Is the Price Ever Right?
By David Milligan, BestDomains
I have had the unique opportunity to communicate with and represent many domain name holders
over the past two years. My discussions on value and sales issues have developed some patterns, and,
with new sellers and buyers coming forward daily, I felt I should share my experience in a discussion
of domain name valuations and common misconceptions about value.
The secondary market for domain names is a new market, representing a new Global Addressing System that combines the importance of personal addresses, telephone, fax and pager numbers.
The unique aspect of domain name sales is that the names are based on words and language, selections of alphanumeric characters that result in and from individuality, personal preference and bias. This promotes very different perceptions of domain name values for buyers and sellers.
When you strip away the posturing, you are left with a party that desires a domain name, and a
second party that controls a domain name. It is common for domain name sellers to be unsophisticated in matters of negotiation and for prospective buyers to use a number of rationales in order to control price inflation.
The surprise element that often enters the picture during domain name sales is an apparent personal attachment to the name in question. This can often leave sellers trying to second guess themselves and the potential market, as demonstrated in the following examples.
** From the seller's perspective **
Somebody wants my domain name; am I selling it too cheaply? What if it is worth much more than I am asking? I think it is worth much more; the offer must be an attempt to steal it from me. I heard that XXX domain sold for YYY dollars, so my domain must be worth YYYY dollars.
** From the buyer's perspective **
I know he only paid $100 to register the domain name, so anything more than that and the seller should be happy. I am not sure what a domain name is, but our company has a trademark on that word or term so the seller should hand it over to us. We really own the rights to the name anyway, so a token payment is more than the seller deserves. We recognize the importance of a good address, so we want the domain name -- but we don't really know how much to pay for it.
You can clearly see the widely divergent perspectives at play here. Sellers are hesitant to place an asking price on a domain name or accept an offer, and buyers are equally hesitant to make an offer. This leaves a minefield of differences of opinion that requires a good dose of negotiation principles in order to close a potential sale to the benefit of all parties concerned.
In the end, a domain name only has the long-term value that is created behind the address; this requires vision and creativity in content and in the use to which the domain name is put. The value of a warehoused domain name lies solely in this potential for putting it to creative use.