Leasing a premium domain name.
- Thread starter Hardstylr
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findtim
Top Contributor
( dave if you read this we need to keep the client confidential )
I haven't leased a domain but i've been looking into this as i have a few PDN's .com.au 's though.
I'm of the opinion that it would be the same as leasing a piece of realestate and what someone is willing to pay, if you have it and its parked and ranks nowhere then thats like a "back street corner store", but if it ranks well then you have a "pacific hwy service station" .
The next thought is , what is the perceived ROI by the prospective client, i explain it 2 ways to clients........ whats it worth to have it and what it is going to cost you if your competitor has it !
eg: last year i was commisioned to do a marketing strategy for an australiawide business, first thing we did was secure over 100 domain names related to the business, keyword/phrase based . this year we we be building the websites and i managed to get 20 completed before xmas.... they all rank first page google and the clients investment is almost already paid back from sales made so far in just 4 months AND we have 80 more to go !!!
SO what was that worth to him? $35,000 ( + ongoings ), but by my calculations he feels that investment is worth $8 million+ to him.
now this was backwards as he owns the domains but my point is you can never really know what the clients budget is and this guy screwed me down from 50K to 35K and then i found out how much money he was going to make but i can't complain i've still haven't quoted him on the next 80 domains LOL
So i hope someone can give us a formula on how to work it all out, in the shop rental market you just look to what next door got leased for.
I think leased domains is going to grow and grow, my opinion is that it won't be like a car lease where after 4 years you pay $1 and get it, i think it will be more like a London flat where you never ever ever get to own it. When i was in London 20 years ago i was running pubs, i was in Mayfair which is the most expensive part of town, i had a regular that was very much like Ab Fab and she had just leased her flat for over 1.5 million UK pounds ( 1990 mind you ! ) and it had a 35 year lease, after 35 years she had to pay again !!!! crazy but i think for those looking to lease domains "history tells the future" and if you have a HOT domain then don't give it away lightly
I haven't leased a domain but i've been looking into this as i have a few PDN's .com.au 's though.
I'm of the opinion that it would be the same as leasing a piece of realestate and what someone is willing to pay, if you have it and its parked and ranks nowhere then thats like a "back street corner store", but if it ranks well then you have a "pacific hwy service station" .
The next thought is , what is the perceived ROI by the prospective client, i explain it 2 ways to clients........ whats it worth to have it and what it is going to cost you if your competitor has it !
eg: last year i was commisioned to do a marketing strategy for an australiawide business, first thing we did was secure over 100 domain names related to the business, keyword/phrase based . this year we we be building the websites and i managed to get 20 completed before xmas.... they all rank first page google and the clients investment is almost already paid back from sales made so far in just 4 months AND we have 80 more to go !!!
SO what was that worth to him? $35,000 ( + ongoings ), but by my calculations he feels that investment is worth $8 million+ to him.
now this was backwards as he owns the domains but my point is you can never really know what the clients budget is and this guy screwed me down from 50K to 35K and then i found out how much money he was going to make but i can't complain i've still haven't quoted him on the next 80 domains LOL
So i hope someone can give us a formula on how to work it all out, in the shop rental market you just look to what next door got leased for.
I think leased domains is going to grow and grow, my opinion is that it won't be like a car lease where after 4 years you pay $1 and get it, i think it will be more like a London flat where you never ever ever get to own it. When i was in London 20 years ago i was running pubs, i was in Mayfair which is the most expensive part of town, i had a regular that was very much like Ab Fab and she had just leased her flat for over 1.5 million UK pounds ( 1990 mind you ! ) and it had a 35 year lease, after 35 years she had to pay again !!!! crazy but i think for those looking to lease domains "history tells the future" and if you have a HOT domain then don't give it away lightly
acheeva
Top Contributor
imho if you "car lease" then you may as well join the finance industry
The better analogy imo is shop front rentals (where you loose the passing trade when you move)
It is simply a case of willing landlord / willing tenant based on ROI, gut feeling or whatever justification results in agreement
Compare investing $500K in a factory or $500K in premium domains
The factory would yield around $40k net in today's market; I would expect that the domain portfolio could yield 2-3x that amount
The better analogy imo is shop front rentals (where you loose the passing trade when you move)
It is simply a case of willing landlord / willing tenant based on ROI, gut feeling or whatever justification results in agreement
Compare investing $500K in a factory or $500K in premium domains
The factory would yield around $40k net in today's market; I would expect that the domain portfolio could yield 2-3x that amount
snoopy
Top Contributor
Have leased names before. It sounds attractive to domainers but it only works in certain circumstances, usually where a deal to buy can't be worked out because of funding or perceived risk by the buyer at the price level being asked.
Most of the time the buyer will want a buy out option and I've only ever had interest in it from names with high type in traffic and in one case high search stats + moderate type in traffic. ie there is an obvious ROI for the person leasing it. Usually price it on earnings.
Leasing also has pretty high monitoring costs involved, chasing up payments, deciding when to pull the plug when they don't pay etc (very common). Needs a well written contract.
Personally I would not try to find someone to lease a name, but rather would use it as an option when a sale can't be agreed to. Typically it is much less likely to result in a deal compared to trying to sell something.
Most of the time the buyer will want a buy out option and I've only ever had interest in it from names with high type in traffic and in one case high search stats + moderate type in traffic. ie there is an obvious ROI for the person leasing it. Usually price it on earnings.
Leasing also has pretty high monitoring costs involved, chasing up payments, deciding when to pull the plug when they don't pay etc (very common). Needs a well written contract.
Personally I would not try to find someone to lease a name, but rather would use it as an option when a sale can't be agreed to. Typically it is much less likely to result in a deal compared to trying to sell something.
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findtim
Top Contributor
Thanks for your input, if its worth buying then its worth leasing ! in actual fact it is less risk for the person to lease a domain then to buy because a domain name can MOVE but a shop location can't , you could lease a domain name and it disappears to page 443 of google !
on the other side of the coin what i tend to do is make sure i am involved in easy to remeber domain names like people.com.au or rockhamptonauto.com.au ( both fake for the purpose of example)
"buy out option" , YES, i've been working on that and thats why i am in this thread, I own over 100 premium domains in a VERY specific area and i just can't decide what to do, lease or sell ???
i've come to a possible solution at this moment and that is a 3 year lease then a buy out , hopefully my service will be exceptional and they will continue to use me as there host etc, BUT then i think ? hang on these people didn't have the foresight i had so why should they be able to then go away and pay each year their "mate" who doesn't know what i know b ut succeeds because of what i have created !!!
Also its like building a block of flats and selling it for $5K !!!!
snoopy
Top Contributor
If there is no buy out clause then the risk is obvious, they are developing someone else's name. If there is a buy out clause there is still a risk that something can go wrong down the road, ie owner changes DNS and disappears, sells to someone else...etc.
I don't really think this is a choice sellers have. It is dictated by the requirements of buyers.
Not sure I follow on this.
findtim
Top Contributor
snoppy thanks, you bring up many valid points, your first being "RISK"
risk: this is where there is an opening in the market for "realestate agents" of domain names , not brokers that arrange/sell/leave but people who are the escrow of the domain that way both sides are protected.
your second point about the buyer dictates terms means to me you are taking the " low road " , supply and demand makes the terms not either party.
eg: i have a site an offer it to a business in say ? newcastle , they say no so i offer it to their competitor etc etc etc and everyone says no, i then convert the site into an affiliate site that pushes sales to a national sales network and its making $XXX a month in commissions.
these are sales someone is missing out on, so NOW i hold the real estate that is valueable to them. i'm not being nasty i am just putting forward thoughts.
does the table turn? i think yes.
the 3rd point, i'll try to clarify, WHY use all my knowledge that has taken me years to gain to end up giving it away after 3 years of a lease? i bought the land , i built the flats, i made them pretty and then i just got 3 years of rent !!! just doesn't make sense, i want rent FOREVER.
I'm talking "main street cbd" , why would i give it up? and if nobody wants my terms then i just go back to point number 2
I think the "killer application" here that you have bought up is the protection of the leasor , alot of my clients are from screwed over wannabies that have disappeared, whereas i have got the same mobile number for 12 years and people LOVE that, plus with hundreds of current clients as referals it builds trust.
protection of leasing: i'd love to expand on this as snoopy i think thats the key area of concern you nailed.
I did some google searches today and made some phone calls but wasn't happy with the responses i got, it was more like website designers posing as website brokers to me, NOOOOOO i am not one......... i looking for a solution not trying to BE the solution.
risk: this is where there is an opening in the market for "realestate agents" of domain names , not brokers that arrange/sell/leave but people who are the escrow of the domain that way both sides are protected.
your second point about the buyer dictates terms means to me you are taking the " low road " , supply and demand makes the terms not either party.
eg: i have a site an offer it to a business in say ? newcastle , they say no so i offer it to their competitor etc etc etc and everyone says no, i then convert the site into an affiliate site that pushes sales to a national sales network and its making $XXX a month in commissions.
these are sales someone is missing out on, so NOW i hold the real estate that is valueable to them. i'm not being nasty i am just putting forward thoughts.
does the table turn? i think yes.
the 3rd point, i'll try to clarify, WHY use all my knowledge that has taken me years to gain to end up giving it away after 3 years of a lease? i bought the land , i built the flats, i made them pretty and then i just got 3 years of rent !!! just doesn't make sense, i want rent FOREVER.
I'm talking "main street cbd" , why would i give it up? and if nobody wants my terms then i just go back to point number 2
I think the "killer application" here that you have bought up is the protection of the leasor , alot of my clients are from screwed over wannabies that have disappeared, whereas i have got the same mobile number for 12 years and people LOVE that, plus with hundreds of current clients as referals it builds trust.
protection of leasing: i'd love to expand on this as snoopy i think thats the key area of concern you nailed.
I did some google searches today and made some phone calls but wasn't happy with the responses i got, it was more like website designers posing as website brokers to me, NOOOOOO i am not one......... i looking for a solution not trying to BE the solution.
snoopy
Top Contributor
The reason is business owners will very rarely develop a site on a domain they don't own or have no rights to buy. It isn't like a business leasing premises, if they lose those premises they can move down the street and they can't be kicked out overnight.
It is more like a business leasing their brand and being in the situation where their work could potentially being going to someone else or be scrapped in an instant.
It is one thing to say "leasing works really well for domainers". It is another thing entirely to convince a business owner it is a good idea, doesn't matter how long you've had the same mobile number for. If I were developing a site there is no way I'd lease a domain, I love being on the other end though.
I think in general its a terrible idea for businesses to leasefor the points Snoopy raised above. A business owner in a retail premises can relocate easy taking their goodwill. A business owner on a leased domain stands to lose everything if the lease is not renewed. The name itself is tied to the domain name and not the mention all the marketing/seo/URL's that can't be redirected to a new domain.
findtim
Top Contributor
wouldn't the solution then be to "never leave" ? eg: bathurstflorist.com.au and you are a florist in bathurst. Now the florist hasn't got a clue how to build a website nor manage and up-keep it but is GREAT at flower design, so the solution is to lease my "block of land that i have built a building on" , the florist gets a 5+5+5 lease and doesn't have to worry about it and i get the ongoing work guarenteeing my income from the domain name.
buy, build, lease
the reality is i am actually doing this for a different florist and she is very happy with the situation, its a whole piece of her business that earns her a GREAT revenue stream and i'm more of her employeee then her landlord but she can't sack me.
the reality is I don't fix the plumbing or repaint the walls as I farm that off to outsourcing so the whole thing self manages leaving me with passive income just because I bought the land first.
if anyone knows a bathurst florist give me a call, i got the name when it dropped last year for just $28 so my ROI is going to be very quick.
buy, build, lease
the reality is i am actually doing this for a different florist and she is very happy with the situation, its a whole piece of her business that earns her a GREAT revenue stream and i'm more of her employeee then her landlord but she can't sack me.
the reality is I don't fix the plumbing or repaint the walls as I farm that off to outsourcing so the whole thing self manages leaving me with passive income just because I bought the land first.
if anyone knows a bathurst florist give me a call, i got the name when it dropped last year for just $28 so my ROI is going to be very quick.
Great thread, as this is something I'm involved in as well.
The angle I take is for the business owner to lease the sites, and reallocate marketing expenses from other channels eg: yellow pages, local papers etc
They can test it out for a given period, and measure their ROI.
At the end of the day, as long as they're getting ROI, they'll be more than happy to keep leasing the site from you.
i try not to sell unless offered a ridiculous sum
The angle I take is for the business owner to lease the sites, and reallocate marketing expenses from other channels eg: yellow pages, local papers etc
They can test it out for a given period, and measure their ROI.
At the end of the day, as long as they're getting ROI, they'll be more than happy to keep leasing the site from you.
i try not to sell unless offered a ridiculous sum
I've studied this option for a long time as a potential monetisation option, and as everyone says: You would need either complete mutual trust on both sides or a really god contract between the two parties.
It is quite risky I would think. Safer option would be to keep the site 'vendor-neutral' so to speak and work on becoming an authoritative site and sell advertising.
Do whatever you can to diversify traffic sources.
It is quite risky I would think. Safer option would be to keep the site 'vendor-neutral' so to speak and work on becoming an authoritative site and sell advertising.
Do whatever you can to diversify traffic sources.
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findtim
Top Contributor
vendour neutral is not the option in my plan, if you refer back to earlier posts the paradigm here is "realestate"
good point rhythm about the complete trust, I have over 300 clients and not a single contract to be found in the last 10 years ! its all "handshake" agreements and ned will testify to this as we did a deal recently and it went like " bla bla", " yep blaa blaa back" , ok" thats my offer ned", "ok, tim i'll get back to you" , "ok tim, thats a deal, i'll send you an invoice" , and then tim pays.... the end.
and when i'm the "seller/leaser" thats what also happens. my brother goes MENTAL at me as he has a hot line to his lawyer and spends masses of money " locking things up" , its just who you are i guess? I trust people and i WANT to trust people.
very few times i have been ripped of, and when it has happened i just walk away but that person knows they broke the handshake .
its a WHOLE new world, my background is photography so the news that Kodak is closing down is an amazing indication of the new world order, it was enevitable as Agfa went down @ 5 years ago.
Why i mention Kodak is they WROTE the rules on photography, so why can't anyone write the rules on leasing domains, its realestate, so ryhthm you are right, either trust or contract.......... you both choose.
I think there is a market her for a "website leasing standard contract downloadable pdf website" just like a "$19.95 Will kit website" . I can't be bother to build it so if anyone takes up the challenge then email me the link as i want a contract NOW.
tim
good point rhythm about the complete trust, I have over 300 clients and not a single contract to be found in the last 10 years ! its all "handshake" agreements and ned will testify to this as we did a deal recently and it went like " bla bla", " yep blaa blaa back" , ok" thats my offer ned", "ok, tim i'll get back to you" , "ok tim, thats a deal, i'll send you an invoice" , and then tim pays.... the end.
and when i'm the "seller/leaser" thats what also happens. my brother goes MENTAL at me as he has a hot line to his lawyer and spends masses of money " locking things up" , its just who you are i guess? I trust people and i WANT to trust people.
very few times i have been ripped of, and when it has happened i just walk away but that person knows they broke the handshake .
its a WHOLE new world, my background is photography so the news that Kodak is closing down is an amazing indication of the new world order, it was enevitable as Agfa went down @ 5 years ago.
Why i mention Kodak is they WROTE the rules on photography, so why can't anyone write the rules on leasing domains, its realestate, so ryhthm you are right, either trust or contract.......... you both choose.
I think there is a market her for a "website leasing standard contract downloadable pdf website" just like a "$19.95 Will kit website" . I can't be bother to build it so if anyone takes up the challenge then email me the link as i want a contract NOW.
tim
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neddy
Top Contributor
I agree with everything you said - except I didn't say "blaa blaa". I'm more eloquent than that.
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