CEO of VPN.com. We help Fortune 1000, entrepreneurs and companies protect their brand.

Having been intimately involved in the domain name transaction business over the past decade, and as an owner of a seven-figure, ultra-premium domain name, there is some advice I can impart to you about what to look for before you make your buying decision. Here are the top eight things you need to know before you buy.

1. Can you finance the domain?

In many cases, the answer is a soft yes. I say this because there are factors associated with financing anything. For example, your personal net worth, business net worth, credit rating and the appraised value of the domain all come into question here. Notwithstanding, of course, any existing assets that you could leverage in favor of financing said acquisition.

2. Consider the long-term value to your business.

When considering any domain name purchase, the first place you’ll want to start with is by asking yourself this question: What long-term value can this domain name add to my business? For example, a domain name that features your unique value proposition, motto, mantra or brand all have innate value.

3. Think about resale value.

What if your business plans change, or you decide to pursue a new venture? What then? Before purchasing any domain name, carefully consider the potential resale value of the domain in advance. By having the domain professionally appraised by a third party beforehand, you can proceed in confidence knowing that the value of it will be sustainable in the long term, especially if you want to sell the domain for a profit later on.

4. Factor in monthly direct traffic with customer lifetime value (CLV).

Many ultra-premium domain names come with built-in SEO value. This is found in the form of direct traffic, the actual conversion rate (or forecasted conversion rate) of a potential customer and the lifetime value of that customer. If the domain name already has historical customer data, you can factor the CLV rather easily. However, if there isn’t such data, you may not have a real idea of what to expect with CLV.

5. Determine the defensive cost of allowing a competitor to acquire the domain

Another important element you shouldn’t overlook when considering the purchase of an ultra-premium domain name is the potential for a competitor to acquire it. While this isn’t as common a scenario as you may think, it does happen. And when/if a competitor does acquire your desired domain name, they can drive the cost of acquisition up so high that it becomes out of reach for your brand.

6. Is this a rebrand or an upgrade?

What is the direction of your business? Are you looking for an ultra-premium domain name simply to rebrand, and if so, what’s that ultimately worth to you? Or are you seeking an upgrade to a name that better reflects your brand identity—such as an exact match domain name—and that also gives you immediate leverage to capitalize on the existing, direct traffic flow?

7. Have you cleared trademarks?

Many ultra-premium domain names come with trademark or intellectual property ownership. This isn’t always the case, though. Ensure that the domain name broker that you’re using has in-house legal counsel that can efficiently research the domain name, the IP, and any existing—and potentially conflicting—trademarks in advance of the transaction.

8. Think about working with an expert for anonymous acquisition and negotiation.

Finally, have you considered using a stealth acquisition method to acquire your desired domain name? In many ultra-premium domain name transactions that I’ve been a part of, the buyer wishes to remain anonymous for a variety of reasons. The primary reasons to consider this includes: preventing the seller from spiking the price, preventing competitors from knowing that they’re buying the domain name and brand or asset protection.

An ultra-premium domain name transaction is something that you want to plan well in advance. Along the way, make sure you have the benefit of an experienced broker on your side. They can help you navigate the ins and outs of acquisition in the best manner. The end result can be you obtaining that premium domain name you want while protecting your best interests along the way.


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