What percentage for this *opportunity*?

[THE4MAN]

Hi guys,

I wanted to see what any of you think about this opportunity that I am considering.

This guy bought a domain name in 2000 and never did anything with it so he decided to put it up for sale for $18,000 or would take a percentage of whatever someone else could do with the site long term.

The domain name itself has some value (not $18,000 but maybe 1/3 of that) but like any online business venture, if the Website isn't built well, if the external marketing and advertising isn't executed properly, and if the solicitation of business isn't handled properly, it's not going to fly. All of this will be my responsibility - he just wants to kick back and enjoy life and collect his monthly checks which is fine.

I own my own promotional media design business and will be able to handle building the site myself, will be able to fabricate all marketing and advertising campaigns and materials, and will meet with potential clients in soliciting their business.

What do you guys think is a fair percentage to negotiate giving this guy? He will probably retain ownership of the name. He will probably not put any money into the business out of his own pocket. And all of this will be included in a written contract once agreed upon.

Thanks for any advice!

Dave

 

[rasETL]

If you are really interested in pursuing this venture, I would suggest you see about purchasing some other Domain Name yourself. I think you could probably come up with a name that would cost you much less, and would allow you to pursue this on your own without a partner, at least not this guy.

 

[chiph]

Whatever percentage you decide on, make sure it's net, and not gross profits. If it becomes a really popular site very suddenly, your bandwidth costs will skyrocket, while you still have to pay this guy.

In the software world, 2% of net is usual. I personally wouldn't go over 5%, since you're the one doing all the work.

Otherwise, godaddy.com is a pretty low-cost way to register your own domain.

Chip H.


____________________________________________________________________
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[GlenJohnson]

Keep in mind there are people out there that make a living buying big domain names hoping to get rich off of it. They have bought the names of some of the biggest companies in the world before the companies were savvy enough to buy it themselves, then held the companies hostage. Look into buying a .us or something like that. Good luck.

Glen A. Johnson
If you're from Northern Illinois/Southern Wisconsin feel free to join the Tek-Tips in Chicago, Illinois Forum.
TTinChicago
Johnson Computers

 

[spewn]

well, it sound like a garbage deal anyway. but if you really want to use that domain, get a contract and have him sign/transfer the name over to you. also, put an end on the contract, like 3 years or so, after which, you walk with no more residuals for him and limit his decision making on the business. unfortunately, as stupid as it sounds, you have to spell out every situation you may or may not encounter. if you've ever seen a legal contract, it's full of crap but covers every possible loop hole.

what is the domain name?

i'm curious why you think a name itself could be worth $6000.

probably porn.

also, when negotiating, don't sound or appear needy. remember, you can walk away at any time (and you will), and he needs to know this. but your product is gonna be so good for him ($$$) that he doesn't want you to walk away. he'll be left with a worthless name, and you still have your great business plan. let him feel that the success comes with you, not the domain.

personally, i can't see buying a domain and putting that person in as a partner when they don't do anything.

good luck.

- g

 

[skiflyer]

$6 grand for a domain is cheap if it's the right domain... especially if it's one of those coveted 3 letter domains.

Here's my advice... raise the money and pay him OR give him 5% for 2-3 years with an option to buy at a price negotiated today.

That way, you guys can gamble together today, and if it's a runaway success he doesn't get to hold onto a big percentage for nothing or renegotiate a sale price based on your success... effectively holding you over a barrel.

In other words, he thinks it's worth 18 grand for the life of the product, fine, work it out so that between the buyout and the percentage he gets approx 18 grand. (or much less since you seem to value it at much less)

He's given you his offer, 18 grand cold.... but willing to negotiate a percentage.

This means it's your turn to accept/counter offer. Undershoot, this is a negotiation, leave room for him to re-counter.

And after the two of you decide on the spirit of the offer, have a lawyer dot the i's and cross the t's.

 

[thephoneguyjoe]

If nothing else, have the contract end when he reaches 18K of total compensation. That limits your exposure to 12K. And make sure there is no penalty if you don't perform to his standards of compensation. Maybe you will find a better moneymaker and committ your time to something that makes you 100 percent for your return on investment. Give yourself 5 years to make it happen then see what happens in the first 6 months, maybe he will settle for a total of 12K and both of you will get what you seem to want in the long run.

Probably porn I agree.