What’s a domain name worth? I have reason to write about that today, because of e-mail correspondence. Today I have somebody trying to sell me swot.com for $600,000. Yes, you read right, that’s $600,000, as in six hundred thousand dollars.

There was a predictable thread:

  • He had chosen me because of my work, his first e-mail said. I write about and post about SWOT sometimes, so I guess I’d shown up in a search.
  • I bit, answered his e-mail and asked him how much.
  • He answered: $600,000. (Not just that, it was a normal, polite e-mail message.)
  • Noting that his English wasn’t native, I thought maybe he and I were confused about comma usage and currency formatting. I e-mailed back asking him if he really meant six hundred thousand U.S. dollars.

Just in case you’ve never been in the domain market, they do get bought and sold. A few years ago somebody paid $1 $7.5 million for “business.com,” or so the reporting said. I knew a University of Oregon student who supported himself five years ago by buying and selling domain names. I personally own more than a dozen, including some vital (to me and mine), names such as the domain for this and several other blogs. I own domain names for some of my children, those whose names were available as domains. I registered all of them myself, didn’t buy them. Palo Alto Software, my company, owns about a hundred domain names, many of them (bplans.com, for example, and bizplans.com) names I registered first, early in 1995.

So here’s the (edited for spelling and grammar only) second-to-last e-mail in the thread, from him to me:

Yes it’s true, this is the price.

I think you are surprised because you are not from this market, but i can tell you that every year the price will go up. This swot.com is one of the best .com names in the market and I have many offer on this name. If you know of any business that needs a name like this, I will be more than happy to do business with you.

I was going to just ignore this e-mail. That price is literally three orders of magnitude too high. I would pay $600. So there was no point in me even responding. But then I thought my response might make a decent blog post and could possibly be helpful to you. So here goes:

I don’t know what you mean by “not from this market.” I am of course not from [country name omitted here], but I have been on the web for 13 years now, I own a dozen domain names personally, and my company owns more than 100. We’ve bought them several times and turned down offers more times than we’ve bought them.

Just last month we were invited to participate in an auction for “[domain name omitted],” which you’d think would be a good domain name for a company that sells business plan software. An hour before the close, the bid was less than $2,500. Fewer than 10 bids had been made. We didn’t even bid. Why? Because by the time you have an established domain that is already working–we get close to a million visitors per month to our website network–a new domain is much less interesting. It is very hard to take it on without diluting your marketing effort.

Sometimes there are special values. For example, after bplans.com was well-established, somebody offered us bplan.com, which they owned, and was picking up traffic intended for bplans.com. We did buy that one. For $2,000. And we bought paloalto.com in 1998, and we paid several thousand for that, because our company name is Palo Alto Software.

With swot.com, you have two, possibly three, advantages: 1.) only four letters; 2.) business meaning (the SWOT analysis) and, maybe, 3.) hard to misspell. I say maybe for the third, because swat is also a very common term.

However, you have no traffic. [Ed. note: He doesn’t. The domain is owned, but there’s no site.] Existing traffic is far and away the best way to create value in a domain name. Look at any of the well-publicized domain name transactions of recent years, and you’ll see traffic already there.

There might be somebody who will pay you more than I will for swot.com. Maybe, just maybe, there is some consulting company with an emphasis on SWOT analysis that has no domain name or a bad domain name and can therefore justify the expense. If I were you I’d do a Google search on “swot consulting” and see who in the results has a bad name, turns up with very bad placement or looks like it might have reason to invest more than I would. Out of curiosity I just did that, and if it were me I’d look into the people who have swot-consulting.com, swotmanagement.com, and abarisconsulting.com. They have marketing on SWOT already set up and related–but much poorer–domain names.

Why do I tell you that? My job description these days includes giving advice to entrepreneurs, and I think this is worth a blog post to share with others, so you get the benefit of free advice. And don’t think I’m trying to negotiate . . . in fact, I’m sure you’d get way more from the three companies I just mentioned than from me. And best of luck to you.

So there. That’s a real case. All I’ve omitted are some names that would just embarrass people.

Tim BerryTim Berry

Tim Berry is the founder and chairman of Palo Alto Software and Bplans.com. Follow him on Twitter @Timberry.