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SitePoint Market Watch |
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| Issue 15: News, Rants and Case Studies for Web Entrepreneurs | |||||||||||||||||||||
Introduction
In this issue of Market Watch, we'll look at ways to maximize the price of the web site you're selling. The open auction format does help with setting market values for properties, but you can still use different strategies to gain the best price for your property. I'll also provide some tips that can help steer you in the right direction. Hope you enjoy the read.
Peter T. Davis Summary Your Pricing StrategyOne of the more common questions asked of me is about pricing. How much should I ask for my site or domain? Is this offer a good offer? How much should I offer for a web site/domain that I want to buy? There is no single answer to any of these questions, but there are some generic strategies that can help you navigate your way to a successful transaction. The overriding principle guiding me when I approach the pricing issue is this: how can we achieve a figure or set of terms which will make both the buyer and seller happy about the transaction. In my experience, when either party is unhappy about the transaction, the possibility of it souring skyrockets. Yes, you want the best price possible for yourself, but all too often it's not worth it if it leaves the other party feeling like you cheated them. That's why one of the first questions I ask when entering into negotiations is what terms or price will make the other party of the negotiations happy. Now, this is impractical when you're coming up with a pricing strategy for your auction, but it can be helpful to keep it in mind. When you try to think about matters from the other side's perspective, it can help you set aside presumptions that may hinder your chances at a successful transaction. We all look at transactions with our own biases, and you almost never realize how what you're doing might seem unreasonable to another party until it's too late. I prefer to avoid using how much income a site generates as a measure for pricing, even though I often do so. I only use it when the other party feels better knowing there's some logic to the amount we've set for the transaction. When setting the opening bid for your auction, though, I think the earnings multiple is unhelpful. Hopefully you've been following other auctions selling similar web sites. Look at which ones have received the most attention, and you'll probably find out that it had nothing to do with where the initial bid was set. The initial bid amount is important, but make sure you're not turning away interested parties. Try 10% of what you hope the final price to be. And, before you ask, "what if only one bidder bids on my auction?" remember you have to make good use of the reserve. The reserve price protects you from selling for less money than you were prepared to. Set your reserve at or around the lowest price you'd be willing to sell at. Set the Buy It Now price higher, say 150% of what you hoped to make. Now, these numbers I'm quoting are all rough guides and illustrate a strategy rather than being the exact figures you should use, so don't take them literally. Don't agonize, but do put some thought into your strategy before placing a listing. I see too many listings where little thought has been given to the pricing strategy. Watch what others are doing too, but avoid the cliches that are seen too often in some listings. Remember that your pricing strategy will never trump the quality of the property being listed, but a good pricing strategy can maximize the results for your quality property listings.
Tips for Buyers and Sellers
That's all for this issue -- thanks for reading! I'll see you in a few weeks.
Peter T. Davis
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Help Your Friends OutPeople you care about can benefit from the wealth of information on new and maturing technologies available on the Internet. Help them learn how to do it by forwarding them this issue of the Market Watch!
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There are a hundred ways you can ask the question and even more ways to answer it. One of the issues we all face in the Marketplace for buying and selling web properties is knowing what you should pay or what you should ask.
