If you are lucky enough to think up a domain name that isn’t already taken you can skip this post. If however you, like the vast majority of us, want to buy a domain that someone else has registered you need to decide how much you’re willing to pay before you begin negotiations.

Some domains were purchased with a genuine interest in the name and a plan to create a site for it. Most domains however have been purchased with a view to the resale market and those that purchased them “off the shelf” for US$10 or less in some cases are now asking upwards of US$30,000 - more if the domain is thought to be valuable.

Stories of outrageous sums for domain names appear every now and again such as the most recent, and very expensive, purchase of Business.com for US$350m. When we think of high priced domains we usually remember the .com’s and they do go for a lot, but other TLD’s have also sold for respectable, although less ridiculous, sums. Have a look at this site for disclosed .co.uk sale prices.

So how do you decide what it’s worth? Is there a market average or rule of thumb?

A domain name is worth both what the seller wants for it and what the buyer is willing to pay for it. That’s it. There is no market average as you can clearly see from the figures on the stories linked above.

So you have to decide on what the domain is worth to you in terms of branding, sales, referrals and so on. I have personally bought good domains for as little as US$300. Again, “good” is relative and completely dependent on what I am able to do with the domain after purchase.

Domain name resellers will tell you all sorts of things, the most commonly touted are:

“This domain is unique” - of course it is! That’s what a domain name is: a unique online identifier.
“This is a premium domain” - so what? Premium means nothing. If you can’t use that particular domain it isn’t “premium” to you.
“One word domain” - that’s great IF it’s the word you’re after but it’s not a deal clincher, two and three word domains work just as well online.
“Easy to remember” - again, that’s good IF it actually is - do NOT take their word for it.
“Domains like this usually go for” - that doesn’t matter. What someone else was willing to pay for a different domain (they’re all unique, remember) has no bearing on what you are willing to pay for this one.

To work out what a domain is worth to you think about what you are going to do with that domain and what you need it to help you accomplish. Does it need to be short, snappy, easy to remember or is it preferable for it to be clearly representative of your company name and/or brands regardless of the length/ease of typing? Are you planning to sell products or services on the site? Is it to be geared towards consumers or business or neither? Is this to be your main website?

Next, consider what the domain has to say. Does it have to contain a certain word or words or can it be something similar or completely different?

Unless you have a very specific requirement for a name you can usually shop around and eventually find one that is very good, if not perfect, and a whole lot cheaper than the “premium” domain.

And never be afraid to negotiate. I have never purchased a domain for the price the seller originally wanted. No matter what the seller says there aren’t millions of people trying to buy domains but there are millions of domains on the after sale market. So unless you have to have that particular domain it is actually a buyer’s market and you can get some good deals if you’re willing to be patient.