Smart Pricing Versus Over Pricing
When an end user contacts a domain owner to purchase a domain name, the challenge of negotiating a sales price begins. Oftentimes, the domain owner has a certain sales price in mind, while the buyer has a number in his head, either determined by his budgetary requirements or his own personal constraints. A domain seller needs to play part psychologist and part savvy businessman to determine how to read between the lines of an email to yield the best possible price, but to ensure the negotiation isn’t ended prematurely.
When the negotiation dance has begun, I think less attention should be paid to the buyer and more to the domain name. Sure, if the buyer really needs the name and has an unlimited budget, the sky could be the limit for the sales price. However, if the seller misreads this need, a sale could be easily lost by drastically over-pricing the domain name. One of the most important things to keep in mind when negotiating is that category killer names (such as LaptopComputers.com, HomeMortgage.com…etc) usually can’t be replaced easily, and the price can be reflective of this . Brandable names (such as CoolGadgets.com, FunTrips.com…etc), on the other hand, can usually be replaced much more easily, and the buyer may go out and find an alternative at a much more attractive price rather than over-pay for this type of name.
An example of this was when I was looking to acquire a home decorating domain name a few months ago. I negotiated with a few domain owners to try to buy a brandable name for an affiliated site I wanted to build. I am sure each of three names I inquired about received no natural traffic, and they weren’t developed, so the true value was in the name and what a buyer would pay. While two of the names were very over priced and not even worth making a counteroffer, a third person replied “you sold xxxxxxxxx.com for $x,xxx and the price of this name is a little less,” which I found to be ridiculous since the names were completely unrelated. Just because I can afford to pay more for a domain name, doesn’t mean I will pay more, especially because I have a feel for domain valuation. Needless to say, I decided to simply register an expired name for $7.44, and I bought DecoratingDiscounts.com, which is much better than the others in a cost/benefit analysis.
Yes, a domain name is a one of a kind piece of Internet property that only one entity can own. If an end-user tries to buy the domain name, the seller should balance his knowledge of the end user’s finances with the value of the domain name. Sure, great deals can happen, but just like in a game of double down video poker, you never know what price is going to lose you a sale. People don’t like to be taken advantage of, and if they feel the seller has increased the price simply because of who the buyer is, the negotiation may be ended.
For me, when I buy a domain name that I plan to sell, I have a value in mind. If/when I receive an offer in that range, chances are good that I will sell it. While it’s great when people sell a domain name a huge sum – and there are plenty of stories like that, I know there are many more stories where the buyer says “no thanks” and moves on to another name. There have been plenty of times when I would have paid more for a domain name, but the asking price was unreasonable. Sure, name your own price if the money isn’t life changing and you don’t need to sell your domain names. But if you are “rich on paper,” over pricing domain names isn’t going to help put you in a strong cash position.
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