7 Quick Tips for a Seller in a Domain Name Negotiation

Aug 27 2012

Several times a week I get questions asking my opinion of what to do at certain stages of domain name negotiation.  While I’m no Rick Schwartz or Mike Berkens, I think I’m asked so often merely because I come across as approachable.  I haven’t sold a name yet for six figures yet but I feel like I haven’t ever had a name or buyer that those type of numbers would be reached.  Yet after looking at who bought the names and what they did with them I feel comfortable that I didn’t leave much money on the table. With an increase in the quality of my portfolio I have no doubt that day will come but in the mean time I’m getting there in small parts.   But the questions keep coming so I thought I would write a little summary of how I approach my domain sales.  Negotiation is both an art and a skill and every negotiation is different, but there are some things that I feel if you keep in mind will lead to a better result.

1. Control the negotiation.  You own the domain so you are in control of whether or not the domain is sold.  The old thought that the price will be less if the seller puts out the first number may not be necessarily true.  According to this piece by Adam D. Galinsky of Northwestern’s Kellogg School of Management and Roderick I. Swaab of INSEAD in France write: “In our studies, we found that the final outcome of a negotiation is affected by whether the buyer or the seller makes the first offer. Specifically, when a seller makes the first offer, the final settlement price tends to be higher than when the buyer makes the first offer.”  Everyone always says that if you put out a price then you could leave money on the table.  This is true if you are talking millions. But in reality, most offers are going to start low anyway and you’re going to respond with a much higher number.  I’m not sure why skipping to the second response is going to lead to a lesser price.  Nobody has been able to show me any data that shows that first offers loses.  It’s just something everybody says. To me the most important thing is that is obvious that you are in control of the entire process.

2. Act just short of offended but don’t be an ass.  No matter what the offer, counter with higher. Act disappointed with the offer even if you’ve already called your wife and giggled like a school girl.  Nobody starts a negotiation with the top number so most likely there is a little more to be had. I’m not good with the “tear them a new a$$hole” method of Schwartz but acting a little put off may work to your favor.

3. Do your homework.  Try and figure out who your buyer is so you can figure out what kind of budget they may have.  A good buyer will never use their real name and will hide their IP,  but many do not.  This is one of the nicest features of Internet Traffic is you get all of this data.  Their name, email, and IP info.

4.  Use your email signature wisely. You can use your signature to make things appear different than they really are.  I’m not saying lie, but it never hurts to be creative.  Give him enough data to know who you are if that is in your favor or hide it if it hurts you.

5.  Regardless of how the buyer acts maintain your professionalism.  You are in control, you own the domain.  There’s no need to let emotions get in the way of a possible sale.  Low bids and trying to devalue your name  is a negotiation technique, not a personal insult.

6.  Use time to your favor.  If they are in a hurry then make them pay to get things done quickly.  Don’t negotiate with yourself.  Wait for counteroffers.  Those that want something hate to wait, it’s human nature, but its also a good negotiation technique.  I’ve heard from other domain sellers that some negotiation took 6-8 months with long gaps between conversations.  But they did get done and they all were for large amounts.

7.  Don’t worry about comps.  You domain is unique.  They can be used against you just as easily as for you.

For a little more detail on my thoughts here is another article I wrote several years back. Many of the points are the same, this one is just a little more to the point

The Unmotivated Seller: 10 Keys to Getting the Best Price For Your Domain Name

 

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Outsmarting the Dumb, Outworking the Smart

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7 comments

  1. Tom

    “Those that want something hate to wait, it’s human nature, but its also a good negotiation technique.” That’s so true.

    Appreciate the post. I definitely need to increase the negotiating skills.

    Thanks for the link out to the Harvard Business School article. It’s a good read.

    Tom

  2. FazK

    Great tips, thanks for sharing Shane.
    I failed to control my nerves on a recent low four figure sale and gave in to low offers and devaluation techniques used by the buyer similar to what you mentioned in point#5, sold it for less than what the domain was worth was later told by many.
    I will be much more confident in the future for sure ofcourse within reason. What you said about some negotiations lasting upto 6-8 months helps too!

    Cheers and best wishes

  3. Iain Taylor

    Thanks Shane,

    “Specifically, when a seller makes the first offer, the final settlement price tends to be higher than when the buyer makes the first offer.”

    I have always waited for the offer price but am going to change this up a little as I am keen to improve results.

    Shane, Do you always put a price on the table to get started?

    Thanks again – Iain

  4. todd

    1. Negotiation tactics change depending on the amount of the domain. Being a hardass like Rick works only because of the value of his domains. You absolutely cannot use those hardass tactics with domains that are priced under 20k because there are many more options in this price point than there are in extremely high value domains. Don’t ever be a hardass because the buyer will walk!

    2. Never give your price in the initial email response because like it has been said you could be leaving money on the table but if after 3 or 4 emails the buyer still has not made an offer I like to send an email with a list of comparables of similar domains. Obviously send the highest priced comparables that you can find.

    3. The most important thing is be realistic in what you want for the domain. I think this is by far the biggest factor in selling names. If you ask 100k for a name that you paid 50 bucks for, the buyer will not even attempt to negotiate with you because he already knows that you are crazy.

    4. Be nice. People like to deal with nice people. Don’t be a dick and you will sell the name and keep all emails short because in the beginning of a sale most people hate a lengthy sales pitch.

    5. Make sure they know you are the owner of the domain and that they are not dealing with some schmuck in the marketing department thats selling on behalf of the company or someone else. I use an email that has my exact name in the email address which helps give them peace of mind that they are dealing with me direct.

    Todd

  5. Calvin Seymour

    The most important one on that list is #3) Do your home work..or better known as “Know thine enemy”…oldest thing in the book. Once you learn a few things about the buyer you can use a little logic to figure out the best methods to use and which ones to avoid. If the buyer has hidden their identity well you have to heavily employ #6 to get #3..but you should get number three at all costs or you could be leaving large amounts of money on the table.

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