Acro.net – Technology Rants & Raves by Acroplex®

When pricing domain names for sale, the old rule of “buy low, sell high” applies.

So if you start off with a low acquisition cost, or even hand-registered a domain name, anything above that cost should be considered a fair selling price, right?

Wrong.

Allow me to explain why I don’t share the “flipper” mentality with regards to domains.

Pricing a domain name for sale – or accepting an offer for that particular domain – is based on a combination of parameters, most of which don’t apply when one simply wants to earn a buck or two.

To maximize your return on investment, consider the following:

• What is the domain’s potential for a business? Could you launch or replicate that potential yourself, all while waiting to sell?
• Is the term positive, with numerous search engine results? Is it a term that is marketable or does it have type-in traffic?
• Can you refrain from selling to the first offer – even if it seems sizable – until the perfect storm of an offer comes along?

Quite often, to price a domain accurately for sale you have to dig into records of past sales; this helps gauge potential and to feel more confident about your “gut feeling”. Of course, the saying goes: “Past Performance Is Not an Indication of Future Results” – so be diligent in how you interpret related domain sales.

Old domains, short domains, generic “dictionary” domains – all have an intrinsic value above most others. The same goes for dot com’s versus other TLDs. But don’t let that fool you: there are times when a secondary TLD can perform very well in terms of valuation.

To further gauge potential, I use ZFBot – an invaluable tool for domainers that searches millions of domains for matches against a string. You can use it to find potential buyers, as I’ve done time and again in the past, to send them into an auction frenzy or make cold calls.

Lastly, consider this when getting ready to place a price tag onto your domain: are you leaving money on the table, if you were to sell it without doing research?

That’s why it takes time to price domains and one cannot rely on most automated tools; it’s a gut feeling that one learns to trust with time.

Follow me on twitter at http://twitter.com/acroplex for updates.

I’ve no recollection of my first domain purchase but it probably happened on eBay, more than ten years ago.

Back in those days, eBay held a higher reputation than today, even with non-tangible goods such as domain names.

Since then, my domain acquisitions diversified and I’ve completely removed eBay from my list of options.

Nowadays, I buy domains from the following markets:

• Domain forums
• Via direct emails to the owner
• Sedo
• NameJet
• GoDaddy TDNAM
• From offers I receive via email

On occasion I might purchase domains on Bido, Afternic and domain conferences.

So what methodology do I use in order to price domains and place offers or bids accordingly?

Firstly, I’m a big fan of aged domains. If a domain is from 1999 and older, I’m interested. If it’s from 1995 and prior, I’m definitely interested.

Some aged domains might appear to be esoteric or might contain dashes. That’s when the visual and/or aural test kicks in.

Are these domains marketable? I add a point. Are they pronounceable? That’s a plus. Do they look “right” in print? Jot one point as well.

Obviously, if I can get any worthy domain for a huge discount, it’s always a great deal. Opportunities for discounts exist: the owner might be short in cash, they might be unaware of the domain’s worth or they might simply want to get out of business.

If a domain has potential and there is a danger of it being snapped by others, I “seize the day” and make an offer within 10% of the asking price; sometimes I might just pay the asking price outright. The latter method took my $2k investment in 360.org to a $25,500 sale a few months later.

Overall, I trust my “gut feeling” and although I do follow the market trends, I’m staying true to what I consider positive elements in a domain.

Lastly, never be ashamed to ask for a discount, provided of course that it does not blatantly disregard the street value of certain types of domains: generics and short ones.

Follow me on twitter at http://twitter.com/acroplex for updates.

As a domain seller, I’m always looking to maximize my ROI; Sedo’s platform offers some room for negotiation.

However, the use of the pre-selected options is rather minimal and some are rather useless. For example, “Please justify your asking price” sounds like a time-wasting response.

There is one option that is quite ominous and that’s “This is my final offer“.

When placed by the offer-maker, it’s an indication that he’s ready to pull out of further acting upon the domain.

Or is it?

A week ago I was in the middle of one such negotiation, when the deal stalled. My asking price and the placed offer were quite apart.

Then, the potential buyer played the “This is my final offer” card.

Big mistake.

When the gap is large, making such a statement won’t push me into “surrendering” the domain. Domain buyers beware: if you use Sedo to attempt to buy domains anonymously, you immediately indicate that you don’t want to negotiate directly; after all, my contact info is in the WHOIS.

So I typed up a nice response to the buyer, explaining why his offer was laughable; for a domain registered before 2000 he was instantly gaining Google juice for the exact terms. I didn’t forget to send him a couple of other potential buyers, using ZFBot as my search tool.

Then I waited. On the last day of the offer, he accepted my asking price.

Epic triumph.

So don’t go around playing the “Final Offer” card to a domain seller that knows when you bluff.

If I could share my appreciation over a single business for 2010, that would be Sedo.

My relationship with the PPC provider started in 2004 and I must admit it started a couple of years late. Until then, parking my domains was something that I wasn’t considering. I lost several thousand dollars in revenue this way.

Lesson learned:  Despite the ups and downs of the industry, Sedo is for me the perfect combination of a PPC provider and domain sales platform. At some point, I asked Donny Simonton of Parked if they’d consider doing the same; he responded that adding a domain sales platform wasn’t in their immediate plans.

As time passes, Sedo becomes a mainstream, household name outside of the domain industry – something that is necessary in order to facilitate sales to end users. While PPC revenue fluctuates, the number of sales have increased for me and nowadays I use Sedo for roughly 90% of my domain sales.

This year, I had a record number of sales on the Sedo platform, without sweating much.

Sedo handles the sales process very efficiently nowadays; while I’ve slowed down my buying I’ve enjoyed the increased revenue from selling on Sedo, often involving targeted emails about ongoing auctions to maximize sales revenue.

After meeting with the Sedo staff in Boston, I was thoroughly convinced about the seriousness with which Sedo treats its  PPC business and sales platform. Recent improvements in the Sedo system have generated increased revenue, despite the financial straits the economy is still going through.

So thanks, Sedo – here’s to a splendid and equally successful 2011.

Nobody likes competition. Especially the guy who receives an email that clearly states just that.

A few weeks ago I received an offer at Sedo for a financial term, a dot net that I registered “by hand” in 2003. As the story goes, I hold domains until the Rapture occurs and since I am not a Catholic, this might take a full lifetime.

But back to the domain – a two-word compound term that returns 700k results in Google.

The domain was at Parked.com due to its higher PPC for financial terms, but I had also listed it for sale on Sedo. As with most Sedo offers these days, the negotiation started in the low hundreds. I was dealing with an aggressive US buyer that left me with little room to raise my asking price.

The final offer was closer to my expected price but still, I felt I was being short-changed. Don’t get me wrong, $1500 is still good money for a domain I spent $8 to register and another $50 in renewals over the years. But why not expand its potential, if I could?

After all, the sale of 360.org a year and a half ago taught me that if you don’t ask, you don’t receive.

So I sent the domain to auction on Sedo, with the final offer I had received being the reserve.

What I did next was a first for me.

Personally, I am sensitive about receiving emails from companies or individuals that I haven’t solicited. However, in this line of business, a legitimate contact of a person or company related to the product or service on offer, might lead to a potential sale.

I crafted an email that announced the domain name and the fact that it was in a live auction that the recipient could participate in. Then, I searched ZFBot - a great tool for domainers - looking for domains that matched mine – either starting with or ending with the exact string. Once I had these domains, I extracted their contact information from the WHOIS using DRT – Domain Research Tool.

It’s important to mention at this point that ZFBot can narrow down your target recipients by sorting the domains according to their parking status: in my case, I wanted to avoid contacting any domain owners that simply had parked domains instead of legitimate companies.

I double-checked every email to ensure there was no junk, “do not contact” or WHOIS shield emails; then proceeded with contacting them – a total of 50 or so – with a description of what I had to offer: the opportunity to obtain the keyword domain most closely related to their business.

I made sure that I explained what was on auction, where and when the auction would end. As part of the sales pitch I described the importance of generics and keyword domains, using simple words. When you sell to an end-user, you don’t simply sell them technology and gimmicks; you are offering them an extension of what they already have.

The only thing I did not foresee was the fact that I sent the email right before a long holiday weekend; Monday was a holiday and that took away a day from the remaining days of the auction as most recipients’ businesses were closed!

Twenty-four hours before the auction end I followed up with another similar but shorter email, announcing the ending of the opportunity and its imminent closing; in doing so I used a bit of a provocative subject: In 24 hours new competition is born.

With a few hours remaining, two new bidders started bidding up along with the original offer. The auction was extended several times, as bidder #3 battled with bidder #1 – all the way to a very nice $3350. I’m definitely happy with the outcome and especially with the fact that the buyer is a person from the term’s industry who will put the domain to good use.

Had I attempted to sell the domain via cold calling, I’d probably be given the runaround. But since nobody likes their competition to get an advantage with an asset that’s being openly auctioned, the domain sold at an end-user price.