A gazillion for a domain – who cares?

After having been around for some time on the aftermarket for domain names, certain lessons tend to repeat themselves and become knowledge. One of them is made clear by the disproportionate amount of space that news of major sales often get. A single domain and a single unusually high sale price can suddenly become arguments that domains in general – perhaps in particular the one you want to buy – should deserve the same price tag.

Hundreds of domain names go for a thousand times the registration cost every single day on the secondary market. Those sales are the market’s “bread and butter” and its true face. These sales derive from a large and lasting value of using the right name and the right version of that name.

If a domain is then sold for ten- or a hundred thousand times the registration cost a few times a year, it is perhaps cool, but it would be both silly and difficult to make these sales into some kind of general benchmark.

As an acquisition broker on the aftermarket where the goal is for the client to gain control of an important domain, the feeling that the request you sent may be the first the holder has ever received is not unusual. When the response arrives, the asking price can disproportionately frequently be hundreds of millions of dollars for a domain where competition and demand can be assumed to be low. It is not very difficult to imagine what probably must have happened.

The owner who received the strange request probably became excited and googled phrases like “biggest domain sales” and then spent perhaps the better part of an afternoon gathering and digesting the search results. The more energetic ones might even have found a blog where “The Domain King” or the similar states that the value of a domain can be more or less immeasurable, as well as how to best cash in on when, against the odds, interest in it appears. (For example, by setting the price so high that 99.9% of buyers simply pass out.)

Then in the name of logic, since the request that appeared is obviously about a domain name, the owner thinks that now is the time to really break the bank.  When this happens, it often becomes difficult for the seller to retreat from the initial position and land in a more reasonable price. The deal is dead. Therefore, it is preferrable if the person who makes contact for a potential domain purchase is an experienced trader on the secondary market, rather than an inexperienced novice. More experienced brokers can get the seller to treat the interest with respect and put the right value on the business opportunity. (As a related note, this is also why a budget is important to maximize the chances of a deal. The first amount mentioned dictates what happens next. It is better if that number is yours.)

Everything, of course, is relative. There are domain investors who only deal in extremely sought-after domains, and who have spent considerable amounts of money and effort to be able to acquire them. Those cases are not suitable for half measures or tell-tales, that won’t work.

But, just like when it comes to the biggest sales, it would be an irregularity. Atypical sellers with atypically valuable holdings. Their strategies and selling prices should reasonably not dictate what price you generally put on any domain, or the general opportunity to acquire a great name and domain equivalent for your business.