My Price Reduction Offer

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I have a substantial portion of my domain portfolio listed for sale via GoDaddy / Afternic. I tend to price this inventory a bit on the high side because I am always able to reduce my price if necessary but obviously can’t increase it once someone agrees to purchase it. This isn’t the case with every domain name listed with a BIN price, but I do tend have a bit of wiggle room on my names.

When someone inquires about the price of a domain name via my Embrace.com landing page, I quote the price I have listed at GoDaddy (if there is a BIN price listed). I give the buyer the option of buying directly via GoDaddy or closing a deal privately via Escrow.com. Yes, I would need to pay a commission if the deal closes via GoDaddy, but there are several advantages to selling via GoDaddy, including:

  • Not having to worry about collecting funds (ie fraudulent payments or stop payments on checks or claims of fraud / not receiving products at PayPal)
  • Fewer worries about the domain transfer
  • People know GoDaddy and understand it is a huge company, so fewer issues sending payment
  • Many people already have a GoDaddy account
  • No KYC verification delays

All that being said, sometimes the prospective buyer thinks the price is too high or is thinking about buying other domain names. Oftentimes, they don’t even respond to my response even when my price is fair or the price is somewhat close to their offer. The later situation is especially frustrating.

If a buyer makes an opening offer of $4,000 on a domain name I have priced at $12,000 (assuming a purchase price of $200 – $2,000), I generally assume there is a reasonable chance we will be able to find a fair price and get a deal done. If I consider the domain name to be average inventory – ie I can replace it relatively easily, I might be more willing to reduce my price to close a deal. Perhaps reducing it to $10,000 or even $8,000 – will be enough to get a deal done. The buyer appreciates the concession and I still have room for a decent profit.

The issue with a negotiation is that should I be the first to follow up with a price reduction, the prospect may detect weakness. The prospect may think that if I immediately reduce my price, I appear very eager to close a deal. They may assume the price will continue to come down if they wait longer. This isn’t usually the case, but that is likely the perception.

The way I reduce the price is to come back at some point and offer to do a deal in private via Escrow.com and I will reduce the price by the amount of commission I would have paid. This is not a huge concession, but it is a sensible price reduction based on something specific rather than a vague reduction pulled out of thin air.

Timing on this price reduction varies. Sometimes I do it several hours after my initial response if I haven’t heard back. When a buyer makes an offer, they are usually ready to pay. I don’t want them to buy something else in the interim. I don’t want to appear over eager, but I think offering this type of price concession is sensible because I wouldn’t have to pay a commission in private, and it shows I have a bit of flexibility without looking weak or giving up too much up front. Depending on the name, maybe I can come down a bit more, but this keeps the discussion going.

My goal is to sell the replaceable inventory with enough regularity to allow me to buy and keep the premium domain names. I don’t want to look desperate to sell this inventory, but if I have room to still make a great profit, I would rather sell something replaceable than lose out on a deal. I think offering this small concession up front is a way to keep the discussion going and a means to find common ground.

7 COMMENTS

  1. Very good post Elliot, you make some good points about worry free selling when don e through GoDaddy, I might have to re-visit that idea.

    • When I know the buyer, I don’t like having to pay commission and I don’t like having to wait extra time to be paid (vs Escrow.com) but I do appreciate that there is very little for me to do.

  2. Embrace.com is an awesome name! Check up your google maps though. Earlier this year the mighty goog decided to change the pricing for their maps service, so millions of free maps on websites all over the world are now just like yours. They still provide I believe 25000 free loads of the map per month…but, only after you tell them your card info, so they can charge you when they feel needed, he he.

  3. Domains in the price range of X,XXX are probably the hardest to negotiate because there may be more than one option under consideration in many cases. Thanks for the valuable insight from your experience.

  4. One drawback to referring folks to GoDaddy is that once there a whole world of domain purchase opportunities opens up …

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