“But You Only Paid $500 for It”

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Some domain name buyers are more savvy than others. They actually do some research on the domain name they want to buy beforehand. They may use a source like NameBio or GoDaddy’s appraisal tool to find more information about the domain name and it’s value, and they might come across the sale price of the domain name they are looking to purchase.

I recently sent a handful of emails to prospective buyers to try and sell a domain name I had recently acquired. After a brief exchange, the prospect mentioned my acquisition price. I want to share a paraphrase of how I replied without specifics that might reveal the specific domain name:

“In the case of [redacted domain name], had I not done my research and participated in the auction, the price would have been lower. Had [their company] and/or the other companies known about the auction, the final price would have been substantially higher.

Yes, the domain name cost my company [$x] to acquire at auction, but knowing where, when, and how much to bid has considerable value.”

The idea behind this reply is similar to the boilermaker story that has been shared and modified throughout time. To paraphrase, a repair might be minor in nature and seemingly inexpensive, but the boilermaker’s knowledge of how to make the repair is what is invaluable and costly.

Like an engineer whose years of training and experience are what makes their work so costly, my knowledge of domain names is what allowed me to buy this domain name at the wholesale price. Notably, it has been a couple of days and I have not heard back from this prospect.

9 COMMENTS

  1. I’d be tempted to take a different tack, in that I wouldn’t have mentioned the price may have been lower. Or, depending upon the lead up to my response among other factors, I may have done something different altogether, viz:

    “This is a marketplace and domain names have been traded in this way for many years. I have made this name available for purchase. Had a corporate owned it, it may have never come up for sale again.

    “The main criteria on which a domain should be bought and for what price, surely, are the amount of marketing expense to be saved by having an appropriate domain for your business, and how much extra your business is likely to make from the branding quality this domain offers.

    “Handled properly, you are gong to benefit a lot more financially from purchasing this domain name than I am going to do from selling it.”

    And if the competition for the name was hot, i.e. other offer(s) in the target price range, or depending upon confidence of selling within that range in a short time: “But that is no longer an issue as I have decided to sell it to somebody else.” or, even better in my view, “With that in mind you can now purchase it for 30% (substitute for your own hike) more than we were discussing.”

    Wishful thinking for the most part, perhaps, but the situation where it is a tempting possibility must occur from time to time.

  2. I had bought two are really good prices, pretty sure from a guy who used to comment in the blogs. Had no idea my purchases had been reported at DNJ. Some time later, in discussion with someone to buy one of them, and he hits me with the surprise that he knows what I paid from DNJ.

  3. Oh you just paid $100K for your house in 1990 and now you are selling for $2million?
    Same analogy…
    How about the used car market now……the used car you bought 2 yrs ago, you can sell for 20% more now.

  4. This is not an objection that can be overcome with any argument, trying to justify a large markup is digging the hole deeper. Better off changing the topic and trying to acquire names without public disclosure of acquisition price.

    If the price is going to get disclosed then the name is not as valuable because of this anchoring effect.

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