the broker a real incentive 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 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.
How Much Does GoDaddy or Sedo Charge?
GoDaddy’s buyer service and Sedo domain brokerage service are two of the most prominent domain buyer broker options out there, but are they worth it? Here are the latest service charges as described on GoDaddy and Sedo’s websites, respectively:
GoDaddy charges a $69.99 initial non-refundable fee, plus a 20% commission. These prices exclude VAT, so could be higher. That means that if you’re buying a domain for $100,000 using GoDaddy’s services, your final total would be around $120,069.99 (based purely on these numbers. This figure could be higher or lower).
Sedo charges a $69 one-off fee and a 15% commission of the gross selling price. On top of that, there is an optional confidentiality clause in which Sedo will not publish your domain’s sale price (which is its standard practice) for an additional 2.5% commission fee. That means that if you’re buying a domain for $100,000 using Sedo’s services, and you want your acquisition price to remain confidential, your final total would be $117,569 (based purely on these numbers. This figure could be higher or lower).
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 compared 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.
If you’re looking for domain name data to base your own purchase on, you can consult two leading data resources. The first is DNJournal, a leading resource that has been featured and referenced in The New York Times, Wall Street Journal, and more. DNJournal (available at DNJournal.com) offers a weekly sales column and keeps track of the top 100 sales of every year. The DNJournal archives date back to 2003.
The other resource is NameBio, a free searchable database filled with sales data from leading domain name marketplaces, as well as thousands of private transactions that have been publicly disclosed. NameBio contains data on around $1.9 billion worth of domain sales across more than 800,000 domain sales.
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?
Here is a couple 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 Sweetman’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.
What Else Do I Need?
Besides a domain buyer broker, you may need an attorney familiar with domain names, especially if this is a significant acquisition. The domain attorney will be able to check or perform your due diligence on the domain’s background and ownership. If the domain has changed hands numerous times, the attorney should be able to verify the ownership history to determine that you are acquiring the name from the rightful owner.
Your domain attorney may also be able to act as the third-party escrow for your domain purchase. If they can’t, then using a service such as Escrow.com or a reputable domain marketplace would likely be the safest option to acquire your domain. For seven-figure deals, in particular, the use of a domain attorney should certainly be considered.
What If My Domain’s At Auction?
The world of domain name auctions can be complicated. There are domain auction services such as GoDaddy Auctions, DropCatch, Flippa, NameJet, SnapNames, and more which hold regular auctions. Sometimes, a domain you’re interested in might come up for auction.
In that case, it’s best to create your own account at the auction site to try to acquire the name. At the stage where a domain is at auction, there’s normally very little a domain broker can do to help you buy the domain.
Note that you’ll need to do your own research on the domain auction venue before committing to bid on any domain name.
A List of Companies That Have Upgraded Their Domain
Before taking the step to upgrade your own domain name, it may be beneficial to have some data on companies that have already taken that step. Here, I’ve compiled a list of companies that have made domain upgrades since 2017.
This isn’t an exhaustive list, and these may not be outright purchases (rather lease-to-own instead), but real-world data is often very helpful in research. Where possible, I’ve included the domain’s purchase price as listed at NameBio.com.
Note that these purchases may or may not have been brokered by a domain buyer broker.
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.
Listen to the experts
In the world of startups, many prominent voices will advocate getting the exact-match .COM as soon as possible:
Paul Graham is the co-founder of startup accelerator Y Combinator, and he has been very vocal about the part that a great domain name should play in your journey as a company. In a 2015 blog post, Paul wrote:
If you have a US startup called X and you don’t have x.com, you should probably change your name.
The reason is not just that people can’t find you. For companies with mobile apps, especially, having the right domain name is not as critical as it used to be for getting users. The problem with not having the .com of your name is that it signals weakness. Unless you’re so big that your reputation precedes you, a marginal domain suggests you’re a marginal company. Whereas (as Stripe shows) having x.com signals strength even if it has no relation to what you do.
More recently, Paul has reinforced this statement in a Twitter conversation. His position on getting the best .COM hasn’t changed:
The point of this essay is not that you should rename your company, but that you should have a .com name. Renaming is merely a consequence of tlds being namespaces.
— Paul Graham (@paulg) September 15, 2020
Angel investor and founder of early dot-com companies such as Mahalo.com and Weblogs Inc, Jason Calacanis, is another proponent of strong domains. As many know, Jason was an early investor in the unicorn meditation company Calm. In explaining his choice to invest, Jason revealed that the domain was a key component:
A company that I fell in love with, Calm.com, was to be my first test. I picked this startup for a number of reasons, including exceptional branding (a four-letter domain name that’s in the dictionary!)
Domain names have also been a recurring subject on Jason’s podcast, This Week In Startups. In September 2020, Ritual founder Kat Schneider explained to Jason how her company got the domain Ritual.com. Here’s the full episode:
Venture capitalist Fred Wilson has backed companies such as Twitter, Tumblr, and Etsy. He was also an early investor in Coinbase. In a 2011 blog post, Fred wrote an in-depth blog post advocating the use of premium .COM domains:
I believe that a good domain name is an important success factor in building and launching consumer web services. It’s not in my top ten but it could be. It’s certainly something we think about a lot when making investments and working with companies post investment.
I have interviewed over 40 end-users to see why they acquired their specific domain names. In some cases, these companies have paid more than $5 million to acquire the perfect name for their business. These interviews are available in two different locations.
Firstly, is NamePros, where I performed 38 interviews with purchasers 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.
If you are interested in knowing as much as possible about domain names in general, I’d recommend the accelerated learning platform, DNAcademy. Compiled by industry educational leader and talented investor in his own rights, Michael Cyger, DNAcademy is the number one destination for concentrated learning in the domain industry.
DNAcademy has even been chosen as the educational partner for the likes of GoDaddy (announcement link), Uniregistry, and Sedo.
The syllabus includes:
- The basics of domain names
- Valuation metrics
- Valuation tools
- How to buy a domain name
- Domain name negotiations
- And a library full of resources including over 160 SOPs (standard operating procedures) that give simple instructions to complete key tasks associated with domain names.
You can find out more about the DNAcademy accelerated learning program by visiting the website here. Note that is an affiliate link. If you’d rather not support James/Names with an affiliated DNAcademy purchase, you can simply go to DNAcademy.com.
This guide is updated periodically with new data, advice, and input.
Note that you should perform your own research and due diligence before using any service, tactic, or advice mentioned in this article. Services mentioned here are not endorsed by me unless explicitly stated. Use the advice offered here at your own risk – this is an article purely meant to help guide your own research.
Last Updated on September 22, 2020 by James Iles