Smart Pricing Versus Over Pricing

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,…etc) usually can’t be replaced easily, and the price can be reflective of this . Brandable names (such as,…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 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, 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.

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Elliot Silver
Elliot Silver
About The Author: Elliot Silver is an Internet entrepreneur and publisher of Elliot is also the founder and President of Top Notch Domains, LLC, a company that has closed eight figures in deals. Please read the Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest. Reach out to Elliot: Twitter | Facebook | LinkedIn
  1. On the other side of the coin, I got an email from someone looking to buy a one-word neighborhood domain that I owned. When I asked how much was his budget, he replied that he didn’t have much money but was willing to offer $50 for the domain. Clearly not worth my time, I said “Thanks, but no thanks.” Then he came back and asked how much I was willing to sell at. I didn’t bother to respond because the potential buyer had insulted me with his initial offer.

  2. Qualifying the buyer or seller is one of the first steps to a successful transaction. Knowing who and what they can afford is critical in establishing price. Perceived value is the key.

  3. Name that are hard to replace are the domains that MATCH exactly what users type in. eg tools for less or
    Query Searches
    tools for less 93
    paintless dent repair tools for less 28
    power tools for less 24
    quality tools for less 16
    Brandable means what people DO NOT type in except it sounds cool or is easy to remember though is not a part. Like the person who registered all the “worlds greatest WORD” domains, I thought it was crazy.
    Worlds Greatest Tools or
    Worlds Greatest Ham or
    Your search has returned no results.
    The guys purchased all those “worlds greatest” domains some time ago thinks each domain is probably worth $10,000 or more.
    While everyone else thinks, take $500 and move on. 🙂
    Since brandable domains can be replaced with any other STUPID terms and be just as effective or cheesy as the above “worlds greatest” for $9 is much better than investment than $1000 for Both are “brandable” both in my opinion are equally cheesy.
    Just a FYI, I have purchased some of the worse domains EVER. so bad I am ashamed to list them, I am being critical of others to show a different point of view.

  4. Good article. One question, suppose some company approaches you for a domain, where do you start?

    Most names I own aren’t really available publicly for sale, so I typically respond that I am not interested in selling. If a buyer wants or needs a domain name I own, they aren’t going to stop wanting it or trying to get it after I give them that response. For almost everyone, everything has a price. While I am not selling my apartment, if my next door neighbor needed to expand and offered me 2x the market value, I would certainly consider moving.
    Usually, if a person takes a “the name isn’t for sale” response as an endpoint, they didn’t want it badly enough to pay the full price for it anyway. When I want/need a domain name and the owner gives me that response, I will typically say, “thanks for getting back to me, but if you change your mind, I am willing to pay you $xx,xxx for the domain name. Please keep me in mind for the future if your plans change.”

  5. I couldn’t agree more with you Elliot. I think it could be an ego thing. When people start inquiring about a name, all of a sudden the seller think he is sitting on a goldmine and greed set into overpricing; this could upset potential/good buyers. ….And for Phlilip (above), I wouldn’t call the $50 offer an insult. As a seller, if you say “make an offer” with no minimum, it is not illegal for the buyer to offer $1 regardless of “gem of a name” . But seller put a $5,000 price tag and the seller offer $50 than he can feel insulted by such a ridiculous counter-offer. At least, the would-be buyer told Philip he is on tight budget.

    While I agree that a person should be able to make any offer when an owner says to “make an offer,” he should realize that a lowball and ridiculous offer will probably be treated as such with a ridiculous response. If a person offers $50 for a $50,000 domain name, there is a good chance there isn’t going to be an agreement. From an owner’s perspective, it’s annoying to receive such uneducated and annoying offers.

  6. While it may be annoying to receive lowball offers, I’ve learned that end users don’t really know or understand the value of domain names. I’ve educated several entreprenuer friends on the importance of a good domain name for their ventures and the associated values of such a name. Many are surprised at the prices good domain names command; they had no idea. Once educated on the topic, however, several have been inclined to pay the premium as they realize the importance of a good name.

  7. Hi Eliot, i got a request about , and i replied i wanted $1495. Too high, too low or right? I checked on domain price site and figured if went for 5 that, 2 years ago, then my price is reasonable. Thoughts?

    IMO, that would be a strong price if you got it. From what I see, there doesn’t seem to be too much consumer interest in Tajikistan tours 🙂

  8. I had fun reading your informative post and the responses to it.
    If the domain name owner get’s a poinless $$ offer for a gret domain name there is NO point into selling the domain (no need to waste time).
    I have had many $$ offers of that kind by individuals that do not know $$ value of a particular domain and by Company owners that want to buy a domain name for next to nothing.
    Do not sell your domain names for next to nothing (Pride and respect YOURSELF).

  9. …and I chuckle at most of the e-mail “offers” I receive (virtually never with any monetary amount in them); where they ask whether it’s for sale, and how much I want for it…even though the WhoIs info (where they got my e-mail address from in the first place) on virtually all my available names includes my site where I have them listed for sale; including their prices. 🙂

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