Domain Negotiation Strategy

DavidL · #1 16-02-11, 03:44 PM

Normally when someone contacts me about a domain and expresses interest, I am very reluctant to name a price. Instead I will insist that as they made the approach, the onus is on them to make an offer. The old 'first to speak loses' mentality!

Once they do, the negotiation starts from there.

However the other day I read this - http://www.kevinohashi.com/07/02/201...t-favor-buyers

so in the last couple of days, I've actually suggested a price (a high one) on the domains to see how that works.

I'm also going through NF to add target prices where I can for the same reason...

Anyway thought you guys may find useful.

snoopy · #2 16-02-11, 04:00 PM

Asking them to make an offer first will cut down sales by a big margin. Most people don't have intimate domain names valuation knowledge and will either offer something trivial or be put off.

The third possibility is people assuming lack of a price means exorbitant pricing which can been seen for example on domain forums where the seller hasn't stated a price, ie the number of inquiries will be low and a bigger % will be time wasters because most assume the seller isn't serious about selling (which is often an accurate guess).

Take a look at how buydomains does things, they always price first. There has always been some degree of talk in the domain industry about getting the buyer to make the first offer, getting them to make the first and second offer etc. In my view that is a flawed strategy unless you don't mind selling a tiny % of names.

Drop.com.au · #3 16-02-11, 04:27 PM

Good article - thanks for posting. Snoopy's observations are spot on too.

Andrew

cherrytron · #4 16-02-11, 11:33 PM

I honestly believe that if you are serious about selling, you should put a price on it.

The biggest problem in this market is lack of information, sales data and true ability to estimate value.

As a buyer, I hate auction reserves or no asking price etc. As Snoopy said above, I just instantly consider the seller a time waster. I always think the seller wants so much they are embarrassed to say so, or they just have it out there to get a market valuation. If you have a reserve price, you have a sale price, just advertise it. In a market such as an eBay auction or a house auction, confined by time you should be able to entice a bidding war and may get more than your reserve. However, on a domain that is just "for sale" with an infinity time frame, setting a hidden reserve or no price guide at all is just doing yourself an injustice - as a buyer, I don't want to give you a starting price because I assume you are just there for a valuation.

I personally think a lot of domain owners simply don't "price" domains because they are waiting for the one day a "stupid big fish" walks in and offers a ridiculous price way above what they would ever expect. Realistically though, how many times do you think this happens? For domainers with absolute premium stock, you can probably wait around for the massive sale every few years. Master Shilling is one of these guys who sits and waits like a ninja. As a buyer we have to remember that a domain portfolio has a low cost of ownership (esp. if owner got in at retail) and they only need to sell one or two here and there to pay for the rest of your stock. These are some of the hardest names to buy and you really have to hit the person at the right time.

I've been involved in lots of 6 figure .com.au offers and transactions as a buyer. Out of all the offers we've put out there, I would suggest there have been very, very few where the buyer has accepted close to our original offer even when we probably would have paid double and they probably would have accepted half, but hey, it happens.

lurker · #5 17-02-11, 12:18 AM

On netfleet I have found quality score is better if you have 'make offer' instead of setting a price (unless you have crazy low prices or very high quality domains). I have always found it strange that netfleet changes the quality score depending on the price set as a domain is worth what someone will pay for it which I would say is next to impossible to determine with an algorithm...

DavidL · #6 17-02-11, 06:49 AM

Quote:

Originally Posted by lurker

On netfleet I have found quality score is better if you have 'make offer' instead of setting a price (unless you have crazy low prices or very high quality domains). I have always found it strange that netfleet changes the quality score depending on the price set as a domain is worth what someone will pay for it which I would say is next to impossible to determine with an algorithm...

Are you sure it's meant to be the other way round! The score is meant to rewrard people who do put a price on it.... Even if the price is ambitious.

The exception is a really crazy price.. Like a 6 figure target on an reg fee name. Do you have an example at all so I can look into it? Thanks

Billy01 · #7 17-02-11, 06:50 AM

I don't think a price is that important. When was the last time you opened a regional cities newspaper realestate section and see all the property with a price listed. NEVER. The agent advertisers the property with the idea of getting an interest from people in the market. Its about the buyer meeting seller at a price that makes them both happy. If the purchaser wants the property enough he will instigate a purchase. Basic sales. The buyer should already have an idea of what they can do with domain, future revenue etc etc etc. The seller already knows his opportunity cost.

lurker · #8 17-02-11, 07:40 AM

Quote:

Originally Posted by DavidL

Are you sure it's meant to be the other way round! The score is meant to rewrard people who do put a price on it.... Even if the price is ambitious.

The exception is a really crazy price.. Like a 6 figure target on an reg fee name. Do you have an example at all so I can look into it? Thanks

Hmmm

I could be wrong but I thought I had noticed this on multiple domains. I am trying one now. As soon as the quality score changes I will let you know.

snoopy · #9 17-02-11, 09:10 AM

Quote:

Originally Posted by Billy01

I don't think a price is that important. When was the last time you opened a regional cities newspaper realestate section and see all the property with a price listed. NEVER. The agent advertisers the property with the idea of getting an interest from people in the market. Its about the buyer meeting seller at a price that makes them both happy. If the purchaser wants the property enough he will instigate a purchase. Basic sales. The buyer should already have an idea of what they can do with domain, future revenue etc etc etc. The seller already knows his opportunity cost.

Ask an agent what price is expected and they'll give a figure, they won't say "no, you offer first". The main reason many agents don't list prices (or ranges) is because of underquoting, which is the opposite of the domain industry.

Here another comment that may or may not be a reason. I think a lot of domain owners have no clue what their names are worth, prices are all over the place and even two people who have been in the industry for a long time a likely to give very different valuations. Personally I don't have a clue what most of my domains are worth, when I go to sell something via auction price is often double or half what I thought, ie way out. I think I know the difference between a 3 figure names and 4 figure names most of the time, but as far as getting it down to anything half accurate, no way.

DavidL · #10 17-02-11, 09:27 AM

Quote:

Originally Posted by lurker

Hmmm

I could be wrong but I thought I had noticed this on multiple domains. I am trying one now. As soon as the quality score changes I will let you know.

Thank you!

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