It can seem complex, with all the metrics and tools and more, to decide which names are worth acquiring. Let’s simplify the process to some key questions to ask. None of these are original, and most have been around for years, but I thought, particularly for those new to domain investing, it might be handy to have them all in one article.
Who Would Want This Name?
When considering acquiring a domain name, the first question to ask is: Who would want this name?
Actually make a list of the realistic uses for this particular name. If you find it hard creating the list, or your list only has one or two possibilities, you should probably move on to another name. Names need to pass suitability requirements, and the more possible buyers the better.
Would I Start A Business On This Name?
The second point deals with the quality of the name. Imagine that someone gave you seed funding to get a business started, maybe $50,000. If you really had that money, and the necessary skills, would you choose this particular name as the basis for your business?
If you would not risk your funds by starting a business on this domain name, why do you think anyone else would?
How Will I Price This Name?
Before you acquire any name, decide how you would retail price the name. Now you might think it’s okay to worry about pricing later, but whether this is a good acquisition, or not, depends on both price and likely sell-through rate.
If you have trouble suggesting a price, is it because you don’t really know the niche or sector well? If the price should be fairly low, given the niche and probable use, does this acquisition make sense?
Pricing is hard, but here are a few considerations to keep in mind:
While you will revisit renewal decisions each year, ask yourself how many years you would hold the name, even in the absence of offers? Let’s say that is 10 years. Think of the cost of the name as not just the acquisition cost, but that plus the cost of those 10 renewals.
It makes sense to try some names for only a year, but be clear from the outset whether that is your strategy for any particular name.
Do I Have Money To Risk?
No name is guaranteed to sell for a profit, or even at all. Are you prepared to possibly never sell the name and completely lose all of your invested funds? Is your personal situation such that you can lose these funds?
Some domain names are liquid, in the sense that they are likely to sell quickly to other investors at some price level. How close is your acquisition price to a likely fast-sale liquid value?
Is This The Best Use Of My Money?
This is one of the most important points, and too easily overlooked. You have a finite amount to spend on domain names. Make the most of it. So for each and every acquisition, compare it to other ways you might use those funds.
For example, is there a different name that would be a better acquisition? Would it be better to put funds into renewing names already in your portfolio, rather than adding this name?
What Will Be My Selling Strategy?
What will you will do after you acquire the name to improve chances that it will sell? What marketplaces will you list the name on? If they are curated marketplaces, what is the likelihood that this particular name will be accepted? For example, you can get a decision prior to registration at BrandPa, or find out the Domain Insights score at SquadHelp.
Do you plan to have a buy-it-now only, or make offer as well? If so, what will be the make offer amount?
Do you plan to use outbound to increase chances the name will sell? If so, what are specific businesses, or types of businesses, that you will contact? What would be said in the short outreach communication about this name as a selling pitch?
Will This Name Be Parked?
Parking is a big topic on its own, but if you use domain parking, is this a name that you plan to park? If so, is there a reasonable case for making money with this name? You should look at search volume and cost-per-click data. Does the domain name already have a link profile, and are those inbound links of value? How have similar names in your portfolio performed? Are there any risks to parking this name?
Will Holding This Name Create Stress?
Are risks, such as possible trademark or other legal aspects, associated with this name? Even if you think all is okay, given the many names available every single day, do you want to have that stress?
What Has Been Overlooked?
Especially if you just saw this name for the first time, is there something about the name that you are overlooking? Do a web search to see what comes up with the term. Check the history of the domain name, and if it is on any blacklists. Are there meanings in slang or in other languages that detract from possible use of the name?
Do The Pros Outweigh The Cons?
While you don’t need to always do this formally, sometimes it can be helpful to list the pros and cons of the domain name. On the pro list would be your points if convincing a business partner that this would be a smart acquisition. For the con list, try to talk yourself out of acquiring this domain name.
How Much Should I Pay For This Name?
After considering all of the above, you have decided that you do want to try to acquire this domain name. But there is one more thing to decide, and that is: How much should you should be willing to spend on this name?.
Keep in mind that only 1% or so of names will sell in any year. That means you need to acquire at a level so that the 1% that do sell will cover your expenses with the domain names that do not sell.
What is the highest price you should consider paying for the name? It is easy to think you really need this particular name, but you don’t. If the pricing gets too high, don’t be afraid to walk away. Especially in auctions, set your limit and stick to it.
I hope readers will add in the discussion below other things that they think are important. Also, comment on your personal strategy when it comes to domain name acquisition.
Who Would Want This Name?
When considering acquiring a domain name, the first question to ask is: Who would want this name?
Actually make a list of the realistic uses for this particular name. If you find it hard creating the list, or your list only has one or two possibilities, you should probably move on to another name. Names need to pass suitability requirements, and the more possible buyers the better.
Would I Start A Business On This Name?
The second point deals with the quality of the name. Imagine that someone gave you seed funding to get a business started, maybe $50,000. If you really had that money, and the necessary skills, would you choose this particular name as the basis for your business?
If you would not risk your funds by starting a business on this domain name, why do you think anyone else would?
How Will I Price This Name?
Before you acquire any name, decide how you would retail price the name. Now you might think it’s okay to worry about pricing later, but whether this is a good acquisition, or not, depends on both price and likely sell-through rate.
If you have trouble suggesting a price, is it because you don’t really know the niche or sector well? If the price should be fairly low, given the niche and probable use, does this acquisition make sense?
Pricing is hard, but here are a few considerations to keep in mind:
- What comparator sales of similar names exist?
- What would be a typical startup funding level for a business that uses this name? What fraction of that is reasonable for the spend on the name?
- How are competitive names currently listed priced?
While you will revisit renewal decisions each year, ask yourself how many years you would hold the name, even in the absence of offers? Let’s say that is 10 years. Think of the cost of the name as not just the acquisition cost, but that plus the cost of those 10 renewals.
It makes sense to try some names for only a year, but be clear from the outset whether that is your strategy for any particular name.
Do I Have Money To Risk?
No name is guaranteed to sell for a profit, or even at all. Are you prepared to possibly never sell the name and completely lose all of your invested funds? Is your personal situation such that you can lose these funds?
Some domain names are liquid, in the sense that they are likely to sell quickly to other investors at some price level. How close is your acquisition price to a likely fast-sale liquid value?
Is This The Best Use Of My Money?
This is one of the most important points, and too easily overlooked. You have a finite amount to spend on domain names. Make the most of it. So for each and every acquisition, compare it to other ways you might use those funds.
For example, is there a different name that would be a better acquisition? Would it be better to put funds into renewing names already in your portfolio, rather than adding this name?
What Will Be My Selling Strategy?
What will you will do after you acquire the name to improve chances that it will sell? What marketplaces will you list the name on? If they are curated marketplaces, what is the likelihood that this particular name will be accepted? For example, you can get a decision prior to registration at BrandPa, or find out the Domain Insights score at SquadHelp.
Do you plan to have a buy-it-now only, or make offer as well? If so, what will be the make offer amount?
Do you plan to use outbound to increase chances the name will sell? If so, what are specific businesses, or types of businesses, that you will contact? What would be said in the short outreach communication about this name as a selling pitch?
Will This Name Be Parked?
Parking is a big topic on its own, but if you use domain parking, is this a name that you plan to park? If so, is there a reasonable case for making money with this name? You should look at search volume and cost-per-click data. Does the domain name already have a link profile, and are those inbound links of value? How have similar names in your portfolio performed? Are there any risks to parking this name?
Will Holding This Name Create Stress?
Are risks, such as possible trademark or other legal aspects, associated with this name? Even if you think all is okay, given the many names available every single day, do you want to have that stress?
What Has Been Overlooked?
Especially if you just saw this name for the first time, is there something about the name that you are overlooking? Do a web search to see what comes up with the term. Check the history of the domain name, and if it is on any blacklists. Are there meanings in slang or in other languages that detract from possible use of the name?
Do The Pros Outweigh The Cons?
While you don’t need to always do this formally, sometimes it can be helpful to list the pros and cons of the domain name. On the pro list would be your points if convincing a business partner that this would be a smart acquisition. For the con list, try to talk yourself out of acquiring this domain name.
How Much Should I Pay For This Name?
After considering all of the above, you have decided that you do want to try to acquire this domain name. But there is one more thing to decide, and that is: How much should you should be willing to spend on this name?.
Keep in mind that only 1% or so of names will sell in any year. That means you need to acquire at a level so that the 1% that do sell will cover your expenses with the domain names that do not sell.
What is the highest price you should consider paying for the name? It is easy to think you really need this particular name, but you don’t. If the pricing gets too high, don’t be afraid to walk away. Especially in auctions, set your limit and stick to it.
I hope readers will add in the discussion below other things that they think are important. Also, comment on your personal strategy when it comes to domain name acquisition.
