Tips to justify domain pricing

[adoptabledomains]

I thought I'd post a few tips on justifying domain prices to buyers the others may find helpful. Maybe others can share their tips as well.

Some buyers don't see why they should pay more than a couple times the reg fee, or even 4 or 5 digit prices for something that costs little to start with. Change the subject from orginal cost to comparative or perceived value.

1. Ask what a typical trade show in their industry costs. Typically this could be thousands of dollars per show, including booth costs, exhibit costs, travel & hotel fees, give-aways, and mailings. A trade show lasts a day to maybe a week, is seen by relatively few people compared to the internet possibility, and the large cost starts all over again next year. The domain is a one time purchase cost and small ongoing renewal with 7x24 exposure potentially forever. Which is a better long term investment?

2. Ask what a typical 1/4 page yellow pages ad costs in their city. Typically thousands for large cities and multiply that times the market area of the company. Again, this cost fully repeats yearly, can't be changed but once a year, and limits you to certain markets where the book is distributed. No brainer...the domain name should be the better investment when you compare value.

3. If it's a dot-com name, ask: Can you afford for your largest competitor to own the .com even if you can still register the .net for $10? If the marketplace is small, or the company is large, the answer is usually no, and they MUST have the dot-com version to avoid sending even a few customers to the competition, or be seen as the "also ran".

4. Value of generic names - names like Amazon.com or Coke take many millions of $ to develop the idea and brand of what they do. The owner of cola.com or bookstore.net have immediate internet recognition of what they do and would likely rate high in searches without the advance promotion. You may never beat the big guy's trademark or promtional spending, but you can compete strongly with a generic in the same markets. Spend millions on advertising or thousands on instant domain name association to your product?

 

[RON2]

Great post Mark. Thanks.

Here's a quote from BuyDomains that they sent me when I requested a price quote. They make some good points.

To estimate the value of a domain, consider what the value of one new customer is to your business, including its lifetime residual value and all of the referrals the customer will provide. Multiply this number by the number of new customers your new premium URL might attract, including "type-in" traffic and "keyword" search engine traffic.

For example, if each of your customers is worth $1,000 dollars over their lifetime, and your new URL attracts 50 new customers over the life of your company, then the domain could be valued at $50,000 to your business. If your premium URL attracts 10,000 new customers and they are valued at only $5 each over their lifetime then you would come up with the same $50,000 valuation. So, if you can buy a domain for a few thousand dollars that is worth tens of thousands or more to your business, then it's clearly a bargain. In theory, the more premium domains you have that generate site traffic and new customers, the better. All premium domains can easily point to your existing site to attract this search engine and type-in traffic. Regardless of how many additional customers this domain attracts to your company, it should hold its resale value and in all likelihood grow more valuable over time.

 

[EM @MAJ.com]

Buy domain haven't change their marketing approach for years ... I remember receiving this kind of message from them when I try to purchase one of their domain name.

Regards,
tw

 

[Edwin]

The BuyDomains message blurs the line between "income" and "profit" too much for its impact to be successful.

If they said something like "If each of your customers brings you $1,000 profit, and a premium domain will bring you 25 new paying customers a year without any marketing expense, how much would you be willing to pay for that domain?" it would IMO be a much more focused pitch.

 

[adoptabledomains]

Originally posted by Edwin
The BuyDomains message blurs the line between "income" and "profit" too much for its impact to be successful...

Completely correct. Anyone in business (or who should be in business) knows the value is in producing profit or reducing expenses. Pure volume means nothing. ...Just ask the failed .coms from a few years ago.

Profit is hard to convince someone of a return, since it also factors in costs and strategy. It's easier to compare the value of a good domain on a cost basis with other forums of advertising, promotion, or IP return on investment.

 

[Columbia]

You can order appraisals at AccurateDomains.com

 

[adoptabledomains]

Originally posted by Columbia
You can order appraisals at ...

You can get them here as well for no cost, and have about the same or better confidence that you aren't just being told what you want to hear.