A couple of weeks ago I introduced questions around the setting of minimum offers on buy-it-now priced domain names. Thanks to all who have responded to the various linked polls. In this article I provide a summary of the results and comments. Setting the minimum offer too low may harm price expectations, while too high a minimum may discourage those who might have bought the name. The Minimum Offer For A $2000 Buy-It-Now Price Many domain names have buy-it-now prices set around $2000, so I first asked NamePros members how they set the minimum offer for a domain name priced in that range. Just over 250 had responded at time of writing. Some set minimum offer prices across the entire spectrum, as shown below, but just over 52% would set a minimum offer somewhere in the $200 to $1200 range. There was good discussion - for example DigitalRoar argued against setting the minimum too different from the buy-it-now price: Garptrader offers the following comment: While noting the time required, pb argues that low offers do indeed encourage interactions that sometimes lead to much higher offers. Karmaco argues that low minimum offers may encourage offers from those without real intentions to purchase, suggesting that the minimum offer should be set close to the price you expect. Read the full set of comments in the original article thread. The Minimum Offer For A $20,000 Buy-It-Now Price For high-value domain names, I think it is more common to use make-offer, and not set a buy-it-now price. However, for those who do use a $20,000 buy-it-now price, I was interested in how they would set the corresponding minimum offer price. The results shown below indicate that most set a minimum of at least $1000, although generally less than $15,000. Strategy For Setting Minimum Offer While the results above provide evidence for different approaches, I also directly asked about the strategy employed. By strategy, I meant, for example, was the minimum offer set irrespective of the buy-it-now price, or rather as some ratio of that price. The results indicate a mix of approaches. For 45% of respondents, they set the minimum make-offer price as some ratio of the buy-it-now price. Just over 25% set it to the minimum amount allowed by the marketplace. Almost 23% set the minimum offer to a fixed amount, independent of the domain name buy-it-now price. Slightly more than 7% set the minimum make-offer at essentially the full buy-it-now price. JudgeMind was one who favoured the last approach. Gericsb uses the ratio approach, Future Sensors outlined an interesting approach: at Sedo the minimum offer is set at 90% of the buy-it-now price, while at Afternic it is set very differently, to the minimum of $20. A hybrid price-dependent approach is used at DAN. If you list your names at multiple marketplaces, this may be an interesting way to determine what works best for you. MediaCode wrote a lengthy and persuasive comment which I urge you to read in its entirety. They set minimum offer always at or above 80% of the stated buy-it-now price, using an analogy to expectations in areas such as real estate. Read the full set of comments in both the strategy thread and in the overall minimum-offer article. Are Many Low Offers Indicative of Domain Value? Some argue one advantage of setting the minimum offer to a low price is that the number of offers received will be a measure of domain worth, even if those low offers do not result in actual sales. I asked NamePros members if the number of offers received is an indicator of domain worth. Results were pretty mixed, with 28% saying yes number of low offers was an indication of worth, while 45% said no, not at all. The remainder saw it as a weak indicator of worth. My question was probably not well worded, as several pointed out that it might be an indication of interest in the name, but not necessarily worth. Biggie points out that it depends on various parameters, for example Ostrados summed up a well-reasoned opinion on the question. You can read all comments on the question of significance of low offers here. Low Offer To Major Sale Related to minimum offer, I thought it would be interesting to see what the maximum ratio of a final sales price to a first offer would be. For example, if you started with a $100 offer but the domain name sold for $7500, that would be a ratio of 75. This poll did not get as many votes as the others, but the results are summarized below. More than 22% of respondents had not received a sale more than a factor of 3x the initial offer. Another 22% report their maximum ratio between 3x and 10x. 18% did achieve a maximum ratio of 10x to 25x. 29% report ratios of 50x or more in at least one sale, with 18% of those reporting 100x plus. Riz M. reported converting numerous times $100 to $500 initial offers into 5-figure sales. You can see the up-to-date poll and full set of related comments in the associated thread. As DomainRecap notes, how meaningful a high ratio is depends on what that first offer was: Ratio Of Offers To Sales In my early months of domain investing, I wondered how many offers people receive for each completed sale. I asked that question, obtaining the results shown below. While the data suggests that on average there are 4 to 5 times as many offers as sales, clearly the ratio any particular investor has will depend strongly on how you set the minimum offer, your negotiating style, the marketplace, the type of domain name, and perhaps other factors. Final Thoughts Many opinions were expressed in the comments, only a portion of which are summarized in this article. Please check out the full discussion at the main article, as well as the other polls and articles linked at the bottom. As is true of many questions in domain investment, there is no clear answer on best practice that applies to all situations. Factors such as your negotiating skill, the kinds of domains you have, what platform you sell at, etc. might influence what is best for your own situation. Recently Darpan Munjal, CEO of SquadHelp reported on social media that the following ordering was most likely to result in domain sales. Buy-it-now price with installment plan option. Buy-it-now price only. Make-offer only. Buy-it-now price as well as make-offer. I presume the data set the conclusions were based upon was brandable names, so may not apply to all domain sales. He argued that including make-offer options along with a buy-it-now may cause price confusion, and buyers become hesitant about proceeding with a sale. This argues toward not having make-offer at all. Personally, after reading and reflecting on the various points, my own thoughts on minimum offer have changed somewhat, favouring higher minimum offers going forward. I do not favour setting minimum offer as low as possible, as I am not convinced of validity as worth indicator, and also I think it will devalue the name in the eyes of some users. I think it is best to make the minimum offer some ratio of the buy-it-now price, rather than constant across a portfolio. It just makes sense to me that a $4500 domain should have a different minimum offer than a $850 name. While I have not done this in past, I have become convinced that a ratio of the order of 70% of buy-it-now price might be about right. That 30% is a reasonable possible ‘discount’ for a high-value asset. If there are names that I feel very uncertain about valuation, I might be more apt to set the minimum offer lower. It makes sense to periodically review, and adjust, both buy-it-now and make-offer prices for each domain name in the portfolio. A minimum offer not too distant from buy-it-now might reduce the price confusion mentioned above, while still letting buyers feel they have negotiated a good deal. Remember these are simply my own current thoughts on the topic - there is no reason that they need be consistent with your own. Thanks to everyone who has responded to the polls linked to the NamePros Blog post on minimum offer amounts.