So you want to buy or sell an existing domain name ? Some Negotiation Tips for you.

1. Know whom you’re dealing with

"Use search engines, WHOIS; find out whom you’re dealing with before you respond. Know whether you’re talking to a principle or an agent. Remember that no matter what deal you think you’ve cut with an agent, they’re going to come back to you. Even if you believe the deal is done, if you’re not dealing with a principle, there’s a possibility that you’ll have to make other concessions because the agent is actually selling the deal to the principle."

2. Deal with the decision-maker

"A domain name seller I represented was called by a major pharmaceutical company that waited too long to register their name. My client had it and they were forced to use a variation of their name. So they called and told him, 'We know you paid X to register and renew the name, and we’ll give you $500, and that’s our last offer.' Negotiations didn’t go anywhere. I got called in and saw that we were dealing with someone with limited authority. We had to slowly move up the chain of command until we got to the people who could make a decision on the spot. We’d ask, 'Who else would have to sign off on this deal?' We got a lot of resistance, but we eventually got to the president who understood that his company was making its living on its ability as a high-tech organization. He bought the name right away. My client made $25,000—not a million, but not $500 either; he was ecstatic. The key was to deal with someone who was used to making those kinds of decisions—someone who’s written and received checks for millions of dollars. If you’re dealing with someone who’s making $50,000 a year, $25,000 is immediately going to strike him as half his salary, and it’s only natural that he resists the idea."

3. Ask the right questions

"I always ask questions before I answer them. I do it to collect information, but more important, I do it so that I know I’m asking the right questions later. I always ask what you’re using the domain name for. The difference between a great negotiator and a novice is that a great negotiator figures out the true interest of the other person. Find out what that is and you’ll make a much better deal."

  4. Develop rapport

"When we meet in person, we tend to build a rapport, and this is very important in the negotiation process. The way you build rapport through email is to match the tonality of a note. For example, if someone addresses you as Mr., make sure you address him that way. Pay attention to the salutation. People like people who are most like themselves. If I’ve chosen a certain type of language and you’ve chosen the same one, there’s a similarity, and people want to find similarities with others. You want to build as many of these as possible. Also, the most beautiful word you can hear is your own name. More subtly, I had a domain name deal where I represented the buyers, and just by noticing the sensory language that the seller used in writing, we closed a deal that we initially thought was impossible."

By communicating through email, you’re missing one channel of communication, but you have time to process all of these things that you couldn’t in a face-to-face negotiation. Listening is a negotiator’s greatest skill, and with email you can actually listen better. Take time to view email—you can use those extra seconds to your advantage. You don’t have to respond immediately. If you’re so smart that it takes you only two seconds to answer a question, you’ll be even smarter in four seconds. We respond quickly because it’s a sign of intelligence, but I’ve seen smart people answer quickly and then come up with a better answer 30 seconds later. Too late."

5. Demonstrate reliability

"Also, do what you say you’re going to do. Even if it means that nothing happens. You can say, 'Thank you for your offer; I’ll have an answer by 2:00pm.' Then make sure you call at 2:00pm, even if you don’t have an answer. It builds trust to follow through on a promise. I know people who do these things on purpose."

6. Negotiate the criteria of the price before you negotiate the price

"Establish on what basis you’re going to negotiate. Years ago the idea of a million-dollar domain name sale was unheard of. Then Wine.com, Business.com, and others set this unreal expectation that affects sellers psychologically and subconsciously. They’re going to judge their success as businesspeople based on an unrealistic comparison to these megadeals. I tell people, 'Harrison Ford gets $20 million for a movie, but no one will give me a dime.' That’s why the search for independent criteria is important. Some of that information is available on your site in the form of average selling price. Ask, 'How are we going to base the price; what benchmark or index can we use so that at the end of the day neither one of us feels ripped off?' This can go back and forth for days, but you build trust this way. Otherwise you go to a price game."

7. Know your BATNA

"The person who wins is the person with the most alternatives. You must understand what your BATNA—your best alternative to a negotiated agreement—is. If you can’t buy this name and conclude this negotiation, what is your best alternative? If you can’t sell this name, whom are you going to sell it to? If you’ve got bills to pay and they’re repossessing your house, you have poor alternatives. And it’s not just the ability to agree on price—you’re also negotiating how quickly you can receive the money. The person with the power is the person with the most BATNA.

"I represented a major corporation that has already rolled out a product, names it, printed the literature, and they didn’t secure the domain name. They had very little BATNA. They then called the owner and said, 'I’m from a very big company, and you won’t believe the mistake I made.' So they immediately gave away all of their BATNA.

"Never do this. It’s something you should do only as a last resort to revive a seemingly dead deal; to stay in the game. I really don’t advise it."

8. Slow down to speed up the deal

"One of the easiest ways to speed up the process is to build rapport right away. I’ve come to negotiations and said, 'I’m representing a big corporation worth millions of dollars, and you want the absolute highest price from me, and you know that I don’t want to pay anything.' I’ve told them the truth; I’ve build trust.

"It’s important to understand that taking time can speed things later on. People need an opportunity to work things out—to come to terms with the notion that they’ll either have to pay more than they expected or get less than they wanted. Think about walking into a car showroom. Your first thought is, 'Forty thousand dollars for a car? Are you kidding?' A week later, you’re buying a Lexus. People are naturally inclined to say no, that’s too high or too low. Postponing the negotiation at that time lets them think about it. They’ll either decline or they’ll use the time to internally justify the deal."

9. Don’t limit the deal

"Once I called the owners of a domain name who wouldn’t sell because they said the name would be worth a lot more in 3-4 years. Maybe, and maybe not, but in the mean time you can still cut a deal that’s worth some cash upfront and some later, in the form of a payment if the average selling price jumps. You don’t have to sell the name outright; you can rent it. You can sell on the basis of click-through comparisons. Redirects are valuable—you can retain the name but sell the click-through. If you believe the name will generate traffic, lease it out for two cents a click-through. For the other side, it gives them more time to secure a better name or a more favorable deal, and the wonderful thing is that after writing checks for a few months, the company may just say, 'Let’s give the SOB the money.'

"And think about using things that aren’t money. Consider what may have little value to you, but significant value to another person. It could be the .org and .net versions of a name, or it could be the value of a press release. A client of mine was involved in a deal with a major corporation. He wanted an official press release because the publicity of dealing with a prominent company was valuable to him. Another seller’s wife was annoyed that he wasn’t spending time at home because of the deal. The buyer sent him and his wife to Hawaii for a couple of days. People may say, 'Let me buy my own tickets; I want cash.' It’s limiting.

"What other people want is equity. Often they’re looking for options. Part of building a rapport is finding out what’s on their MIND. In this case, it’s an acronym for motivation, interest, need, and desire.

"Once I knew, or at least thought I knew, that I was dealing with a buyer who was going to turn the name around immediately and resell it. So I negotiated for 50% of the sale price if the name turned around in 18 months. It helped me uncover right away."

10. Stay in the game

"I’ve been in deals where someone sends a written response saying, 'This is absolutely, positively my final offer.' It ends the negotiation. If you’re going to win, you have to stay in the game. The easiest thing to do is to say instead, 'At this moment I cannot continue and further. Do you have any suggestions about how we can proceed?'

"Another technique to stay in the game comes from concession science. Any offer you make where you can substantiate your logic or reasoning behind it will be taken seriously. If you’re a seller and you want a million dollars, substantiate why you think your name is worth that. If you’re a buyer and you’re offering ten dollars, substantiate why."

Some Names for Sale. 5 oct 2000

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