Domaining MBA Monday: 3 Ways To Blow A Domain Sale

Domaining MBA MondayOver the last year I’ve been working more and more with startups and venture-funded companies to help them acquire the domain name of their choice. Usually budgets range from $25,000 on the low end to $500,000 on the high end. One thing all these companies have in common is that most of them have never bought a domain name and have no idea how to get the process started. Many of them have started out themselves by reaching-out to a domain owner and in many cases had a bad experience that soured them on the experience and Domainers in general.

One of the terms I’ve heard over and over is, “Domainers are famous for being bad business people.” Of course no blanket statements like this is true, but it only takes a few people to ruin it for the rest of us. Most of the full time Domainers I know are very professional and great business people. However, like I said, it only takes a few bad experiences to make us all look bad in the eyes of some pretty major people in the startup and VC community.

Through this experience I’ve heard some interesting stories of sales lost because buyers were picking between a few names and easily filtered out domains owned by people they didn’t want to do business with. Yes, if someone does want your domain and only your domain you have all the leverage, but many times there are buyers with solid six-figure budgets and several names in mind. So I thought now would be a good time to share some of the ways I’ve seen major sales lost, below are three ways you can blow a domain sale:

  1. Being a complete jerk – to most people it is common sense not to be a complete jerk to someone emailing you asking if you would sell them a domain. I know more buyers than I can count on two hands that have decided not to buy a domain because they emailed the owner asking if it was for sale and got some nasty response back. Remember, buyers are often looking at a few different options, by making it clear that you’ll be a hassle to do business with, they’ll go with another option. I experienced this first-hand last year in a $400,000 deal I was doing and saw the money go to a different domain owner because the first person we contacted was a complete jerk. Then, six months later the original domain owner told me he needed to sell ASAP and he’d even drop his price to $200,000, it was too late, $400,000 had already gone to someone else, deal lost for not reason other than poor business skills.
  2. Setting a ridiculous price – some prices make sense. If you have a solid one-word .COM, a million dollars is a fair price, heck in some cases a few million is fair. However, if you have a mediocre name or a TLD that has never seen a six-figure sale demanding $500k+ will probably leave you holding onto that domain for a long long time. I recently had a client interested in buying a one-word .US domain name, the owner wouldn’t accept anything below $500,000. I told him if it was a .COM I’d get it but paying $500,000 for a .US name that he paid $300 for in an auction just didn’t make sense. He could have made an 100x ROI, instead the money went to someone else.
  3. Ignoring emails – it can be all too easy to ignore inbound emails, especially if you get a lot of them. If you don’t care about selling a domain, then ignore away, but if you are interested in selling you never really know who is on the other side. I have heard so many stories from startups who emailed someone for weeks and was ignored, then bought another name, and then months later heard back in some cheesy sales email that the domain was for sale. Like I said, if you don’t want to sell, ignore away.

The most important thing to remember is that domains aren’t like houses or cars, there is no way to know what price you could be expecting. I’ve seen one word .COMs sell for thousands of dollars and millions of dollars. While all of us take our knowledge for granted, the average person has no idea what a domain is worth or the best way to negotiate a sale. Major Domain Investors like Frank Schilling and Michael Berkens are very good business people and that is one of the reasons they’ve built the empires that they have today.

If you don’t need to sell your domains, or a particular name, then by all means be a jerk, set crazy pricing, and ignore your emails. However if you are not happy with your cashflow and your revenue is falling, the three points above might be why.

{ 7 comments… add one }

  • Adi Weitzman April 29, 2013, 11:49 am

    Morgan,

    I tend to think that no 2. (setting a ridiculous price) is almost expected because of the way domainers go about describing how to make sales. I’ve read enough blogs and watched quite a number of videos mention that the price of a domain name is what a buyer is willing to pay for it so how can anyone be surprised that a medicore names get priced astronically? I’m sure people like Adam Dicker and others only had in mind premium .com names but in the absence of transparent sales and people who are willing to share valuation methods it will be quite hard to teach people how to price domain names realistically.

    Reply
  • Morgan April 29, 2013, 11:51 am

    @Adi – the important thing to realize is that most prices aren’t ridiculous. Asking for $750,000 for a solid one word .COM is not ridiculous at all. Asking for $750,000 for a random 4 word .COM or one word .US is often just foolish. Guys like Adam have really solid names and can ask for premium prices, it’s all the guys with crappy names that price them well above premium prices that lose out on the deals.

    Nothing wrong with demanding top dollar for your domains, there’s just a right and a wrong way to do it.

    Reply
  • Adi Weitzman April 29, 2013, 11:57 am

    Morgan,

    I completely agree. I think people like Adam who know the value of .com names can easily ask for millions (btw wasn’t trying to insult Adam or anyone else), the problem is, as you said, those investors who dont know how to price names or don’t know the value of a name asking for million. I think they lose out on deals precisely because they DONT know how to value domains. I guess they havent read your ebook šŸ™‚

    Reply
  • Morgan April 29, 2013, 12:02 pm

    @Adi – you hit the nail on the head.

    Reply
  • Ms Domainer April 29, 2013, 12:26 pm

    *

    Well-written article that really nails how domainers can be better sellers and avoid being the jerk.

    Thanks for the reminder.

    šŸ˜‰

    *

    Reply
  • Krishna April 29, 2013, 5:13 pm

    Very useful article. Morgan, I have one doubt.

    One word.coms and price range you are discussing are about keyword .coms or even for brandable domains.

    It will be helpful if you give some examples (if they permit you to name the domains).

    Reply
  • George April 29, 2013, 5:17 pm

    I tend to agree, I mean a domainer asking a high price for their domains in another parties eyes, is considered greedy. If you do not ask you will not ever get your price. Why are people so sensitive, make a counter, anyone can ask anything for their asset. Do not run off crying to your mommy, if someone comes out with an outrageous price, counter with your top offer, otherwise move on. Unless you are offering 3-4 figures on 6 figure domains, yea you might piss some sellers off, and be called a low baller.

    Reply

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