A couple of months ago, I needed something from Target. I can’t remember what it was, but I needed it more quickly than when I would get it if I bought it online. I went to the Target store and noticed the price in-store was higher than the online price. Although ordering online may be more convenient than going to a store, actually getting the product right away is more convenient and there are additional costs associated with keeping the inventory in the store.
This got me thinking about domain name pricing, and I think some people might have a similar philosophy when it comes to domain names.
Many domain investors list their domain names for sale on marketplace platforms like Sedo and Afternic with buy it now prices. If a domain name sells via one of those platforms, the domain name is either automatically pushed or transferred to the buyer, or the seller needs to facilitate the transfer or push. The platform handles the payment disbursal and manages the transfer or account change to the buyer. It is typically a convenient process for the seller.
On the other hand, when a seller deals directly with a buyer on an inbound inquiry, there is more work to do to close the deal. Not only does the buyer and seller engage in a negotiation, but when a deal is struck, the seller needs to spend time and effort to finalize the deal and transact. At best, the seller just needs to facilitate escrow and take care of the domain name transfer. At worse, the deal becomes a time suck educating the buyer about escrow and making sure there are no issues with the domain name transfer. There may also be time spent going back and forth on the contract. It seems like the bigger the company that is buying a domain name, the more issues there are with the contract.
Put simply, more effort goes into managing a private sale than a BIN platform sale. As a result, domain registrants may quote a higher price for a domain name when a buyer comes to them directly than if the domain name is bought via marketplace platform. It takes more effort, so it is more expensive. In addition, a buyer engaging with a seller gives the seller additional time to do diligence on the domain name to understand whether the BIN price is fair.
One issue the seller should keep in mind is that the buyer can also do diligence and potentially see the lower BIN price. The buyer can either simply buy it via platform or call the seller out on the price differential. Some buyers will have done their diligence before engaging with the seller, and it could get sticky if they see the different prices. This can cause the buyer to call the seller’s ethics about pricing into question, although it can easily be explained about the extra time and effort that goes into dealing directly with a buyer.
As always, you are welcome to share your thoughts about this and discuss whether you think this is problematic.