Tips and Tactics for Negotiating the Purchase of a Domain Name

by Edwin on July 23, 2009

Some domain buys are simplicity itself. You visit a domain listing site such as Sedo or Afternic, see a “Buy it Now” price, pay it and get the domain name. Or you type the domain name into your browser, and land on a page with a “this domain is for sale” notice on it. A quick email back-and-forth later and you’ve agreed the substance of a deal.

Transactions that simple are not worth spending time on here, so let’s focus on more tricky cases.

The Non-Seller

The domain name you’re after is owned by an entity that doesn’t need the money (a large company, for instance), or which has owned the domain name for a long time, or has some other reason for being “attached” to the name beyond its perceived value.

  • The .com for .co.uk swap: in some cases, it can make more sense to own the .co.uk than the .com domain name. At the same time, there is a lot of ammunition out there to demonstrate that “.com is king” in the form of articles in reputable newspapers and magazines. If you can secure the .com for the .co.uk name you’re after, try offering it in trade for the .co.uk, with a couple of links to relevant news articles and a reason that would stand up to casual scrutiny as to why you want the .co.uk version of the domain name (e.g. I already own alpha.co.uk and beta.co.uk, and your gamma.co.uk is related and would fit perfectly into the set)
  • The advertising package: perhaps the domain name is owned by a company that gets a lot of business to its main site via the Web. Do you own domain names that would complement their core business? Are these developed, or could they be developed at least to a casual level fairly quickly? Try putting together an offer that includes a long-term advertising deal (e.g. “I’ll put a banner for your widget business on the homepage of alpha.co.uk, beta.co.uk and gamma.co.uk for 5 years. My intent is to develop your domain name as well, and I will also set up a banner on that domain too.”)
  • The mutually beneficial swap: study all the domain names and websites that the entity you’re trying to purchase from owns. Do they seem to be concentrating on a particular niche or product/service category? Do they already own the domain name for their core product or service? Is that a domain name you own or could acquire easily? Perhaps you can offer them a domain name – or package of domain names – that would advance their business more than the one that you’re trying to buy off them.
  • The payment in kind: do you manufacture a product or offer a service that might appeal to the domain’s current owner? Would a lifetime subscription to your service or a lifetime supply of your product be something that might sway a domain owner into doing business with you? Or a one-time offer of kitting out all their close friends and family with that hit gadget you manufacture?

In every instance, try to find out more about why the domain name you’re after was registered in the first place. Was it a favourite place with a special resonance to the owner (geo name)? Was it acquired in the merger of a company (product/service name)? Was it acquired with the intention of developing it, or as a defensive registration to stop competitors owning it? These are just a few examples – there can be as many reasons as there are owners, as everyone has slightly different motivations for doing a deal.

Once you understand the domain owner’s motivations for owning the domain, you’re well on the way to striking a deal. After all, you now know what is important to them, and you can look for ways to structure a deal so as to empathise with their reasoning.

The Long, Slow Dance

If you’re a newcomer to the domain industry, you may not be aware that it can take a VERY long time to close a deal. Some of the most lucrative transactions stem from a long, slow dance of courtship – an initial approach followed by gentle follow-ups over a period of many months or years.

You’re building a rapport with the domain owner; their feelings towards the domain name – and towards the prospect of selling it to YOU – may gradually evolve as the dance progresses. Perhaps the owner’s circumstances have changed, and the offer which seemed derisorily low a year ago looks a lot more appealing now that the mortgage is due and the bank account is bare. Or the company that made a particular product is getting out of that market, and has no need for the corresponding domain name. If you’ve kept the lines of communication open, you’re at the head of a queue of one when it comes to closing that sale!

If it’s clear from your initial approach that the domain’s owner doesn’t want to sell, then stop overtly trying so hard! Constantly hammering them with offers is like stepping all over their feet when dancing. Take the time to hear that music, move to the beat together… focus on what their interests are for the domain name, what their business is, or other “safe” topics rather than simply sending “Please sell me your domain – I’ll offer you x,xxx” for it.

The Speed Date

Sometimes you can be dealing with a potential seller who’s not really convinced they want to sell – but they’re intrigued enough by your offer to at least give it some consideration. Is there anything you can do to push them to make a snap decision before they have the chance to sit down with a coffee, really think about the deal, and get cold feet?

I’ve successfully closed transactions after phoning the domain owner and suggesting that I Paypal a deposit over to them immediately (“If you’d be willing to accept my offer, I can send you 20% of the purchase price while we’re still on the phone. That’s how serious I am.”)

Equally, the offer to pay immediately, up front, can lower a seller’s defenses. It’s up to you to weigh the risks and the potential reward of such an approach, but if you can steer clear of any talk of contracts, escrow etc. it can sometimes be easier to persuade a reluctant seller, especially a less business-savvy one. (“Of course, if we can agree a deal today I will send you the money immediately, and once you’ve been able to confirm that you’ve received it, we can sort out the domain name transfer.”)

I’ve even had some success buying names off eBay by contacting the owners and making them a “here and now” offer that’s substantially more than their initial listing price if they’ll end the auction right now and sell to me. I’ve made it clear that I am not prepared to get into a bidding war with anonymous third parties, and that my offer is very time limited. Basically take it or leave it – and in a number of cases they’ve taken it (the prospect of guaranteed money now outweighs the lure of an unknown but potentially higher amount of money later).

It Takes Two Humans To Do A Deal

Even if the domain name you want is owned by a large corporation, you’re dealing with people – not robots – when it comes to trying to close a deal. A friendly, personable manner can open a lot of doors that a brusque, blunt approach will keep firmly shut. Whether you’re in a years-long dance or a minutes-long speed date transaction, always consider the person on the other side of the table.

{ 1 comment… read it below or add one }

domains for sale May 11, 2010 at 5:54 pm

loving your articles Edwin, keep them coming

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