There are a lot of domain investors who are afraid to leave money on the table. I am one of those people. However, I am also a realist, and I would generally rather do a deal at 70-80% of what I think I could potentially achieve than hold out for every last penny, which may never come. Worse, it could cost me a reasonable deal that is on the table because a buyer could choose another domain name instead of mine.
There’s a funny thing about leaving money on the table. When we agree to sell a domain name for an end user’s best and final offer, we will never ever know if we left money on the table. How can we? When an end user buys a domain name from me for their own usage, it would not be possible to know if they would have paid more for it or if someone else would have paid more in the future. The domain name will almost certainly be used, and if it is ever sold again, it is likely a result of the added value they brought to the domain name.
The largest companies in the world may inquire about a domain name, but that doesn’t mean their budget will be commensurate with their size. Sometimes they need a domain name and will pay more for it, and other times, they will simply choose an alternative domain name.
If you are very wealthy and/or you don’t rely on domain name sales as a primary means of income, you may have the luxury of turning down good offers in the hope that a better offer comes at some point. I’ve turned down plenty of offers, and I regret several because they were fair and I haven’t received better offers for those particular domain names. My bad.
In my opinion, sometimes it is better to take a good offer and move on from there without having the regret that money will be left on the table. Yes, a business owner needs to do his or her best to get the most for their unique assets, but they shouldn’t risk a good deal for what could be a pipe dream.
As always, I would appreciate it if I could read your insight on this. Everyone seems to have a different strategy when it comes to negotiations and dealmaking, and it would be great to see what you have to say about this.
This is why it’s important to form an evaluation of what you believe all of your domains are worth to the right end user which would be based on…
1)How good is the domain for the industry?
2)Are there many comparable alternatives?
3)Profit margin of the product/service the domain covers.
4)How many end users exist in the space, easier to stick to your guns on pricing and possibly blow a deal if a good handful of other end users exist.
5)Frequency of offers
If I valuate a domain somewhere in the 25k range and I get a 10k final offer (happened few weeks ago) just because that’s the best that they can do doesn’t mean I should sell just means they aren’t the “right” buyer. A domain isn’t worth what an end user will pay for it a domain is worth what the “right” end user will pay for it. I also don’t valuate what I paid for something, 10k offer came on a domain I picked up dropped for $8 a few years ago. Quality+Patience on the gems that have a large end user pool. Selling something for 9k that ya believe is worth 10 is okay but selling something for 10k that you believe is easily 25k+ I’d pass on unless you’ve been eating those Instant Lunch soups in the styrofoam cups for the last month and need a steak, quite a few of us have been there at some point in our life. 🙂
Thank you for sharing your insight!
I would agree that for most domain investors, one has to be realistic with prices and not make the buyer feel taken advantage of. How would you feel as a potential customer of any product/service if the seller is trying to take advantage of you? In many cases you would just walk away and look for a competing product/service. Yes, there are some high-profile domain investors who don’t need the money and take a very hard stance with potential buyers. But I am sure they lose many potential sales doing so and we only hear about those rare six and seven-figure sales. For most of us, that perfect end user will never show at our door and yet renewals have to be paid and so does the rent. That doesn’t mean accept lowball offers but just be realistic. Most domain sales won’t even qualify for listing in the weekly DNJ sales reports.
However, I believe that even in 2014 the bigger issue domain investors face is that most small businesses and web developers don’t place much value on the brand value of short relevant-keyword domain names. All you have to do is look at the type of domain that small businesses use in Google Adwords campaigns or the sort of domain which appears in Flippa website listings – reg-fee quality domains that experienced domainers would normally not even register. Domains are viewed as commodities and being pitched the idea of paying thousands of dollars for a domain name which should only cost ~$10 seems absurd.
“There are a lot of domain investors who are afraid to leave money on the table.”
Sellers will be doing it on pretty much every sale, by leaving money on the table is the only way a sale will ever take place unless strangely you have got the buyer to pay $X and they would genuinely walk away at $X+1. When they say “I won’t pay more than say $10,000” that could mean they have a budget of $10,000 or a budget of $100,000. Again nobody will ever know.
Equally seller will pretty much always be leaving money on the table, they could have got the name for less. They could have also missed out on the purchase because nobody knows what “less” is. When I sell a name I don’t even know what my limit is unless it is some fixed price sale that I won’t deviate from.
Better to just a get a price you think is a good price as Elliot suggests.
This is one case where there’s a benefit of having a larger portfolio. If you’re in a position where you’re fielding multiple strong offers / inquiries every week, you have the luxury selling on the stronger offers and waiting on the weaker ones. Because offers on any individual name are rare, investors holding a smaller portfolio might feel pressured to sell a name before they’re ready, just because they have no idea when the next opportunity for a sale might present itself.
I don’t understand what difference it makes on the size of ones portfolio, other than receiving more offers on multiple domains, If a large portfolio owner receives an offer on a domain that he hasn’t received one offer on in 10 years, he’s going to try to negotiate as much as the smaller portfolio owner would…
Sure its easy for the large portfolio owner to play tough or hold out for more, afterall he’s selling a dozen domains a month, but he would be fool not to try and land the sale due to the domains low interest.
@ Elliot, Very good article for which I’m in agreement..
It’s easy for domainers to say “don’t leave money on the table” but many inquires are unique in so many ways, and your put in a position where you have to decide on a low sale or no sale at all, for a domain you’ll likely have to wait a very long time to sell like you say… It really comes down to how much interest your receiving for a particular domain.