Domain Name Merchandising and Pricing.

By Duane J. Higgins, ceo
xtradot.com

Want to put some muscle in your domain name portfolio? Want to increase the overall value of your domain name portfolio from 50 to 100% with very little effort? There is a domain merchandising and pricing strategy that very easy to use and if often overlooked.

Increase the prices.

I will give some more information on this strategy below (see "graduated domain name pricing"). However, first a bit of information on (domain name) product merchandising and pricing:

From Dictionary.com:

Merchandising:

noun

1.  the planning and promotion of sales by presenting a product to the right market at the proper time, by carrying out organized, skillful advertising, using attractive displays, etc.

Now information on pricing a product from entrepreneur.com:

Pricing a Product:

Definition: To establish a selling price for a product. According this this definition:

No matter what type of product you sell, the price you charge your customers or clients will have a direct effect on the success of your business. Though pricing strategies can be complex, the basic rules of pricing are straightforward:

• All prices must cover costs and profits.
• The most effective way to lower prices is to lower costs.
• Review prices frequently to assure that they reflect the dynamics of cost, market demand, response to the competition, and profit objectives.
• Prices must be established to assure sales.

Comparable sales are a great place to start when considering how to price your domain names. I addition here are some factors below that I found on a nifty site called DNSalePrice.com:

Valuation factors to consider when researching comparable sales include:

Empirical: TLD (top level domain) Length Words (number of) Numbers Hyphens Misspelling

Soft: Commercial potential Brandability Memorable and pronounceable Ease and ambiguity of spelling Search engine potential (page rank)

Hidden (i.e. requires additional info): Site content Current traffic Source of traffic Current Revenue PPC rates

But of course, the fact is that a given domain name is worth whatever someone is willing to pay for it. That story will never change.

Here are some real (head scratching) examples of the beauty (of the domain name) being in the eye of the beholder:

For example, did you know that the domain name ireport.com sold for $750,000 in 2008?  Check the record.  What would this domain name get on the open market today? I would guess between 15 and 25,000 at the most. That's quite a difference from the 2008 sale price. Beauty certainly is in the eye of the beholder.

Or another example. The domain name Flowers.mobi was once sold for $200,000 at auction. It was sold a few years later for under $10,000 at another auction. Two different times. Two totally different valuations.

So we do generally employ what I call "graduated domain name pricing" strategy.

The objective is to increase the overall sales prices, profits and the value of the domain name portfolio?


Once we set our initial pricing (even if most of it is internal) we do gradually increase the price for  a given domain name over time. Almost without exception.


There are several reasons that we do this:

1.) Domain  names are a commodities that have historically increased in value over time just like most commodities. One of our objectives is to support that process of maintaining domain name values. Not to reverse it.

2.) We find that many of our domain names get multiple bids by the same buyers over time. One of the ways we protect against that with our assets is to increase the prices over time. The buyers catch on to that practice and if they are serious about the purchase this negotiation tactic gets their attention. Sometimes it does lead to missed sales (at the lower price) and sometimes it leads to sales at a much higher price. Maybe even by a different buyer. This process protects the prices of the domain name assets as well.

This technique can also be effective when soliciting offers to potentially interested parties. For example, if you offer the domain name to a party with a buy price of  $5000. That is your starting point. It is often helpful for the buyer to clarify the offer to let them  know that the name wont be offered for that price again. At least, not from you. If the party is not interested, that is fine. Nothing lost. You both move on. This strategy is helpful for the buyer and the seller with what I call discounted pricing. When I make offers at this level and there are no buyers I generally will double the price.

The graduated domain name pricing is certainly a sales tactic. Just as when any merchant would dramatically reduce the price to a discounted level. With the buyer and seller understanding that prices wont stay that low and will return to a much higher price.

The strategy generally does result in holding domain names for much longer than you originally planned and you need to be prepared for that. Say you start a domain name price at $5000 and it doesn't sell. You increase the price to $10,000 and it doesn't sell. You then increase the price to $20,000 and it does sell. What did this process accomplish?

Two major things:

1.) Supports the domain aftermarket and maintains domain name values.

2.) Helps to maintain and enhance the value of your domain name portfolio.

 
Before you sell a domain name you may consider a quote by famed motivational speaker/author Tony Robbins who once (famously) said that "Everything you do is a cause set in motion."

Selling a particular domain name may seem like a simple little transaction that is relatively easy to do. However, there could be longer term ramifications to your sale that aren't initially apparent.

That being said, holding onto a domain name and spurning some offers is not always easy to do. It is comforting (and sometimes necessary) to take the quick money and perhaps let a domain name go for much less than what it is likely worth on the open market over time. That is ok too.

So how do you determine what a given domain name could be worth in the open market. There is one answer to that question that is the best one that you will find.

Hold on to it and you will eventually find out. Just be prepared that it may sometimes take years to sell a particular domain name.

I would suggest my "graduated domain name pricing" strategy if you want to give that a try. Pricing an merchandising strategists will tell you that sometimes the higher price point is better and even more likely to lead to a sale.