Do you leave money on the table when you price your domains?

For years domain name marketplaces have been sharing data that shows a direct correlation between pricing domains and faster liquidity. This means, if you price your domain names, they will sell faster. I don’t think this is up for debate although I personally don’t have the data to corroborate this so have to trust the marketplaces and the data that they share.

As for my own strategy, I’ve gone back and forth for years on whether to price my domains or not and I can’t say that I have a definitive answer or strategy for myself. The challenge that I’ve always had with pricing domains is that feeling that you left money on the table.

Here’s an example.

Earlier this year I sold a domain name on Afternic, Kale.io which sold for $4,223 (note there is a commission there so I made $3,378 net). Now I do think that since I priced the domain name it made it easier for the buyer to pull the trigger and make the purchase. At the same time, I think that the buyer would have likely paid $7,500 or maybe even $10,000 for the domain since they were clearly interested and had a meaningful budget.

kale-io-sale

While I’m happy with the sale since I only paid $280 for it originally, I still feel like I probably left a few thousand dollars on the table. Had I not priced the domain and left it as “Make Offer” the buyer might have placed an offer and we could have gone back and forth likely yielding a higher sale price.

Lately I’ve been thinking of moving all of my domains to “Make Offer” but then I wonder. Well what if the opposite is true with a sale like Kale.io. Maybe, the buyer would see that the domain wasn’t priced and would skip it and buy another name, maybe for $10,000, who knows, but I’d miss the deal entirely since the idea of going back and forth with a domain owner wasn’t something they wanted to do.

I think this is a topic that most Domainers wrestle with and I’m not sure there’s a right answer, I think it really depends on what your goals are. If Domaining is your full time job then I think maximizing liquidity might be the best path to take. If Domaining is an investment strategy, just like investing in the stock market or real estate then maybe sacrificing more immediate liquidity for higher sales prices is worth it.

I’m not a full time Domainer, never have been, never plan to be, so I think I fall in the second camp. At the same time, I think there’s a balance and I’d rather sell a name for 25% less five years earlier than wait five more years just to make 25% more. Does that make sense?

Okay, enough from me, now I want to hear from you. What do you think? Comment and let your voice be heard!

{ 14 comments… add one }

  • Snoopy June 25, 2018, 9:27 pm

    How about this.

    If Kale.com was unpriced they would have offered $50. It sold for $4223 but the buyer thought it would cost them $200 initially.

    They decided to hit the buy it now instead to avoid the back and forth and risk losing it.

    The fact is nobody knows with any of this. For low value names probably best to set a price as the buyer will have dozens of alternatives, lets make it easy like buying a TV.

  • Daniel June 25, 2018, 9:28 pm

    There will always be something left on the table when you do a buy it now… But there is nothing better than making money while you sleep. Waking up to a nice sale after making a smart investment and pricing it to be sold on a buy it now or self-check out. Bravo to you on making that sale!

  • Frank Mueller June 26, 2018, 1:50 am

    you can’t rely on the marketplaces infos
    as their business is different

    they receive traffic from listed domains
    then offer related domains ( all listed at the marketplace )
    and when there is a sale it’s them commission earned
    not the traffic sending domain necessarily

    now when it has a good buy now price sale is faster
    and hassle-free for the marketplace

    of course they want you to set a BIN price

  • Logan June 26, 2018, 9:19 am

    Hi Morgan – it’s important to note that your — or anyone else’s — cognitive dissonance regarding ‘leaving money on the table’ is all in your head. It does not reflect reality. It’s simply ‘woulda, shoulda, coulda’ second guessing of yourself:

    “I think that the buyer would have likely paid $7,500 or maybe even $10,000” — key phrases in the sentence: “I think”, “would have likely”, “maybe even”.

    That’s a lot of uncertainty and speculation going on about things not based in reality. Those hypotheses can never be tested and then accepted or rejected. The sale has completed and you received the proceeds you agreed to receive when you priced the name at the marketplace of choice. That’s reality.

    The key is to price your domain names with ‘zero regret’ pricing in the first place. This is getting your head straight at the outset by pricing to contentment. Price the name high enough such that your regret when it sells at BIN will be zero because you priced it as if the end user with the ‘highest and best use’ for the name finally came along and pushed the BIN button. Then, you’ll simply be gleeful at all the cash you now have in your bank account in exchange for the $10 annual liability you just got rid of.

    To your point, end users hate negotiating with mysterious, curmudgeonly domain name owners. So, why force them to negotiate at all? Price for the highest and best end user with a price for which you would have zero regret, set it as BIN, and …. wait. Consider testing different (higher or lower) BIN prices every 6 to 12 months as you reassess and revalue your entire portfolio in light of new information and new trends going on in the real world. When it finally sells, you will have received a price that makes you happy with zero regret and zero cognitive dissonance and you will now have plenty of funds to renew your entire portfolio of domain names. Happy times!

  • Jose June 26, 2018, 10:54 am

    In the appraisals learn from you first and after Rick “domainking” the years have passed with a struggle to be accepted my valuations have gone from selling for $ 150 to $ 15,000 with expired domains.

    The registered ones I give to Broker for negotiation and auctions, to prove in domainagents.com and I am going to give everything to the Broker deciding what value to have each one.

    The 10 domains of adults that have are in hosting give money every month.

    Happy day.
    Jose.

  • Brad Mugford June 26, 2018, 1:28 pm

    Almost any time a deal is reached the seller is leaving money on the table, unless you extract the exact top amount a buyer is willing to pay. Generally a deal is reached when your asking price is less than the buyer is willing to pay.

    I will put prices on more average domains as pricing certainly does help liquidity. I sell many priced domains at venues like GoDaddy that have never got a direct inquiry.

    On better domains, .COM especially, I have them set at make offer and am willing to negotiate with serious potential buyers.

    Brad

  • Geirge June 27, 2018, 6:16 am

    Regarding ‘leaving money on the table’. Personally, I don’t understand.
    My DN BIN prices are 10-15% higher than the price I’ll be happy to get.
    After the DN is gone, the next thing coming to my mind is banking the money, enjoy it and get ready for the next DN sale.

    • Morgan June 27, 2018, 9:24 am

      @Geirge – that only works if you have one flat price you’d expect to get from all buyers. I think a company with 10B/year in revenue will have a much bigger budget, and can probably benefit a lot more from a domain that a company that does 10M/year, so the pricing would be different for each IMO…

      • Logan June 27, 2018, 10:28 am

        I don’t think asking price should vary based on the income of the prospective buyer.

        When you list a house for sale, do you suddenly jack up the price when you find out a billionaire would like a tour of the property? No, there are comparable sales of other unique but comparable properties that guide the ask, the offer, and the ultimate price at close. There is a general range of reasonableness therein that guides all actors in the transaction.

        As a seller of such a property seeking to maximize price and post-transaction personal contentment with that price, it’s best to set a BIN price at the upper end of the reasonableness range that you would have zero regret if it sells at that price.

        • Morgan June 27, 2018, 4:19 pm

          @Logan – I don’t think price should always be based on income but I do think that you should take into account who is making the offer when coming up with a price. This is where domains do really differ from houses and why some Domainers sell names for millions that others would happily sell for five or six figures.

          That’s just my opinion but I know that many Domainers much more experienced than myself take the buyer into account when coming up with a price…I’m just listening to the jedi masters here 😉

          • Logan June 27, 2018, 5:25 pm

            Hi Morgan,

            I was generally referring to BIN pricing strategy, not Make Offer pricing strategy.

            Sure, if the Make Offer offer is made by a multi-billion dollar company and the offer is within the range of reasonableness defined by comparable sales of like properties, one can jack up the price to see how just far the multi-billion dollar company will go. It all depends on the quality of the domain name and the cash flow needs of the seller.

            Of course, many jedi masters own the domain name equivalent of oceanfront mansions — A+ grade domain names registered many moons ago. It’s relatively easy to hold out for superlative offers on an A+ grade property. I would do the same thing.

            However, I currently invest in B+ to A- grade properties sourced judiciously from drop auctions. Mostly two-word .com domain names. It’s easier to assess these using comps and then set high BIN prices to generate cash flow needed to make my entire portfolio ROI positive on an annual basis. 98% of my portfolio consists of names that a multi-billion dollar company would happily pay $10,000 to $50,000 for but would likely balk at paying $100,000 to $500,000 for if I tried to walk them up. I am a realist. My names just aren’t A+ grade; they are only B+ to A- in quality. It’s easier to BIN at this level of quality and keep the cash flowing annually. The other 2% of my portfolio? These are A to A+ in quality and I do intend to hold out for more on them. Yet, I do have them BIN’d for my current 6-month test; they are simply very, very high BIN prices.

            Regardless, I still contend it’s all about seller mindset. I sold SmartMonday.com to an $11 billion international insurance company for $15,000 using BIN pricing after paying $69 for it 92 days earlier. I do not ruefully shake my fist at the sky cursing the gods of commerce because I let it go for such a low price relative to the income of the buyer. I established in my head in advance the ROI and cash proceeds that would make me a very happy investor should the domain name sell, regardless of the wealth of the buyer. I remain a very happy investor. 🙂

          • Morgan June 27, 2018, 11:31 pm

            @Logan – thanks for sharing, lots of good points there and as we all know, no right answers here!

  • Frank Mueller June 28, 2018, 1:38 am

    a huge company with a huge cash flow
    will not inquire for a domain name
    just for fun and entertainment

    they have a plan
    they need the domain to make their plans work better
    in order to make a lot of money – using that domain name

    so they profit a lot from that name
    so it’s valuable for them

    a small guy using the same domain
    for a not so promising purpose
    will not make so much of it
    so the domain isn’t worth a lot to him

    that is the only difference
    why a domain is always priced on the
    additional value a buyer can have from owning it.

    • Morgan June 28, 2018, 10:52 pm

      @Frank – very well said and agreed!