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Small Business Heroes

How to Negotiate the Price of a Pricey Premium Domain

Buying a domain at the asking price? That's like buying a used car at the asking price. Doing your homework pays off.
How to Negotiate the Price of a Pricey Premium Domain
Image credit: Westend61 | Getty Images
Guest Writer
Content Marketer and Author
5 min read
Opinions expressed by Entrepreneur contributors are their own.

Your domain name is your brand. Indeed, very few brands these days can get away with an off-beat domain name or a one that doesn't reflect their company. In fact, many top brands are built off their domain name rather than the other way around; and more than one company has been named after the domain it picked up.

It should come as no surprise, then, that top-tier domain names cost a lot of money. Cars.com holds the record for most valuable, valued at a whopping $872 million.

Related: Why I Spent $1.5 Million on Our Domain

Now I certainly don't expect most startups or growing companies to spring for a multi-million dollar domain name, but it's absolutely not uncommon for a good domain to go for tens of thousands of dollars. In internet terms, the cost is akin to buying a house. It's often the single largest purchase a brand will make, and it's where your own brand will live for years or decades to come.

So, how do you make sure you're getting the best deal on your domain name? Having gone through the process several times myself, I offer the following tips.

1. Do your research.

Before you approach the seller with an offer, do your research. First, study the domain itself, to see what its history is, how much interest it's generated and what the price has been in the past. Also research the seller. Negotiating with a private seller is very different from negotiating with a professional domain-flipper.

There are a number of different companies and agents out there that will appraise a domain, either algorithmically or organically, and give you a rough estimate of its value. NameCorp, Domaining, Estibot, and Sedo all offer such services, as do many domain registrars. I recommend a personal appraiser more than an automated tool, however, as there are often factors that aren't easily picked out algorithmically but are quite important to a real valuation.

Obviously, a brand-name domain matching your company's will be more valuable to you than what the aggregate history, age and previous usage of the domain may indicate. A history of sales for the domain may also indicate when the current owner is trying to get far more than the domain is worth. So, use professional appraisals as ammunition for negotiations, particularly when the list price is much higher than the appraisal price.

2. Always negotiate.

It doesn't matter if you're a struggling startup with a mediocre Kickstarter response or the hot new kid on the block flush with venture capital: Always negotiate for your domain name. Whenever a domain name is for sale, the owner is going to set a high price in hopes of getting an offer. No one expects to sell for the list price, so you should never expect to buy for that price either. 

The only time to be concerned about a time limit for your purchase is when you can verify interest from other companies. Most of the time, you're the only one negotiating for the domain, so you have the leisure to take your time. The caveat, of course, is that you need to initiate this process early enough that you have plenty of leeway before any important launch dates for your company.

3. Walk away.

The key is to play hardball. Domain names may be like houses for online brands, but they're distinctly unlike real estate in that the domain you want likely has very little demand for it. A domain like Dropbox.com is in high demand for brands named Dropbox and for a few other brands that have dropbox-related services, but that's it. How many of those brands are also seeking a new domain name, and have the budget to buy a high-priced domain?

Related: What Are They? Domain Names, Business Entity Names, Trademarks.

In the vast majority of cases, the domain you're looking to buy will have few if any other bidders. So, you don't have to worry about competition snatching it up when you're deliberating. Your negotiation will show the owner that there's some interest out there, but he or she will know full well how few bids have come in.

If the price is too high, walk away. State simply that the price is too high for your budget and you can't make a purchase at that price. Chances are pretty good that the seller will rethink it, come up with a lower price point and reach out to you via phone or email with a better offer.

4. Ask about a payment plan.

Depending on who is selling the domain, you may be able to set up a payment plan to make this large purchase easier on your budget. Most large domain registrars will offer payment plans, with the domain ownership transferring upon receipt of the final payment.

Meanwhile, you may be able to use the name, much as you can drive the car after taking out a car loan; but the terms depend on the contract. Escrow has a service specifically for secure domain name transactions.

Related: 3 Keys to the Right Domain Name for Building a Brand

A payment plan, however, can be more difficult with private sellers, who wdon't have the infrastructure to handle automatic monthly payments, or who may not have such a contract on hand. In those cases, hire a lawyer to draft up a simple agreement for both parties to sign. And then get to work marketing through your new domain.

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