Lease Pricing a Domain Lease

[atlas]

How would one price a domain lease?

For instance, if one could sell a domain for £5,000, how much per month does it make sense to charge for renting it?

Thanks in advance for any thoughts or opinions.

 

[Alien]

How would one price a domain lease?

For instance, if one could sell a domain for £5,000, how much per month does it make sense to charge for renting it?

Thanks in advance for any thoughts or opinions.

How about then £500 per year to rent it?

I suppose you've got to think like the average non-domainer and what's a reasonably, justified price?

I've got no experience in this area, just my unqualified thoughts though, lol!

 

[GreyWing]

Jeff you will probably find it has a huge amount to do with a buy out price at the end of the contract. Most domain tenants will want at least the option of a buy out at the end.

If you think a domain is worth 5k and you gave them a buy out of £5k at the end of a 5 year contract then you could ask £1000 a year for example.

But if you had a 5k domain and you wanted 10k as a buy out because of increased value of names in 5 years then you may only be able to get £500 a year.

A huge amount with leasing has to do with how the contract ends.

Best of luck with it though, its a great option on some names that time doesn't allow for development.

 

[Edwin]

Jeff you will probably find it has a huge amount to do with a buy out price at the end of the contract. Most domain tenants will want at least the option of a buy out at the end.

If you think a domain is worth 5k and you gave them a buy out of £5k at the end of a 5 year contract then you could ask £1000 a year for example.

But if you had a 5k domain and you wanted 10k as a buy out because of increased value of names in 5 years then you may only be able to get £500 a year.

Some very interesting comments there. My gut instinct would be 20-25% leasing fee i.e. they could buy it outright TODAY or lease it for 4-5 years for the same total spend (that's the opportunity cost of trickling the payments in over 48-60 months - you get to OWN an asset vs just USE that same asset).

You might consider having an automatic increase already baked into the contract, e.g. 5% a year, or 25% at the end of year 5, or whatever. That way, they can pre-empt any other party by choosing to continue the lease, but you're guaranteed to gradually increase your earnings so as to broadly keep pace with inflation.

Whatever buy-out option you wrote into the contract could be exercisable at the 5-year renewal mark. So they have the 30 days before the contract expires to A) renew the lease at the then-higher monthly rate, B) buy the domain name outright at a preagreed X multiple of the then monthly rate, or C) forego renewing the lease, at which point control over the name would revert to you. If they missed the deadline to purchase the name, they'd have to wait another 5 years and would then have to pay a higher acquisition cost (because it would be based on higher monthly lease payments).

 

[Whibs]

Always ensure you have a clause covering use of the domain name should the lease be cancelled.

Should they not renew you may have the potential to develop the domain in the same industry and having a clause to ensure that, means the domain will not be burnt and unusable after.

 

[atlas]

Matthew, Graeme, Edwin and Whibs - thanks so much for all your advice and insight. I greatly appreciate it.