When an end user contacts a domain owner to purchase a domain name, the challenge of negotiating a sales price begins. Oftentimes, the domain owner has a certain sales price in mind, while the buyer has a number in his head, either determined by his budgetary requirements or his own personal constraints. A domain seller needs to play part psychologist and part savvy businessman to determine how to read between the lines of an email to yield the best possible price, but to ensure the negotiation isn’t ended prematurely.
When the negotiation dance has begun, I think less attention should be paid to the buyer and more to the domain name. Sure, if the buyer really needs the name and has an unlimited budget, the sky could be the limit for the sales price. However, if the seller misreads this need, a sale could be easily lost by drastically over-pricing the domain name. One of the most important things to keep in mind when negotiating is that category killer names (such as LaptopComputers.com, HomeMortgage.com…etc) usually can’t be replaced easily, and the price can be reflective of this . Brandable names (such as CoolGadgets.com, FunTrips.com…etc), on the other hand, can usually be replaced much more easily, and the buyer may go out and find an alternative at a much more attractive price rather than over-pay for this type of name.
An example of this was when I was looking to acquire a home decorating domain name a few months ago. I negotiated with a few domain owners to try to buy a brandable name for an affiliated site I wanted to build. I am sure each of three names I inquired about received no natural traffic, and they weren’t developed, so the true value was in the name and what a buyer would pay. While two of the names were very over priced and not even worth making a counteroffer, a third person replied “you sold xxxxxxxxx.com for $x,xxx and the price of this name is a little less,” which I found to be ridiculous since the names were completely unrelated. Just because I can afford to pay more for a domain name, doesn’t mean I will pay more, especially because I have a feel for domain valuation. Needless to say, I decided to simply register an expired name for $7.44, and I bought DecoratingDiscounts.com, which is much better than the others in a cost/benefit analysis.
Yes, a domain name is a one of a kind piece of Internet property that only one entity can own. If an end-user tries to buy the domain name, the seller should balance his knowledge of the end user’s finances with the value of the domain name. Sure, great deals can happen, but just like in a game of double down video poker, you never know what price is going to lose you a sale. People don’t like to be taken advantage of, and if they feel the seller has increased the price simply because of who the buyer is, the negotiation may be ended.
For me, when I buy a domain name that I plan to sell, I have a value in mind. If/when I receive an offer in that range, chances are good that I will sell it. While it’s great when people sell a domain name a huge sum – and there are plenty of stories like that, I know there are many more stories where the buyer says “no thanks” and moves on to another name. There have been plenty of times when I would have paid more for a domain name, but the asking price was unreasonable. Sure, name your own price if the money isn’t life changing and you don’t need to sell your domain names. But if you are “rich on paper,” over pricing domain names isn’t going to help put you in a strong cash position.
Smart Pricing Versus Over Pricing
Jeremiah Was a …
Jeremiah was a bullfrog… and a biblical figure… and a common first name… and now you can own the domain name Jeremiah.com for just $55,000 $39,000 – or if you submit a best offer that’s accepted by the owner via Ebay. Some recent first name .com sales include:
Jacob.com $75,000 (I think this was a steal)
Marilyn.com $45,000
Doug.com $45,000
Kathy.com $65,000
There have already been two competitive offers placed in the first 8 hours of listing, so I would be surprised if it makes it until the listing end date of April 29th.
Sing it with me…
“Joy to the world, all the boys and girls, joy to all the fishies in the deep blue sea, joy to you and me…”
New Acquisition: CelebrityBabyPhotos.com
It seems that the latest rage in our gossip craving, celebrity worshiping society is to pay exorbitant amounts of money to celebrities for their baby photos. Searches for “celebrity baby photos,” have been growing over the last several months, just as the hefty sums to acquire the exclusive photos have grown. To capitalize on this trend, I just purchased CelebrityBabyPhotos.com.
Although I am not quite sure what I am going to do with the domain name yet, I know there is great value in the name. Just today the New York Post gossip section led off with an article about Ashlee Simpson’s pregnancy rumors and the fact that her father is pitching photos of her baby for $1,000,000. TMZ has also been covering Ashlee’s pregnancy.
This comes on the footsteps of other multi-million dollar celebrity baby photos, including Jennifer Lopez, Katie Holmes, Christina Aguilera, and many others. As people continue to spend a considerable amount of money reading up on celebrity lifestyles, the payouts are going to continue to grow.
Big Price Cut – UnemploymentLine.com
On April 4th, I offered the domain name UnemploymentLine.com for $5,750. The name didn’t sell then, so I am going to drop the price on it today. The new price is a crazy $3,500. This is a cool name, and with the current recession, unemployment is a hot button issue.
First person to respond “sold” in the comment section will get the name.
Commercial Usage of a Domain Name
People often ask me what I look for when buying a domain name. While there are many factors that I consider, I think the single most important thing about a domain name is its potential commercial usage. When evaluating domain names to acquire, I ask myself, “how can this domain name be used, and would it make sense to build a website around this domain name?” If you are able to know exactly what will be on the website before even navigating to it because it’s a category killer name, you probably have a good name.
I hardly ever buy a domain name based on traffic or revenue numbers. There are too many non-controllable factors when buying based on these statistics, so my buying decision is not determined by these stats. Yes, I do ask about a domain name’s traffic, but that is to make sure the name “has a pulse” to get a feel for whether it is worth sinking money into a development project. The single most important thing to me is commercial usage.
Whether I am planning to build a website on the domain name or whether I plan to sell the domain name to someone who will build a website, I want to know whether the domain name makes sense to have a website. Sure, there are plenty of great “brandable” domain names out there, but why do I want to spend my time trying to convince someone about how great it sounds or why that particular domain name would be great for a particular site? I would rather be able to contact someone in the industry or someone in the domain industry and say, I have the category killer name for this particular niche, and the domain name is actually the name of a particular category or niche.
A person should never have to say, “this domain name would make a great xyz website.” A great, commercially viable, generic domain name shouldn’t need any explanation. For example, my newest acquisition is EstatePlanners.com. I believe this domain name needs no explanation, and that’s why I like it.
Tracking Domain Names for a Competitive Advantage
There are many companies that track domain names to get a competitive advantage over their competitors or to monitor another company’s strategic initiatives. Previously I discussed the use of IP address monitoring to track new domain purchases, but some companies simply track new domain registrations to essentially do the same thing.
I read a blog post in Boston Magazine where they speculated about where a Boston-based news outlet wanted to expand (prior to their demise). Because of domain privacy, they aren’t able to know for certain that the company bought those other names, but based on the date of registration and the registrar, they could get a pretty good idea about who registered the domain names.
There are many types of information a company can use to track a competitor. They are able to monitor trademark and patent filings, follow business license applications, watch city/state filings…etc. A company’s domain registrations are another tool to allow outsiders to look ahead and make predictions or assumptions about another company’s strategy.