Every time I receive an inquiry for a domain name best suited for a start-up or a product, I face the same dilemma.
Do I quote the maximum valuation price for the domain, or do I give them a break?
This dilemma stems from a statement that is often part of the response to a quote:
We are a start-up and cannot afford five figures.
The truth is, that five figures begin at $10,000 and end at $99,999 so there is a wide range of budgets along this line.
Domain investors should seek a return on investment that provides ample financial cushion for their full portfolio. When one has to renew thousands of domains, their average price quote tends to be higher.
By quoting a price outside of the affordability of a buyer one damages their own prospect, along with that of the buyer. Domains aren’t just abstract entities, they become products, services and brands that may last a lifetime.
It’d be great knowing that by being a little flexible in one’s pricing or payment plan, they are contributing to the creation of something new. This is something that eludes the concept of domain flipping, and those that practice it.
To circumvent the aforementioned dilemma, I often invite the Buyer to share their terms of what would constitute a flexible pricing, or plan. They are given an opportunity to discuss options, as opposed to being faced with a sticker price that is set on stone.
Start-ups, in general, are frugal entities that have to preserve funds for securing talent and their payroll, in order to create the product or service that will pay for everything, long term.
Quite often, I complete such domain sales feeling good about the accomplishment of the sale, and the ability of the buyer to go forward with their business plan.
Startup might just be a negotiating tactic though a startup will not have a Google type budget. It might be prying but worth finding out…
Investor funding
Projected annual sales over the next few years
IT budget
Monthly lease costs
Number of employees
As you mentioned, the domain seller can offer finance terms and merely redirect the nameservers in the interim. That way the domain cost fits more easily into the startup’s budget.
But in many cases they will just go with a reg fee option despite how trivial the domain cost is relative to other operating expenses.
Leonard – By all means, researching your buyer is the first thing to do before any quote is provided.
What I cover here, is the follow-up approach when sometimes – realistically – the buyer’s budget will never reach your range.
If you have a car budget of $20k, don’t go to Porsche. They won’t care that you cannot afford to pay what their cars cost. Same applies to domain names. I don’t care you cannot afford my premium dot com. Go shopping somewhere else…
Mike – That approach is overly simplified. We aren’t talking about lowball offers, but achieving a good sale and being flexible at the same time.
This is really about win-win. Sometimes you’re able to match a home-run price with a buyer that value it just as high (and likely higher), but in the real world of business an owner needs to take care of a lot of things and while we value domains highly, the domain is only 1 of a large number of things a business owner needs to juggle to keep the business floating let alone flourishing.
If you get your price or close to your price and they can get term then it can be a win-win for both parties. They save some capital to use now, but take over the domain.
These deals are more complicated to structure and can carry higher risk, but can be worth it.
I agree with you and providing flexibility. Once you know you have a serious buyer and not someone simply low balling then it makes sense to start asking questions and finding out more about the plans of the buyer with the domain and how much they are truly able to invest.
By showing flexibility the buyer will be more than happy to talk and negotiate to come up with a closing price/deal.
– Will
Buyers lie. Sellers lie. Every 5 figure sale I’ve had began with the same sob story. I’m a student. I’m a new start up. I’m a non-profit. They are all lying about something. No one gets a break.
If you are trying to build a business as a domainer then relationships are everything especially relationships with your buyers. If being a hard ass is your style. Ok, go for it. But in my mind a good business deal both buyer and seller walk away happy. That requires some conversation and collaboration. Nice article.
Ben – I’m not touching sob stories here. It’s about establishing a handshake at a price that works for both parties.
Keith – The secret is to know when to be a hardass and when to show flexibility. The all or nothing method doesn’t work.
Willox – Sometimes it takes several rounds of negotiations, when the buyer is serious but cannot go all the way towards your price.