When you buy a domain name, what are you actually “buying”?

Here’s one of the strangest, and most counter-intuitive, things about buying domain names. When you “buy” a domain name from someone else (even an ultra-premium one like cars.com), you’re not actually buying the name!

Surprised?????

So, what ARE you getting for your money, actually?

The answer is: You’re buying the right to register, and continue to register, the domain name for as long as you want – and use it in your business for as long as it makes financial sense to do so.

A useful analogy is to think about vanity number plates for cars. You know, the one that says MY-BMW? For as long as you own the car, you have the right to pay a fee each year and renew your registration details – including the use of the MY-BMW plates.

But what happens if you forget, or are unable, to pay the registration? Your cool MY-BMW plates eventually get returned to the pool of available registrations, ready for someone else to grab them.

Or, what if you decide that you no longer want your vanity registration? One option is to “sell” the plates to someone else (sometimes though a broker or auction house if they are valuable enough). And the fee that the purchaser pays you? Think of it as a one-off transfer fee, an enticement for you to forgo further use of the MY-BMW plates.

And then, the cycle continues – the new owner has the right to use their new MY-BMW plates for as long as they pay the annual registration renewal fee or sell them onwards to someone else if they want.

So, back to domain names. There are four common scenarios:

Firstly, if you’re buying an expired (or never-registered) domain name straight from a registrar, all you’re going to pay is the domain registration fee (around $10USD at GoDaddy).

Secondly, in contrast, if you’re buying an expired name with significant value (one I saw the other day was Cobras.com, for example) then you’re going to have to bid at a domain name auction, and often pay a significant premium for the right to register the domain in your name.

Thirdly, say you want a specific domain name for a new business start-up, but it is currently registered to someone else. You (or your broker / agent) could approach the current owner (often found via a Who Is lookup) and make an offer to buy the domain name.

Finally, a domain name owner, investor or broker might approach you directly to purchase the domain name from them for a one-off fee.

Remember, in scenarios three and four you’re really paying a one-off fee to have the domain name transferred to you. It then remains yours, however, for as long as you want to pay the annual registration fee – and for as long as it makes sense (in terms of sales, traffic, branding etc).

Featurted Image by wikimedia.

Leave a Comment





ajax-loader

Free PDF

Learn how to boost your income with passive profits!

Success!