Why your business needs a Domain
Taking your business online is now a necessity to keep up with the competition, to do that; you'll need a domain name.
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Choosing the Best Name for You
You've decided that you want to own a domain name. There's just one problem, you're not sure how to choose a good one.
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Direct Navigation
As the Internet matures, the number of potential customers online is growing and with it, the number of ways to promote your business online. More...
Stock
Domains are equivalent to "stock on hand" in the retail world and need to be purchased and maintained with an annual renewal of registration. The cost of renewal for wholesale buyers is typically around USD $6.75 per domain for the .COM extension.
Domain stock is a rare and valuable resource. Very few domains of significant value are available for new registration. Consumer demand for generic domains continues to increase, while supply of commercially viable names remains limited.
Domains are the equivalent to stock on hand in the offline retail world
Domain owners have a unique role to play in the domain sales process. Each controls a limited amount of domain stock which they may choose to sell, develop, or maintain while it appreciates. Due to the extremely high multiple (years-revenue) most domains sell for, it is beneficial for domain owners to sell their stock when opportunities arise.
However, the stock turnover rate is extremely low in comparison with most retail industries. This leads to a lack of liquidity which denies domain owners the ability to sell large volumes of stock at high rates. When owners need to sell domains at volume it requires heavy discounting to move a significant amount of stock. This is particularly true for domains that have a retail value under USD $5,000.
The Domain Owner's responsibilities for the domain sales process are:
- Make stock available
- Set retail prices
- Set commission rates
- Provide proof of ownership
- Negotiate self-interest
- Release ownership
Once a domain has been sold, it needs to be released to the new owner in a timely fashion. In many forms of emerging retail sales, the sales process may require an immediate transfer. "Making stock available" entails having the domains which are for sale registered at a registrar with "real-time transfer" capabilities. Manual transfers require labour and bottlenecks the sales process.
There is a great debate on the value of setting retail prices for domains to be viewed by potential buyers. The argument against displaying prices is that by engaging buyers in a dialogue, it gives the seller the opportunity to negotiate a higher sale price for the domain and allows for human involvement to assist in closing the sale. By instigating human negotiation it maximizes the investment return of each domain.
The problems caused by not setting fixed prices include:
- Potential buyers might not contact the seller without a point of reference to negotiate
- Many marketing sources will not offer domain stock without having a price to display.
- It disables the potential for "instant sale"
- Many potential buyers are adverse to negotiating and find it stressful
- Many owners do not want to have to action insignificant or fraudulent offers
Immediate execution of a transaction is paramount. If you can't transfer and control
the domain within minutes many retail sales will be lost
Hybrid Model of Price Theory
A hybrid model is to offer fixed prices in distribution channels where the buyer is likely to want immediate ownership, or when the channel partner will only display domains with prices. When a fixed price is less likely to give the owner maximum return, the domain should be marked as "make offer".
In order to extract the best value of domain assets while offering maximum motivation to domain resellers, sale commissions need to be variable and set independently for each domain. By setting unique commissions for each domain, the incentive to marketers can be aligned with the needs of the domain owners to sell domains. Domain owners need the ability to indicate to marketing partners the "urgency level" they have to sell each domain. An open market where variable domain commissions exists enables marketers to increase their margin and allows domain owners to shed excess or less desirable domain stock. Without a domain level commission domains that would typically have a low rate of sale will not receive the marketing distribution that is required to generate user interest. This creates an issue of "dead stock" that receives negligible interest from both marketers and users. Variable commissions assigned to each domain ensures that marketers are compensated according to the difficulty which is required to make each sale.
Domain owners need the ability to indicate to marketing partners
the "urgency level" they have to sell each domain
Before a domain can be sold the seller needs to prove that they own it. The easiest proof of ownership exists through who-is records. However, it is becoming increasingly difficult to ensure that who-is records are accurate or even readily available. The additional use of "privacy protection services" prevents the public from obtaining who-is data even when manually researched. Therefore, the most accurate form of ownership confirmation is from the registrar themselves. If a domain owner wants to prove ownership or enable real-time domain transfers they must have their domains registered with a registrar who has those capabilities.
In the case of domains that are for sale at a fixed price, and the owner has authorized for real-time transfer upon sale, there are no negotiations. In this scenario owners are notified that a sale has occurred, the domain has been transferred, and the funds from the sale are available.
When a domain is offered as "make offer," either directly on their own websites or on a marketers which allows "make offer" pricing, the owner needs to be involved (also see: domain brokers) in the process. They are required to communicate with the potential buyer either directly or through a communication system. The labour and systems used for monitoring, negotiating and executing these agreements become strong factors on how effective "make offer" pricing affects domain sales revenue. Negotiation can dramatically increase the value extracted from each domain.
In order for a domain to change ownership, it must first be released by the existing owner. The most efficient method of release is a contractually release of domains for sale to an intermediary distribution service contingent upon receiving proceeds of the sale. This type of service allows for real-time transfers which are paramount to an efficient system.
Domain brokers act as the domain owner's agent. Many of the activities that the owner is responsible for in the process of domain selling can be done by an agent, for example:
- Sales Management
- Manage Distribution
- Domain Pricing
- Negotiate Commissions
- Monitors Escrow
Because these agents act solely on behalf of the owner their fees are paid and negotiated with the owner outside of the traditional commission structures. They typically do not share in the published commission agreements with other intermediaries in the process.