Buying Internet Domains: Why Not To Fall In Love With Someone Who's Taken

Written By: Dharmesh Shah June 20, 2006

I get this question all the time from startup founders:  What’s the most I should pay for an Internet domain for my new company?

My initial response is this:  If possible, try not to become attached to a domain name that has already been taken.  It’s kind of like falling in love with someone who’s already spoken for.  Though people often rationalize this behavior in any number of ways, more often than not, it’s simply a bad idea.  When you fall in love with someone who’s taken, you’re basically creating grief for yourself.  Doesn’t matter if she’s current with a “loser” who doesn’t deserve her.  Doesn’t matter if he doesn’t know how great she is – and you do.  You may be right, she may be better off with you, but you don’t really control the situation.

Note:  I try to stay away from relationship advice, but I have inadvertently become the master of the mediocre metaphor – so work with me.  Apologies for the gender bias as well.  I initially tried to make it gender-neutral, but it didn’t come out sounding right.

Here are the most common arguments I hear most often from would-be buyers of domain names.

Rationalizations For Falling In Love With An Existing Domain Name
  1. Current Owner Is A Loser:  Sure, the current domain owner might be a company that has no clue what they’re doing.  Fact is, it doesn’t really matter.  This seems to have no impact on the odds of you acquiring the domain name.  In fact, in a weird twist of fate, the bigger the loser the current owner is, the harder it will likely be for you to buy a domain from them.  

  1. Worth More To Me Than To Them:  Perhaps you have a brilliant idea that will allow you to gain much more value from the domain name than the current owner. As such, in theory, you might be able to pay them a price that they should take, but people don’t always do what they should.  Even if they paid $10 for it, and you’re offering them 200 times that, there’s no guarantee that they’ll sell.  

  1. They’re Not Using It Anyways:  You’re confusing usage with maintaining the option for usage.  The option has some value to the owner.  So, even though they aren’t using the domain name now, they’re telling themselves they’re going to someday.  Or, they’re telling themselves that there’s someone else out there that will pay more than you will.  (Even though yours is the only offer they’ve had since they registered the domain 4 years ago).

  1. Can’t Hurt To Try:  This is true.  But be prepared for a high probability of rejection (or even more common, no response at all) when you make an unsolicited offer to purchase an existing domain.  An exception is if the owner has already listed the domain for sale at a specified price.  Additional note:  I’ve found that people that have listed domains for sale with one of the exchanges, but have not stated a price, are much less likely to sell the domain to you (at any price).  Often, the domain is listed purely for curiosity to see what people will offer.

  1. They Have An Obligation To Sell:  Though you may believe that the owners of domain names have a moral obligation to sell the domain name, if they’re not using it – in the days of $2 web-hosting and Google AdSense, it is easy for those that care about this to simply setup a site and sleep at night with the comfort that they are actually doing something.  Point being, if they’re remotely concerned about their moral obligation, there’s a cheap way for them to get over it – and still not sell you the domain.

  1. It’s Worth More If It’s Already Registered:  There’s possibly some element of truth to this argument.  It is rumored that the Google algorithm favors domains that have been “in the index” for some period of time (particularly to address the “sandbox” period).  As such, it’s possible that buying an existing domain name might be worth something and save you some time.  However, from an SEO perspective, it’s unlikely that your new site is going to maintain the same PageRank with your new content.  All you’re really gaining is the fact that the domain has been “baking” for a while.  There are exceptions to this, I’m sure.  I’m not an expert.

In short, my strong recommendation is to find a domain name that isn’t already registered so you can register it “free and clear” without headaches, negotiation and premium pricing.  Having said that,  I am a strong advocate of ensuring you have the “.com” and “.net” domain names – without tricks in spelling or hyphens.  The domain name should be your company name. If the “.com” is not available, find a different company name, or pay a premium price.  Don’t play tricks with the domain just so you can register something that’s available.

If you have a business model where the name is super-important – then search one of the existing premium domain resellers and find something you like (where the price is known and the transaction can be closed easily).  In this case, I personally would spend up to about $2,500 for a domain name (assuming you have the cash).  However, I’ve known companies that have spent more.  I think decent domain names can be purchased in the $500 - $1,000 range.  As an investor, I’d be a little concerned if I believe I startup founder is putting too much weight on the name.  (If your future success is going to be that dependent on a specific name, I question the market opportunity).  

Finally, I’ve found that the list of expiring domain names also provides a rich pool of possible names.  These have the advantage of being “pre-registered”, but are much easier to acquire – and much more economical than purchasing a premium name.  Sifting through these does take a fair amount of time though.

Summary Of My Point:  You have enough to worry about in the early naming process.  Don’t fall in love with a name that’s already taken.  It’s going to waste time and money (and that’s if your successful).  It’s easier just to find a domain that is either available free and clear or, if you have the budget, buy one that is offered for sale on one of the premium domain exchanges.

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