Chapter 17: Domain Leasing and Financing – Baiting the hook

Domain Leasing and Financing – The Ultimate Backup Plan

Even large organizations with ample resources sometimes will not be able to absorb a large cash outlay, e.g. due to limits on credit card, budget cycles, treasury policy, or other administrative restrictions against large outlays. However, that does not mean that this buyer does not have ample capacity to ultimately buy your domain at your price.  This is precisely where leasing and financing comes into the picture.

With domain leasing, your solution is to allow the buyer the opportunity to make a smaller monthly payment in order to secure the exclusive right to use the domain and perhaps even the option to buy it later.  Most leases do come with a purchase option though this does not need to be offered right at the outset. The main thing you are solving for here is to “bait the hook”. You want your buyer to start using your domain, and to become dependent on it in the marketing materials, email addresses, etc.

With Domain Financing, the recurring payments for the domain are partly or fully applied towards principal. However even though principal is being paid, most domain financings will be structured in such a way that if there is a default, or non-payment, the result will be that the domain is fully restored to the registrant and the buyer loses their contributed capital without the opportunity to recover it. This compensates the seller for their “opportunity cost” of having set aside the domain.

A domain lease or financing can be for an extended period. A total of up to10 years is a reasonable maximum planning horizon for most organizations. This also provides a reason time period during which you can reasonably hope that your lessee or financing customer will trigger your purchase option, or make some other arrangement, e.g. in the event they secure a significant financing, are acquired, or achieve significant organic growth.