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A Few Thoughts About End User Research

Posted on 28 July 2014 by Andrei

If a random person and Bill Gates go to the supermarket, they will both pay the exact amount of money for let’s say bottled water. In other words, it’s not a “You’re Bill Gates and have a lot of money, so you have to pay more” situation.

Domains are different and I’ll try to explain why.

First and foremost, domains are definitely *not* commodities or anything of that nature.

Each domain is different and it’s not like you can say something along the lines of “Sorry Super Cheap Clothing LLC, SCC.com is not for sale but you can buy UNN.com instead, since it’s also a LLL dot com with two repeating letters”… I’m sure you get the point.

For the company Super Cheap Clothing LLC (random example, no idea whether or not it exists), SCC.com is the only LLL.com they should own and any other three letter domain is of no interest to them.

The list of examples could go on and on but again, I’m sure you get the point.

When it comes to domains, it’s definitely an advantage if you can figure out a thing or two about the end user who is contacting you.

If the end user is a deep pocketed company with a track record of domain acquisitions, trying to obtain more makes sense. On the other hand, if the end user is a smaller company and you quote a price that’s too high, you might very well ruin that potential sale right from the beginning.

Some domainers don’t care about end user research and simply quote whichever price they want to obtain, regardless of who the other party is.

I’m not sure that’s the ideal approach.

Why? Simply because figuring out who the other party is can help you make educated decisions, so why shouldn’t you take advantage of information that’s right in front of you?

Now of course, a lot of times, end users try to acquire domains in stealth mode.

For example, by using a free email address.

Or by hiring a broker.

It’s not always possible to figure out at least some information about that end user but when/if it is, wouldn’t it make sense to take advantage of it?

This works both ways, of course.

Don’t assume that your potential end users will always prove to be deep pocketed companies. A lot of times, the exact opposite is true and you’ll realize that the financial possibilities of a certain end user are nothing worth writing home about.

Yet even in such a situation, having that information puts you in a good position to make educated decisions.

If it’s a domain that’s not extremely important and the likelihood of ever receiving another offer is low, having some information about that end user might help you figure out how to start the negotiation process and calibrate your price expectations.

Quite a few times, domainers quote prices that are too high and by the time they change their mind and would be willing to accept a lower amount, it’s too late because the end user in question moved on. If that domainer would have known that the potential end user is a company with limited liquidity, he might have decided to tone it down a notch as far as the initial asking price is concerned so as not to risk losing the sale.

I’m not saying you should spend your entire day wondering who a certain end user is, I’m simply trying to explain that if the information in question is right in front of you, it might make sense to put it to good use.

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6 Comments For This Post

  1. anton Says:

    should be irrelevant who the buyer is. fair price is fair price.

  2. AbdulBasit Makrani Says:

    In some cases there are endusers with plenty of money who doesn’t want to shell out the money what the domain is actually worth off.

  3. Andrei Says:

    @anton: if you want to buy an apple from me and I tell you “sure, that’ll be $100″ then of course, my price doesn’t make sense. Everyone else is selling apples at a fraction of that price, so unless there’s something very special about that particular apple, my pricing decision makes little sense.

    When it comes to domains however, it’s hard if not impossible to put together a “one size fits all” definition of the word “fair” because each domain/situation/negotiation is different.

    To a large company, even a price that would make domainers very happy is more than fair if the domain in question is something they can put to good use. For a lot of large companies, buying a category killer domain is one of the smartest purchases they could possibly make and even at prices that one might consider high, the costs pale in comparison to what most of them spend on offline assets.

  4. Andrei Says:

    @AbdulBasit Makrani: yep, I agree 100% that there are exceptions but all in all, the likelihood of a well-funded end user being willing (not only able) to pay more than one with limited financial possibilities is reasonably high

  5. AbdulBasit Makrani Says:

    Right Andrei. And for that it’s better to gamble by asking more when you find the enduser is multinational company no matter you close it successfully or not. It’s clear that when we don’t ask for the amount we want, no one is going to pay it.

    @anton
    I don’t see any price is fair in domaining. The beauty of domain business is that every domain is unique and if you have the domain you can ask whatever you want.

    What do think is the value of DUDU.com to an enduser? May be 50k or 100k? But that was sold for 1 Million Dollars. There is someone retail/wholesale price of LLLL market but at the end you have the power to sell at your own price. If the buyer wants, he will come back to you only because that particular domain is only with you!

    I completely disagree when people say that a domain is worth what an enduser is willing to pay. That’s nonsense. There can be plenty of other endusers out there who might pay more than the other one. Or there can be some new startup company who will pay more than what you have been offered so far and pays your asking price!

    It’s the combination of your research, enduser, luck, gamble and most importantly patience.

  6. Leonard Britt Says:

    The key point here is that the seller has considerably more negotiating power when the buyer makes the initial contact rather than the other way around. When a buyer contacts you, they have already decided they want the domain if it can be acquired at a fair price – though yes there are end users who still want good domains for low $XXX. When a domain investor reaches out to end users, many are just using social media accounts or have some reg fee quality domain and they are perfectly happy with that. They might ask “How much?” but generally are just inquiring and aren’t really interested in spending serious money – no matter how good your domain is.

 
 
         
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