Domain Name Pricing: Is It Ethical? | DomainInvesting.com
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Domain Name Pricing: Is It Ethical?

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Someone posed an interesting question to me, which I thought I would pose to readers. Is it ethical to price a domain name based on who is inquiring about purchasing a domain name rather than based on the factors associated with the particular domain name?

Essentially, the person was questioning whether it was ethical to give one person a price of $250,000 for a particular domain name and a price of $25,000 to someone else when the domain owner is able to ascertain that the first person is a marketing executive at a Fortune 500 company and the second person is a small business owner.

I try to be consistent when pricing my own domain names. The prices I quote tend to be expensive, but that is due to the inherent nature of domain names being one of a kind Internet real estate, and they are difficult to replace.

Regardless of how one feels about this ethical question, one should remember to be consistent with domain pricing when they have names listed for a buy now price on Sedo or Afternic and someone contacts them via email to inquire. It is quite possible the prospect saw the buy now price and wanted to work out a better price in private, and they may think the domain owner is trying to pull a fast one by raising the price from what is publicly listed.

I am curious what others think about this ethical question about domain name pricing.


About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest.


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Comments (9)

    Paul Nicks

    I don’t think it’s a question of ethics at all, it’s a question of economic value. The EV of a unique product like a domain will be different for each individual looking to acquire it. Every buyer has a maximum price they are willing to pay and every seller has a price they are willing to take for a product, the trick for the seller is to price the product such that they are as close to the maximum price the buyer is willing to pay.

    Remember that by default a closed deal means that the buyer paid less than or equal to the amount they felt the product was worth to them personally, while the seller receiver greater than or equal to what they thought they should receive from the product. Therefore, both parties to a closed deal should walk away happy, with no ethics questions to be discussed.

    July 10th, 2017 at 10:41 am

    Tony

    The one thing I learned from Berkens is that if you think you can sell a name for $250k to the ideal end user then just wait for that end user instead of selling short for $25k. It’s a matter of bad business and not so much ethics similar to what Paul Nicks wrote.

    July 10th, 2017 at 11:26 am

    Keith DeBoer

    As you say Elliot stability is good. For a lot of reasons it makes good business sense. Price gouging is not a sustainable business model in my opinion. That said we know that every company selects their price poinst based on cost, profit margins and what the market will bear. Domains are not that much different, in my opinion and who is making the inquiry and the value it has to that specific buyer is a major factor.

    July 10th, 2017 at 12:46 pm

    Jon Schultz

    I don’t think any activity is objectively immoral or unethical. It’s all subjective, with people who agree on which laws and policies work best being friends and people who disagree being enemies (to one extent or another). “There ain’t no good guy, there ain’t no bad guy, there’s only you and me and we just disagree.”

    Considering that, when you can, reduces anger and unnecessary friction with other people.

    July 10th, 2017 at 12:59 pm

    Eric Lyon

    I think it’s common practice today for the larger companies to research first, prior to accepting/countering/offering. If they see the price scaled from low to high in different places in their research, they are obviously going to start at the low end and stick firm based on the research.

    Inconsistent pricing only makes it harder to sell for maximum potential.

    July 10th, 2017 at 1:22 pm

    Nicco Schaal

    Get as much as you can or as much as a buyer is willing to pay. Every domain is unique and it might be valued at 250,000, but if a buyer is willing to pay 25,000 (only?), take it or wait another 10 years to find that premium customer. Why does it take so many years to sell a damain? Because we all wait for that 250,000 offer.

    July 10th, 2017 at 1:29 pm

    Ehren

    Sizing up buyers is shady. What other legitimate industry does that?

    Either price for the highest and best use and consider reasonable offers from there, or price a little lower in a range where you have more than one potential buyer but still at a solid price.

    July 10th, 2017 at 4:23 pm

    WQ

    Your domain is your private piece of property online. If someone comes along and wants to build a thrift shop on it then you can price it one way (or not sell it at all if you see better potential for it). If someone comes along and wants to build a 20 story luxury condo unit then you price it another way.

    You should be getting a piece of the pie if someone wants to build on your property. This is why some sellers ask for cash + equity if they think/know it may be a huge project.

    It’s easy to say, if you think it’s worth 250K then wait. Problem is, no one else may EVER agree with you. That condo builder may not ever want to build on your lot.

    There’s also other factors that come into play as well. Mainly, cash flow needs. A person with no cash flow needs can sit longer and hope that builder comes along some day. Someone who needs cash today may say, go ahead and build that thrift shop and give me something for it.

    July 10th, 2017 at 6:07 pm

    John

    Whenever I make a sale, more or less this very topic comes up in one form or another with the buyer. Recently I mentioned selling two nice long three word .com’s for just over $21k and it did then too.

    I agree that consistency and honesty is good and important. If you honestly regard a domain as being genuinely and reasonably worth a certain amount or range, then definitely state that clearly. However, just because you may sometimes be willing to sell for less in no way whatsoever changes the value of the domain. The buyer is either getting a bargain or deep discount, or merely paying a fair price.

    July 11th, 2017 at 1:46 pm

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