Prices, Gouging and Haggling for Internet Domains?

GregStevensLA asks: "I'm considering paying for a 'premium' domain name for a small web start-up I want to form. The company that currently holds the domain name is offering it for $1500, but they made it clear to me that they expect a counter-offer and are 'willing to make a deal.' I've never done this before, and I have no idea what a reasonable counter-offer is. If I say 'I can't go above $1000' am I being too easy? Should I try to push for lower than that? My understanding is that these prices are hugely inflated anyway (i.e. pure profit going to companies that probably scooped up the domains for free). In some sense, paying anything beyond a registration fee is gouging, in my opinion. I don't want to be conned... on the other hand, this is the reality of business, and I don't want to come across as amateurish. Does anyone have any advice for this new-comer to domain name purchasing?"

Comments

Let's get this point out of the way

[linvir]

Let's get it out of the way early, because I can feel this wave of antipathy coming...

Please do your best to find an alternative first. Look into alternatives before succumbing and compensating these worthless parasites for their land grabbing.

Re:Let's get this point out of the way

[MindStalker]

Exactly. Even more importantly don't let your domain name hamstring you. Most people nowadays use google for find websites, they rarly type them by hand anymore. So, offer these guy $100 (hell I payed almost that much from a registrar 10 years back) get a domain name that is close to this use it, get your google rank up and don't ever expect to get this name and these guys will eventually crawl back to you.

Hey Greg

[bluelip]

Hey Greg,

          We spoke eralier about you purchasing a domain name from us. In light of recent interest in the domain, we're now asking $2500.

Thanks,
Your Friendly Neighborhood Domain Dealer

Find a better name.

[nxtw]

Don't give these cybersquatting bastards money. If cybersquatting wasn't so profitable, the cybersquatters wouldn't exist.

Don't Buy It

[mysqlrocks]

I refuse to give money to domain squatters. Buy another domain name, be creative. Domain names become less and less important every day. Focus on SEO and other ways of getting people to your website. The domain name just isn't that important unless you're going to do a lot of non web-based advertising (radio, TV, print, etc.). You can pay for a lot of clicks on Google AdWords for $1000.

Re:Don't Buy It

[patio11]

Yep. Are you intending for your web site to be a destination location? Like, someone will log on and say "I want to go to Bob's web site now, www.bobswebsite.com"? Because the vast majority of home users do NOT have usage patterns like this and I'm guessing your users won't either. Back in the olden days of the Internet, when search engines were unknown or cruddy and Internet expertise was nil, somebody who wanted to try out that whole "buying books online" thing might actually type in www.books.com just to see if it worked. Then books.com, internet.com, business.com, nameofyourbusiness.com, etc were worth a lot of money. Now, most of your first-time leads are going to be coming in from search engines and they largely don't care about your domain name (helps to have a search term in the url, of course, but you can get that just as easily by naming yourself www.bobs-pc-shop.com instead of www.bobs-pc.com). Your returning customers will either remember the domain name (rather unlikely), go to their history tab (very unlikely), go to a bookmark they made (suprisingly likely, and a convinient "bookmark this site" button works wonders), or just do it the easy way and Google your business name again.

Heck, I'm as atypical as a user can be and I've been finding myself Googling "Amazon" recently.

Re:Don't Buy It

[Glonoinha]

Actually Google wasn't even a word - they made it up because googol was already taken.
Yourname.com (or whatever) is already taken, so make something else up. If it can work for Google, it can work for you.

Re:Don't Buy It

[patio11]

Both Google and MySpace are intended to be what my father the real-estate agent would call "destination locations" -- you go out with the specific intent to patronize one or two of them, the same way you go out with the specific intent to patronize your bank. This is why a bank generally does not stress overmuch about being on a corner. You can compare this to gas stations, which are NOT destinations (nobody says "Hmm, I think I'll hop in the car and drive over to that Shell station on 67th street next to the Burger King") -- their location is critically important to them. Almost every gas station you find will be built on a corner, for maximum visiblity and accessibility.

In the Internet, things are almost completely reversed. If you're a destination, then you might well get accessed by the address bar (Amazon, Google, eBay, MySpace) -- its very important to you to have a punchy, memorable, very unambiguous (can't be mispelled or misremembered) name. If you're not a destination, you rely on people seeing you "from the road" as it were, and in today's internet "the road" is Google. Google doesn't care whether you have a maximally-punchy minimally-long domain name or not.

I wouldn't write a 45 letter domain name for the heck of it, but you can feel free to not treat "six to eight characters terminated with .com, and exactly equivalent to your business name" as the gospel anymore. You're the expert on your own business, so you're best qualified to determine whether your users will see you as a destination location or not.

Re:Don't Buy It

[fermion]

I think it is a bit more complicated than this. Gas stations aare wierd because people will often stop at whatever gas station is on thier way because it is not a long term stop. For example the station that is accesible directly to the off and on ramp of a freeway has an advantage to one in which the driver has to take a convoluted route. This is the same for fast food stores. OTOH, banks, stores, and the like, is often more a time commitment.

But even banks will pay extra to build where the customers are. For instance, there are two new banks near me. Both are built on pretty recently expensive real estate, real estate that could have been had much cheaper a few miles down the road. But they built where the money was.

So there is some element of "location" here, like being a .com, and bussiness routinely make decisions to pay exhorbanant fees for location. But there is a second issue here, and that is branding. If one is burger king, then building a consistant brand means that you must use something like BK.com, and, if the brand is established, then the law pretty much gives access to those domain.

However, a new service still has to worry about presenting a consistant brand and a veneer of credibility. It may be shallow but I think twice about dealing with a so-called pro that has an address at aol.com, or ms.com, or even mac.com. I mean I would sooner conduct bussiness out of the trunk on a olds. When banks merge they spend massive amount of cash rebuilding the brand. So why is it not rational, when one is trying to build a new brand to not invest money in it?

I am not trying to defend these creeps. I do not even like the fact that allegedly reputable registrars like godaddy have the service of stealing domains from those who forget to register, and then try to scare their clients into long term registrations based on the fact that godaddy has a service that can steal them if the client is one second late. But a cool name seems be helpful for bussiness, and a domain matching the cool name does seem to provide some added value.

So, what is the advice to the original question that no one want to answer, but rather demean the poster and criticize the behavior that all of the money making world seems to believe, at least to some degree, is rational. Just like any other deal, figure out what it is worth. Not how much you can pay, but what it is worth to you. Just like any other product. Try to negotiate to that price. If you can live without the domain, lowball. If not try to find the current going rate and start there. It might be the 1K, it might less, or more. If you can't justify the cost, move on. Perhaps there is another name use can use. Perhaps there is another way to represent the name.

At the end of the day it is a bussiness decision, and all this emotional crap that all these allegedly rational posters are pulling is just not useful. To get anything done we all have to deal with scum. If you can't take the scum, then stay out of the bedroom.

That's nothing

[El Cubano]

The company that currently holds the domain name is offering it for $1500

I recently received a solicitation for a church domain name. I am the webmaster for my church and another church in North or South Carolina (I forget where), no longer needs one of their domain names. The church I attend has the same name, but is located in another state. Basically, the guy said he wanted to offer us first dibs. When we inquired as to how much he wanted, he said that it had been "appraised" at up to $20,000. Though, he was very nice about it and said that he would give it to us for $8000. Sheesh. I recommended to our pastor that he ignore the request since we already have a well known and establishd domain.

Re:That's nothing

[DigiShaman]

Don't worry, there's a nice place in Hell for people like him.

.com is overrated

[JanneM]

For a small business, that's a serious chunk of money - too serious. You will end up in a "bidding war" with yourself as they try to suck as much cash out of you as possible. It really is overrated to have a .com adress in any case; if you like the name, look for name.us, name.org, name.net, name.whatever. A lot of countries have restrictions on their top-level domains (you need a business address in the country or similar), but there's a whole set of top-level country domains that are offered to any comers for their mnemonic value, like .tv if your business is related to broadcasting, for instance, or .nu, always popular in Scandinavia.

Re:.com is overrated

[Alfred, Lord Tennyso]

I'm afraid I gotta disagree with you there, at least to a point. If your .foo domain name duplicates a .com domain name, then you're just buying trouble. If there's somebody actually there, you'll risk looking like you're surfing off their trademark, and maybe you are. Even if there isn't, people will go to the wrong web site all the time. Get popular enough that people are going to domain.foo, and the scuzzball domain squatter is going to make a ton of money off you selling to a scuzzball who puts up nothing but Google ads to people who type domain.com out of habit.

Or worse, they'll put up an exact duplicate of your page and use it to steal passwords and credit cards.

In general, non-traditional TLDs just look unprofessional to me. I'd never buy anything from a .biz domain; I just wouldn't trust the guys who own it.

For the most part I consider general-purpose TLDs a waste of time. But they do have this going in their favor: if it keeps the question asker from paying anything to the squatter, and the squatter has to continue paying his $3.25 (or whatever it is) a year to sit on the domain, along with a few thousand others... well, that makes me smile just a little. If people abandoned .com in droves, leaving the squatters holding the bag, it sure wouldn't make me unhappy.

Yes!

[durandal61]

Hope to god they don't read Slashdot! :-)

Price Gouging

[Distinguished Hero]

Can someone explain price gouging to me? If someone offers to sell you something at a price that you consider too high (gouging), you don't buy it. If someone offers to sell you something at a (high) price, and you agree to pay the person the money, that means that whatever you are buying is worth more to you than the money that you are offering in return (therefore not price gouging). Since (almost) all transactions are voluntary, and people engage voluntarily in transactions only if they think it is to their advantage, how can price gouging exist? Can someone clear this up for me?

Re:Price Gouging

[linvir]

Get a decent browser, and you'll be able to type "wp: price gouging" in the address bar and find these things out for yourself instead of starting a long, boring Slashdot discussion. From the resulting article:

Price gouging is a frequently pejorative reference to a seller's asking a price that is much higher than what is seen as 'fair' under the circumstances. In precise, legal usage, it is the name of a felony that obtains in some of the United States only during civil emergencies. In less precise usage, it can refer either to prices obtained by practices inconsistent with a competitive free market, or to windfall profits. In colloquial usage, it means simply that the speaker thinks the price too high, and it often degenerates into a term of demagoguery.

Do not mod this post up. I know where you sleep.

Re:Price Gouging

[chill]

It's very simple really.

All domains are worth precisely $12. No more, no less.

If someone has registered a domain, and is offering to sell it to you for more than that, they're nothing but leeching parasites, or as the PC like to call them, "cyber-squatters".

Don't feed the parasites.

Bullshit. There is such a thing as supply and demand. Domain names have features such as being easy to remember, have connotations to other items, being short, etc. This is why something like gmail.com is much more valueable than MyCantRememberTheNameForEmailButThisMightBeIt.com or asdf1324la8h_asdlkjuq7.com.

A domain name is worth exactly what someone is willing to pay for it, no more and no less.

You might want to review some economic theories postulated after the 17th Century. What you're espousing is called the "natural price" in Pre-Classical Thought.

I fear your business is not long for this world

[wowbagger]

I fear that your business is not long for this world. My reasoning is this: You are considering spending a large chunk of change for a domain name from a cybersquatter, rather than striking out to find an unused name you can register for a percent of the money. Given that ALL small businesses starting out are cash-strapped, the fact that you are willing to waste your limited money in this fashion makes me doubt you will spend your other money wisely. The fact that you then turned to Slashdot for advice on this would tend to confirm the hypothesis that you are not really thinking coldly and rationally enough to found a successful business.

I don't want to sound harsh, but I do think you really need to step back and reconsider your plans - perhaps you can locate a local college where you might get a dispassionate third party to help fix you a nice big bowl of Reality Checks.

I've watched too many businesses fail because the founders, while having the best of intentions, made bad decisions because they were not willing to face the harsh, unpleasant facts.

Please - do prove me wrong. Be successful, and when you are successful, feel free to email me and say "Boooya! In your FACE Wowbagger!" If you can be successful you will have earned the right to do so, and I will congratulate you.

But if you keep doing things like seriously considering spending $1500, or even $100 on a domain name when you are just starting out - I don't expect that email.

Invest in something useful

[dereference]

It costs less than half of that to register yourself a unique service mark or trademark in a couple relevant classes. It's just as intangible, and you do need to do some research up front, but it keeps its value far better than any domain name. It can take months to complete the process, but if you've done your research the process itself is painless and can be done almost entirely online. As an added bonus, if your registration is successful you can petition ICANN to transfer any (new) infringing domain names to you, as the rightful owner of the mark (you can't necessarily grab existing infringing domains as far as I know, but then again you're going to look for a better name anyway, right? Yes, I thought so).

Buying a Nolo book on legal protection is definitely well worth the $30-$50 investment, and the knowledge gained will carry over to any new businesses you might decide to start. Don't even consider paying a huge chunk of hard-earned money for a domain name without at least understanding the basics of legal rights that do (and don't) convey with it.

Offer the lowest price possible and test them out

[Centurix]

Really, you cannot trust anyone who spouts about counter offers. Offer them $150, a good offensive play.

Someone squatted on centurix.com and I asked them how much. $5000 was the reply, so I said $100 is my best offer, if that's not enough then have fun with the domain. They accepted, I had the domain for 2 years and just let it lapse, the same company bought it again after I had it. Good luck to them, my current domain suits us much better.

Get a trademark, then UDRP

[Animats]

One of the more useful things to do in domain disputes is to get a trademark. If you do business or have a product named "Zowie", get a trademark on "Zowie". It's not that hard, it costs a few hundred dollars, and the process is entirely on line. Doesn't matter what category of product the trademark is under, or even if it's on the principal register. You can almost always get registration on the supplemental register, which means you can't keep others from using the name, but they can't keep you from using it either.

Once you have a trademark on the domain that describes your stuff, you can make a cybersquatting complaint. If the domain owner is just parking the domain, under the Uniform Dispute Resolution Policy that's considered "use in bad faith". Then you send a letter to the domain owner, threatening a UDRP proceeding.

(If it's a "private registration", the registrar will now "uncloak" the domain so fast your head will spin, because they don't want to be the party to a UDRP proceeding or lawsuit.)

At this point, either the other side will offer to sell you the domain for less than a UDRP costs ($1000), or you go forward to a mandatory UDRP proceeding, which is an instant win when you have the trademark.