Just made a 100K offer for a domain. Am I crazy?

It depends why you're getting it. What does the word "Amazon" have to do with selling books? Or "Google" with searching?

Having the "best" name doesn't really help you build a brand.

If you needed to ask, that means you haven't thought it through. If you made a $100k decision without thinking it through, then yes, you are crazy.

When you buy a domain, you're buying a business on that domain. Like any business you have to appraise its value and also its potential value less the cost to realize that value.

So, if the domain is serving $2,000 of ads every year, it's worth $2k using a common estimation model. You don't want to buy it because it's priced at its value. Yes, you would have a good ROI if you held it, but the ad revenue isn't guaranteed, you have transaction costs, annual costs, etc.

If you know you can double the ad revenue to $4k by changing to another provider or using a proven method of placement, then it's worth $4k to you. If the seller is still offering $2k, then you have a good deal and you should buy. If the seller realizes this and raises the price, then you have to decide how much beneath $4k you need to go to make it worthwhile for you.

If you want to build a business on the domain, then you're pricing the value of each visitor. Let's say each visitor brings on average half a cent in revenue: 400,000 visitors brings $2,000. How well will your business convert these visitors? Say you can convince .05% of them to purchase software at an average lifetime value of $100 -- that's $20,000 per year in revenue. Of course you'll need to build a sales site and the product itself. If that takes $15,000, then the domain is worth about $5,000. It might be worth more since the product and the site could be transferred to another domain, so possibly you could pay up to $10,000 or $15,000 for the domain.

These are just considerations - I don't know the numbers for your business or for the domain you're considering. You would certainly want to choose at least two domains and play the sellers off of each other. Your math might tell you that you'd pay $100,000, but market pressure might bring it down to $50,000 anyway.

P.S. If you are buying for the value of the name as a brand, then I think for that money you should just buy an actual brand.

Yes, I paid slightly more than I probably should've for a domain (no-where near this much but in terms of how important it was) and it'll hinder you from making future pivots or product changes which could be bad.

When looking for domain names I found one that was on sale for $100k, simply as a joke I offered $10k and they accepted this. Obviously I don't even have that but it probably means you don't need to pay so much. Most people look at how much domains were worth in 2000 and think they can start the bidding at that price.

If the name is still for sale and they're willing to sell it, it probably isn't worth what they're asking for it. If you can find someone with experience in the space that you trust, this helped me a lot. Traffic is also key in most names, unless they're a short one word .com they aren't worth much without a lot of traffic.

No right answer to this question. I can definitely see some circumstances where it would be worth it. Owning the category killer domain can be incredibly valuable. The brand recognition and instant credibility of a good domain is also undeniable. Many have type in traffic which means potential customers looking for that service show up every single day without any effort. Some search engines also give you an SEO boost for exact match domains.

Worth 100k? Depends on the name. But I thought after reading all these negatives, I feel like many of these people haven't actually owned any good domain names and seen the value that can generated from them.

What is the long-term plan for your company?

If you are going to be raising investment from Angels or VCs, are they going to look at your domain purchase and think this was a wise investment? Or are they going to think you were being frivolous with money?

Will the name actually have a significant affect on your business? You'd be surprised how many great domains are still available.

Do you think you could flip it? If the domain is only valuable to you, it probably isn't that valuable. Do you think somebody else would want the domain if you decided not to use it? Or would your money just be gone?

Just a few things to consider.

100K is a lot of money for a domain! The name can really build the brand of the company though. If you're solving a painful problem that people are willing to pay for, the name in my opinion is irrelevant. If not, the name can be make or break the business for a unique company. Some of the startups that I've came across in the past I wonder how they get the domain in the first place and how much they paid for it. One that really stuck out today was branch.com. I wonder how much they paid.

The name isn't worth that much unless its valuable on its own. Does it get typein traffic? Does it generate revenue on its own with a landing page or adsense page?

There's not enough information to make a judgement. It's like saying "Is a house worth 100k ?" - without knowing the details it's impossible to say.

There are definitely domains that are worth millions of dollars, but there are far more domains that are worthless.

A good point to start is by saying "how valuable would this domain be on the open market at auction ?"- if you don't know you can get specialist with expertise in the domain market who can value it for you.

There's no way I'd pay thousands for a domain these days. There's so many common TLD's available now that if you can't have .com it's perfectly acceptable to have another.

The simple fact is that nobody cares any more. It's more common to directly type the company name in the address bar of a browser than to type out "www." etc.

If the 100K investment makes business sense and results in a positive outcome (profit or increased market share etc), then it's the right price regardless of whether you could have bought another domain cheaper. Buy, profit, move on to the next task on the list...

Just 1?

What happens when you want the associated .net or .org? Trademark rights been checked?

You could've gotten a .com, net, .org and like 10 years registration for each and been in a good position. And been in a position where you'd still have a lot of cash in the bank.

With all due respect, I don't believe you. Your comment history on HN is "Should buy the .com" and you have conveyed zero insight around today's question. I judge you are trolling.

I know it's not the question, but if you need to ask HN what are you missing, your partners can't communicate that to you, and they think you are crazy..

You have bigger problems here.

Being forced to come up with a different domain name can be more valuable than 100K. It could help you rethink your entire approach to the problem you are solving.

Unless you have already built a brand name and the domain is your brand name, 100K is TOO TOO much.

well... if you can afford it I think a good domain can be worth a lot...but remember that there are more important things if you are starting something.

yeah you make me sick.