Your Reality vs. Reality

Apr 19 2010

One of the toughest things to do in business is to separate the way you see the world from the way your customers see it. It takes years for many to realize that it’s not important how you feel about your product but rather, how do they feel about it.

Retail is a tough business. In retail, it is difficult to get past your personal likes and dislikes when it comes to ordering products. As much as you may like the color purple, the reality is whether your customers will like the color purple. And just because you think something has too high of a price point doesn’t always mean it is.

Every day I am surprised how much money people spend. Daily, they fill their carts up with hundreds of dollars of product. I sell the product and love the product but can’t even comprehend spending what my customers spend annually. But it doesn’t matter.

What matters is I know that despite the fact I can’t or won’t spend that much, others will. The same goes for domains. To question why anyone would spend what they do on domains is futile. To you $8000 may seem like 3 months pay, to someone else it’s a new purse. It’s all relative. Some people make daily what you make in a year. Others make the same as you but spend it differently.

Domains are a little different than a hard physical good. Goods are priced on cost, supply and demand, and competitive pricing. Domains are priced on revenue, supply and demand, comparative domain sales, and desire. Desire is a hard variable to understand. Auctions seem to drive desire. Desire to win, to not let the others have it.

There is never a domain sale price that surprises me. I do feel some sales reached levels above what I would pay or below what I think the value is, but that is of no importance. For me to criticize for paying so much only shows that that person’s reality may be a bit different than the buyers. I have no idea of the finances of the buyer nor his/her desire to own the name. For all I know, the $150,000 payed for was a drop in the bucket financially for the buyer. The same financial impact of me paying $60 for a domain.

What I try and teach my salespeople and myself is to push past personal lifestyle and finances when it comes to selling. You don’t want embarrass yourself and the company by gouging the customer but you do want to maximize the price. I have always put it this way. If you give a price and they immediately say yes, it was too low. If they immediately say no, it was too high. If they have to think about it, it was perfect. You have to know what you have and the real value. What would this domain go for in a reseller market, a cash flow sale, or an end user sale. The difference in the three is the amount of time and effort put into the sale and your financial situation. Sometimes the end user sale falls in your lap. Other times you need a quick sale for financial reasons and you sell at a lower rate. A seller needs to completely understand these values to maximize cash flow and at the same time receive higher sale prices.

Too many domain owners think they have a domain that is worth much more than the real value and kill their ability to make a sale. Other sellers settle for lower prices than could be achieved because they are either content nor can they comprehend that someone would actually pay that much for the domain. Of course, I find much more of the former but the domain industries is full of dreamers. Dreamers that don’t have the experience and knowledge to know the value of the goods they are selling. There is one simple way to tell if your reality is actual reality. Are you selling product at or higher than the prices you determine? If the anwer is yes, then you are living in reality. If no then you have three choices, one, you lower the price. Two, you need to hand it over to a better salesman or three, you need to become one yourself.

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Outsmarting the Dumb, Outworking the Smart

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1 comment

  1. Leonard Britt

    Great post as the public often does not have the same appreciation for domains that domain registrants do. I had an end user contact me last week about a non-com domain with 22K GAKT exact global monthly searches. I had it priced under a $1000 but their response was still “…that is way too expensive for us…”

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