I took a Financial Accounting course my first semester of sophomore year in college. I don’t remember much from the class except for one thing the professor told us that I will paraphrase: “accounting is more of an art than a science.” I think the same thing can be said about the pricing of domain names on the aftermarket.
Everyone seems to have their own strategies that work for them. Some people price their domain names with the expectation of getting a specific return on their investment (I often hear 10x). Some people price their domain names sky high so they don’t leave any money on the table in the event the perfect buyer comes knocking and needs the domain name. Other people price them to move inventory and generate a solid cash flow. Some people don’t ever put BIN prices on their domain names. Many people employ different pricing tactics depending on the specific domain name.
When you overprice a domain name, many prospective buyers will simply look for something else if it is beyond their budget. They may not know they can make an offer or they may not know how to make an offer. They see a name for sale at a specific price, and if it is more expensive than they wish to spend, they will choose something else.
If you underprice a domain name, you may be leaving money on the table. A buyer may be expecting to pay $25,000 for a domain name, but they see it on Sedo with a $8,000 buy it now price, and they jump on the deal right away.
The irony with overpricing and underpricing is that most times the domain seller will never know whether or not the outcome would have been different had their pricing been different.
There is no real science to how I price my domain names. Generally speaking, I price my names based on how much I paid, my gut feel for what it is worth, the difficult in acquiring the domain name, what I would imagine it selling for to the right buyer, comparable sales, the prices of comparable names for sale, and probably a bunch of other factors I am not thinking about. Ultimately, it takes me about 10 seconds to determine the price of one of my domain names, but I regularly update my pricing depending on other factors.
When people ask me for guidance and advice about pricing domain names, I tell them it’s more of an art than a science.