You see the right domain for your next business is for sale. You approach the seller and they come back to you with a sky-high price, high enough that you’re not even sure how to attempt to negotiate. Has this ever happened to you?
Buying a domain name can be a frustrating challenge. Domains can often be had privately and securely for a tiny fraction of their asking price if things are handled right. But why?
One Domain, Many Prices
Often a domain name does not have just one price. A domain’s asking price and the minimum amount the seller would let it go for might be worlds apart. Even sales listings on different domain marketplaces could have different asking prices. There are a few reasons why a domain might have many prices:
1. Low cost, high ROI
One of the key factors separating domains from other forms of investment are the ridiculously high ROIs that can happen. There are many cases where domain names sold for tens of thousands of dollars were purchased for 10% or less of the sale price. Domain sales often result in ROI of 1000% to 10000% and even more.
Imagine if you received an offer on a domain that was 10 times what you paid for it within the past year. Now imagine that there are a select few buyers willing to pay 50-100 times what you paid for it, but you don’t know who they are and have no such offers in hand. The offer in hand may be too tempting to turn down even though the potential for a higher sale is there. That happens often with domains, especially when a high turnover is necessary to fuel the business.
2. It can provide more value to some buyers over others
A domain might often appeal to both a small entrepreneur and a large corporation. The small entrepreneur might use the domain to help them build a site to make some additional money. The large corporation might be able to add millions of dollars to their bottom line with the domain.
Since it’s worth far more to the large corporation, they would be more likely to pay far more of it – not even considering their budget often puts them in a better position to. Sellers know this.
3. Greater desire to sell the domain can cause a price cut
A domain seller might need a certain amount of sales to run their business. The domain might not be a type of domain the seller is focusing on. Heck, they might simply be tired of looking at it!
There are several reasons why a seller’s desire to sell a particular domain might grow. That added desire often leads to the minimum price they’ll accept being lower than before.
4. Differing commissions
There are several marketplaces where domain names are sold, and the commission structure on each of them is different. A domain sold on one marketplace might yield up to 20% less for the domain than at another marketplace. So to achieve the same minimum amount of cash, the price on each listing would need to be adjusted.
5. Room for negotiation
Most domain sales reach their agreed upon price after some negotiation. Domain sellers know this and will often add a premium to their first given price in efforts to hit their target price after a round or two of negotiation.
Bottom line, you may be paying more than you need to for the domain you want, sometimes considerably more.
Why Using a Broker Can Help You Get the Best Price
1. Save your identity from adding a premium
Your identity can often work against you when trying to purchase a domain. You may be part of an established company that has a clear use for the domain. You might be an individual that can be researched to be involved in the field the domain targets. If it’s clear you’re buying the domain to put a serious business on it, the price will go up for you.
A broker approaching the owner helps to hide your identity, giving you a better chance to get a better price. It may also spare you from having the purchase published with you indicated as the buyer, something which may not be desirable especially if you’re not using it right away.
2. Better initial approach
The initial approach and offer can make a huge difference in the price the seller gives back and brokers are experienced with it. A bad initial approach might even be ignored by the seller. If you’re not sure whether the domain is for sale or not, non-response from the domain’s owner might have you incorrectly assuming that it isn’t for sale.
3. Experienced negotiation
Let’s face it – if you’re not negotiating domain purchases every day, you likely won’t know the best way to handle it. A broker who has been on both sides of domain negotiation would have a much better understanding of how to respond and what offers to make, which gives a better chance of buying the domain for less.
4. Help ensure your purchase doesn’t fall through
If you’re purchasing a domain that is THE domain you need, price may not be a major factor. Despite that, transactions fall through due to communication issues, problems agreeing on payment type and many other reasons.
Brokers having dealt with more domain transactions are much more likely to have faced the challenges you could face with your purchase. That experience helps brokers know the best action to take to avoid a potential issues.
5. Handle the domain transfer stress-free
If you haven’t dealt with domain name purchases in the past, the transfer process may be new to you. Until that domain rests in your account, you could have concerns as to whether the transfer is working or not. A broker helps handling the domain transfer so that you don’t even have to think about it.
For smaller purchases, it would be hard to find a broker or domain acquisition service to take your purchase on. You may have to take on the purchase yourself, but at least the potential loss of money is there.
If you’re striving to make a more serious domain purchase on the other hand, you should really consider utilizing a broker or domain acquisition service to get it. It may not even be a matter of price, but simply the ability to get a response from the seller and go from there.
Need assistance with acquiring a domain? We can help – contact us or visit our Acquisitions page to find out more details of our Acquisition services.