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The Yin to the Yang of Domain Sales

January 18, 2015

Yin YangAlthough it isn’t a regular column to this blog, consider this my weekend musings, if you will.  The following are some thoughts I was having a moment ago while giving my head and beard a quick trim for the coming week.

Several days ago I caught a post on Abdul Basit’s blog, New Year Starts With a Five Figure Sale.

First of all I want to congratulate Abdul on the very nice sale of a 4L .com, BMGL.com for $25,000.  Congratulations are also in order to Jessica Ebanks from DomainNameSales who helped close the deal.  I have communicated with Jessica before and found her to be very professional.

I want to present another side to the story though.  It in no way is meant to diminish Abdul or his approach to the sale, or the sale itself, but I only feel it’s worth mentioning to provide a balanced perspective.

It is always good to hear the successes.  We need them to stay motivated in business, and to see what is possible, so we can help break through our own walls and all try to raise the bar a little higher.  However there is a Yin to the Yang of a successful domain sale such as this, which is important for anyone who wants to be successful in this business to at least pay some thought to.

In my personal experience, (and your mileage may vary) for every ten fish that you throw back into the ocean – fish meaning,  a buyer with a serious expression of interest in the form of at least a halfway decent offer on the table – probably nine of those fish aren’t coming back.

There are many different types of domain investors, and numerous ways to skin the proverbial cat in this business. So what I say may not apply to everyone.  You’ll have to be the judge, or else take it with a grain of salt.

For instance, if you are the sort of portfolio owner who holds mostly top generic 1-word .coms, LL.coms, or LLL.coms, and the like, then you can almost always afford to say no, and it isn’t going to cost you, since there is a much wider pool of buyers, you likely receive steady inquiries on your domain, and should have more of a command over negotiations.

In the Rick Schwartz school of domaining, that means holding out for the one right end-user who will pay top dollar.  With these sorts of domains and this sort of approach, a handful of big sales or less might carry you through the year.  Plus those names are likely generating a bit of parking revenue too which helps keep the boat afloat.

For many other domain investors though, if you’re trying to run a profitable business on more of a, shall we say, diversified portfolio including two and three-word .coms, brandable names, and various alternative TLDs, then you have got to stay cash flow positive and to do so you must keep the cash register ringing.

In the case of Abdul Basit’s sale, the buyer’s offers went from an initial $1,500, to $8,000, $11,000 and $15,000 to which Abdul held firm at his asking range of $25,000.  In retrospect we have to admire Abdul for sticking to his guns and making it rain Benjamins.  On the other hand, there were a lot of points which the negotiation could have soured or the buyer decided to walk for good.  They came back, but they don’t always and you must be prepared for that reality.

Of course, every negotiation and every domain name is like a box of chocolates, to borrow from dear old Forrest Gump’s Mama.  As such, each one requires a certain sensitivity and should be approached according to whatever variables are in play.  You should also have a real idea of your domains value, or at least its potential value.  I am not advocating taking every offer that looks good and is served on a silver platter.  Of course that would be silly.

What I am trying to say, is that aside from maximizing a sale of a single domain, which we should all be striving for all the time, one also needs to consider how to maximize overall profits, and that may mean trying to close more sales consistently, even if at less than homerun pricing.

For instance, what would be the opportunity cost of passing up nine sales in the $8,000 – $15,000 range for every one sale you are able to push to the top of a $25,000 range?

Again, a lot will depend on the circumstances around a particular sale, but this is something to think about.

In some ways I am speaking here specifically to those wide-eyed, bushy tailed domainers, perhaps newer to the business, who will come across a story such as Abdul’s, and either develop overly optimistic expectations about domain sales, or come to believe that the only fish worth hauling is a whale and must as a matter of course throw back every marlin they manage to hook.

And yes, I know a whale is a mammal! 🙂

Again, this won’t apply to all domain owners, and all domains, in all situations.  And I will further reiterate that it is not a strike against Abdul.  From what I can tell, I have the rough impression he is a diligent, motivated person with his head in the game, deserving of the type of success he has had.

What I am saying is simply a point to ponder – take it or leave it – for purpose of adding some balanced discussion and a little Yin to the Yang.

Wishing everyone a great week to come.

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