Hello, happy Monday, and welcome to Domaining MBA Monday here on MorganLinton.com! While I’m writing this post the TRAFFIC Florida domain auction is winding down which is why I thought this would be a great time to cover this topic. Now I’ve covered this topic before but heck, I’ve been writing this blog for close to six years so it’s always good to throw a relevant refresher in every once and a while right?
I sometimes hear people comment on domain auctions, saying things like, “I can’t believe how little that domain sold for!” or people see a domain on a sales list and say, “I can’t believe how much that domain sold for, it’s not even worth half of that!”
The problem with statements like these is you really can’t understand the price until you understand the buyer. SalesForce.com paid $2.5M for Social.com, a great purchase for them and IMO a solid price for the domain. Try to get a small company with five employees to buy this for $2.5M and it’s not going to happen. Going a step further down the food chain and sell this to an investor who is looking to re-sell and the price continues to drop.
My point is a simple one, remember who you are selling to. If you are selling a domain name to another domain investor, expect to sell at wholesale. If you are selling a domain name to a small company with limited resources expect to sell a bit above wholesale but not much. If you are selling to a big multi-national corporation expect to sell at retail.
So, when everyone starts to digest the results of the TRAFFIC auction or looks at the next big one-word .COM sale, look past the number and look at the buyer. Don’t expect to sell your domains at retail to other investors and also don’t expect to see names like Social.com selling for $25,000 anytime soon.
Last but not least, as a buyer you should also remember who you’re buying from. Try buying a random three-word .COM from a company like Google or Facebook and you can expect a seven-figure price tag, they don’t sell domains so if they do they want to do so at a massive premium. Buy from a domain investor and that same name that Facebook pegged at $3M could be $30,000 or less.
At the end of the day sales is all about understanding the buyer and the seller, so look past the numbers and try to understand both sides of the deal. Then you might find prices that had you scratching your head actually made a lot of sense.