Guest Article: Selling a Domain Name to an End User
Monday, June 9th, 2008
The story of one domainer who sold his domain to “an elephant”.
[Editor's note: Many of you know Steve, a frequent reader and commenter on Domain Name Wire. He has a great story about selling a domain name to an end user. Although he can't retire on the sale, he turned an investment of under $100 into $15,000. Some of you have similar stories. For everyone else, here's a little inspiration, told in his own words.]
What should you do if and when an end user contacts you about one or more of your domains; especially if that end user is one of the giants of industry (i.e. an elephant)?
Perhaps a recent sale to one such elephant can provide some useful guidance.
Back in late 2002 or early 2003, while competing with others over the daily drops long before the sun came up (back in the “good ol’ days” when they could still be bought for just reg fees), one of the domains that caught my eye was Healthify.com. While such a domain would hold little interest to many if not most, I felt reasonably certain that—since its base word, Health, was a major worldwide field/industry; and therefore wanting to “healthify” “things” i.e. oneself, food, etc was logical even if the term itself was not widely used— registering it could prove to be worthwhile.
This fact, when combined with the additional factors of it being both just one word as well as a golden .com, made the decision easy (I would not have then—and still would not today—register Healthify in any other extension than .com). When taken together, this handful of factors also led me to price it for resale with an asking price of $25,000 and a minimum bid of $15,000. I felt comfortable that an end user company; whether startup or existing; should have no qualms about making what would logically be only a modest investment in one of their most important assets; their home on the Internet (and possibly their company name as well).
Then, this past February, a received a phone call from a friendly guy inquiring whether I’d consider selling Healthify.com. After telling him that it was in fact for sale; and that it had an asking price of $25,000 with a minimum bid of $15,000, I asked him how much he’d like to offer. When he said he’d like it for $7,000, I nicely declined. I then asked him what the most was he would like to pay for it. When he said he could go as high as $8,000, I thanked him for his interest and offer and asked him to review the market/economic explanation I provide with all the domains I post for sale at my site.
After we hung up, I did a quick check on Google and Yahoo and found that the large multinational corporation General Mills was running a “healthify” service on one of its web sites, where they’d take food recipes and “healthify” them (make them healthier); including of course via the use of General Mills products.
A couple of days later, he sent me the following e-mail, using a gmail account to mask his employer:
“Thank you for taking the time to speak with me, the other day. I have evaluated my budget, and I can squeeze $10,000. Would you accept $10,000 via Escrow.com (I will pay the escrow fee)?”
While chuckling to myself because I was now virtually certain that he was working on the behalf of, if not actually employed by, General Mills (though he never did say, and I didn’t ask since it wasn’t germane to what I was willing to accept for the name); I again nicely declined his offer.
After giving it another week, I e-mailed him back to see if he was still interested. While my intent in doing so was to discuss possibly financing the sale at a 15k price; even though General Mills obviously didn’t need such assistance; I received a pleasant surprise when he responded that he was now willing to buy it for the 15k minimum I was looking for (I guess he was able to “squeeze” his budget a little harder). We closed the deal a couple weeks later.
Would General Mills have paid more than $15,000? Impossible to know. But, in light of how little I had in it, the fact that they were the only ones to inquire about the domain in the 5+ years I’d owned it (indicating that future offers were likely to be few and far between), and that this multi-billion dollar/year giant had not quickly acceded to paying what would be far less even than a rounding error for them, I was comfortable with the 15k.
If you haven’t already had the opportunity to experience such, may your own elephant dance be as interesting, enjoyable, and profitable.
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It would be interesting to read Steve’s market/economic explanation on his web site. Would he open to providing the URL? Also curious, was the domain parked or forwarded to his site?
A great story and congrats to Steve!
Steve didn’t want to use his last name, even though it’s easy to find it and easy to find his site even by looking around Domain Name Wire
With that in mind, I’ll let him post the URL of his site.
Thanks Andrew and Chris; hope it helps and encourages others in our field.
Spike, though I didn’t keep the exact market/economic explanation after I’d sold this domain, you can see a virtually identical one for Healthifying.com; as part of a set of 5 closely related “Health” domains (visible at GetRichSlowly.com).
While not anything detailed, I’ve found that such an approach; especially when combined with my detailed discussion of the importance of domains and why they’re worth what they are in the section of my site prior to the listings; is often helpful in generating higher sales prices; and it helps potential buyers see and understand why I won’t sell them for the silly offer prices (i.e. $100-$1,000) many of us receive.
While initially time consuming to write, it’s saved me countless hours writing e-mails to explain all this when inquires/offers come in; which is what I used to do.
Such an approach would be very tough of course for those with many 1,000’s of domains.
ps Spike, as with the large majority of mine, I had this name parked (though it never earned more than a dollar here and there).
It’s interesting to see how both sides took their time negotiating. Steve played it very cool! I think it would be easy to get yourself in a tither after the research – realizing you had a great end user on your hook.
Will you be offering brokerage services?!
Steve,
Congrats on the sale.
Hindsight and arm chair quaterbacking are certainly easy but I’m wondering if you should (maybe you did) call this guy out and ask if he is from general mills.
If someone won’t be honest with you, why should you cut them a deal.
Also, since Rick got $750k for ireport.com (another domain of little interest to most people) I wonder if there might have been a higher offer.
Then again, $15k is a hell of a profit on a name you or others don’t care about much.
yes rick got 750k for ireport.com. and domain wire called it right on… a lesser experienced seller would have gotton only 25k.
this goes to show you the sky is the limit.
and rick had to sign a confidentality agreement and had to work a couple of months to close the sale.and had to insist on telling only the price no more.
this shows us all how experienced the domain king really is.
and general mills would have gone higher on price.
Great story! Andrew, I’m beginning to like these happy-monday stories that you’ve been doing. A very good way to open the week!
It’s a very big world and the internet is becoming more essential every passing day. End users are recognizing the importance of high quality portals which bring consumers to their products/services. Congrats to seller not only on the sale itself, but on having patience.
I saw this on http://www.SubliminalMessages.Com and wanted to encourage you and the readers of your article on how to sell a domain name to swing for the retirement fence. $15k is certainly nice, but heck, I woulda paid you more than that! Supply and demand, right? You have it, they want it. What part of retirement planning do you not understand? Man, you’ve got to be kickin’ yourself right about now.
@ Sammy – I don’t know…perhaps he could have gotten a little more, but at some point the buyer just walks away and he has nothing. In fact, he’s out $15k or so.
At some point you may reach the “domain sales tipping point” where your price tips the scales and the prospective buyer just goes with another option. In this case, they could have easily passed on the purchase and gone with EeatBetterAmerica.com/ or the not currently registered HealthifyIt.com (a term which they use on the current site). You just never know when that elephant might just take a hike and you have to be prepared that they might.
woops make that EatBetterAmerica.com (which they own)
Andrew, as usual, you get the great story and focus it on an important factor in all domainers’ resell and revenue strategy. I hate you.
jk
The story here really is not “how much could Steve really make on his domain healthify.com”, but “wow, Steve made such a massive profit margin on his investment that it makes all other investment arenas cringe in embarrassment.”
Would General Mills pay more for that domain? Who knows? Large corporations have powerful ad agencies in control of their ad campaigns. I would have thought the buyer of the domain was from their ad agency, as opposed to General Mills marketing department. I’ve stated on my blog many times that ad agencies buy domains to match their ad campaigns they are selling to their client, NOT the domain name that best describes their client’s product/service (prodserv).
However, on simple research, I found that “eatbetteramerica.com” is owned by General Mills. Whether that domain was “created” by their ad agency or their marketing dept remains to be told. General Mill may have a “rogue” marketing director who understands domain values, and has convinced the BOD to let him purchase domains that can be relevant to General Mills marketing direction.
But let’s forget that for now. Let’s focus on the one hundred and fifty $100 bills that Steve just got for a domain that he probably invested less than $100.
And finally – this shows those short-sided domain investors that domain values don’t depend on “traffic revenue”. A nice domain that invokes a great brand or marketing focus sometimes can easily beat a traffic generating domain.
Great post, Andrew.
Stephen Douglas
Successclick.com
Amen.
Kelly: Thanks; and I’ve thought about brokering in the past, but decided to leave it to others.
Rob: Thanks; in another e-mail, I did say to him words to the effect of, “This would be a great domain for a company like General Mills, which already has their own Healthify online service/application.”
He chose to ignore my comment, and I decided it didn’t really matter since; for the reasons I’ve given; I was satisfied w/the 15k. It was humorous, though, going through all this when we both knew the real buyer was General Mills.
Name Broker (and Rob): Sure; would have loved to get more for it. But; as I explained; I did allow a week go by since my last “no thank you” to his 10k offer before contacting him again.
Rick’s sale of iReport.com for 750k was one of those “needle in a haystack” situations where a name none of us would have paid more than 20k for–if that–sold for far, far, far more than it was worth.
If we wait for such moments, we’re more likely to find ourselves dead than rich. There’s a lot to be said for sales velocity…
Sammy S: Don’t blame you for thinking such; but, again for the reasons I gave, I was–and remain today–satisfied with the 15k…and 15k pays for a lot of new regs/renewals.
But hey, if you’re actually serious and sincere that you’d have paid 15k for it, you’re welcome to (also) take advantage of this here ‘ol neophyte domainer by adding Workify.com and Wealthify.com to your portfolio for the same 15k each; price good until the end of June and subject to prior sale, of course.
Excellent choices for the huge employment and investment fields/industries, respectively.
Adam: You’re right. They had no fewer than the two domains you list; and who knows how many other domains with “Health” in them; which they could have used.
If a huge company like this was seriously debating during a week’s time whether or not they were willing to go from 10k to 15k, it’s reasonable to believe that 15k was the most (or near the most) they were willing to pay for this domain.
The belief that big companies will always pay big (100k+) money for the domains they want is an incorrect assumption by many. Remember, we see these industry giants regularly settle on using names many of us wouldn’t even pay $100 for.
Tough call.I gotta think the General would’ve unblinkingly coughed 50k…but you can’t complain about 15k either.C+ for Steve.
@ Dr. Domain – I’ve worked at a Fortune 500. It’s not that simple. These things are rarely budgeted, so it’s hard to squeeze out the money sometimes.
Steve-
Thanks for sharing your experience and being open to all this discussion, and every way it turns. It’s fun to pay armchair quarterback and “what-if?” especially after the the deal. Plus all the discussion from others helps you consider angles you might use if you are lucky enough to get that e-mail from an “elephant”!
Andrew-
Love the way you get updates on comments! Not every blog has this feature, but it keeps a conversation going long enough to get a little deeper into a story.