Four Ways to Close Domain Purchase Deals
Whether you’re buying or selling a domain name, it can be difficult to find a deal that works for both parties. Usually, this comes down to the seller wanting more for the domain than the buyer can (or will) pay.
Here are four ways to close a deal when you can’t agree on a price with the other party.
Payment plans help bridge the gap between wanting a domain now and not having the money to pay for it. With a payment plan, the buyer agrees to make ongoing payments until they pay the full amount.
Sometimes they will make a down payment plus monthly fees. For example, if the buyer agrees to pay $10,000 on a payment plan, they might pay $1,000 upfront plus $500 per month for 18 months.
One of the challenges of a payment plan is determining who controls the domain during the payment period and what happens in the event the buyer stops making payments.
Typically, the buyer will get to change the nameservers on the domain name during the payment period so they can host their website. The seller will retain control of the domain name.
If necessary, escrow companies such as Escrow.com will hold a domain name and handle payments for this type of deal. Some domain marketplaces, including DAN.com, also hold domains for payment plan transactions.
Most payment plan domain deals allow the buyer to stop making payments if they decide they no longer want the domain. The seller then retains the domain name plus any payments the buyer has made to date.
A lease is different from a payment plan because the payment obligation is ongoing; the buyer never actually owns the domain name.
This means the lease payments should be less than those of a payment plan for the same negotiated price.
Building a business on a leased domain could be problematic. You might have to pay lease payments forever! For this reason, it’s smart to negotiate an upfront option to buy the domain.
For example, let’s say the seller wants $50,000 for her domain. You agree to lease the domain for $1,000 a month and retain the option to buy it at any time for $50,000. If you buy it after one year, you’ll end up paying $62,000.
Having a purchase option ensures that you can acquire the domain and stop making lease payments if your business takes off.
Startups are usually short on cash but long on hope. One option to bridge the gap to buy a domain name is to offer equity in addition to (or instead of) cash.
Many startups have done deals like this. Uber bought Uber.com with equity instead of paying approximately $100,000 in cash. When Uber went public, that equity would have been worth $532 million! Unfortunately for the domain seller, they sold the stock much earlier.
The odds of a startup becoming the next Uber are small, so buyers would be smart to negotiate for a combination of cash and equity.
Entrepreneurs might be able to offer sweat equity to close the gap on a domain deal. Experts in search engine optimization, web design, content writing, graphic design or anything else can offer to trade their services to make up for some of the deficit of how much the seller is asking.
Or, you could trade watermelons.
In the book The Domain Game, author David Kesmodel writes about an interesting transaction. When watermelon farmer Scott Day bought the domain names Watermelon.com and Watermelons.com in 1997, he negotiated the price down but agreed to send a crate of watermelons to the seller.
Most people don’t have a crate of watermelons, but they can still get creative. Think about what you have that you can trade to complete a deal or how you can change the timing of payments to make it work for both parties.
Owning the ideal domain will pay dividends for your business, so get creative. And when you’re ready to search for your next domain, Namecheap will be ready to help.