Negotiation. This is the part that makes or breaks a deal. This is the part that makes you money! Major companies hire expert negotiators to step in during mergers and acquisitions, during a sale of the company, and even to train their sales staff. Being able to properly negotiate is the most important attribute you can have as a salesman! Do NOT take that lightly! Domain name investing is not just about the domain name, it's about sales techniques, negotiation tactics, customer service, and a heap of other extremely important aptitudes to develop!
An expert negotiator will beat you to a pulp while making you feel like you're the one in control. They will make you feel like YOU won the negotiation. That being said, the first thing you need to do is take your ego and throw it out the door. It is not welcome at the negotiation table!
*I use these strategies 95% of the time with end-users only. I throw out a few of these lines to other domain investors, but there really is no point as we both know what each other is up to anyway and most of us don't have the patience for it! Generally, an investor will tell you his bottom line regardless, so leave these insanely annoying tactics for end-user negotiations!*
My # 1 rule of negotiating
Know what you want! I cannot stress this enough!
If not, make one. A thorough list of all the things you MUST have at the end.
Now that you have the list of MUST have's, add a bunch of fluffy wants to it.
Most of these fluffy's you will not walk away with. In fact, that's the point. Bare with me; you'll see why soon.
The Outbound Negotiation
More often than not, you will be doing outbound, so I will cover what happens in an outbound negotiation from my personal experience.
You've sent the outbound email out, they've opened it a bunch of times, and a few days later they email you back with the line "How Much?" If you tell them without ever trying to pull a number out from their side first, you've risked leaving money on the table.
*Before moving forward, I must say this one thing: NEVER BE AFRAID OF LOSING THE DEAL. If you are investing in the right type of domain names, you should never fear that!*
These days, my reply to the "How Much?" question is almost always a variation of "To be fair to you, I will leave the table clean for your offer to be placed on. I am certain you've done your due diligence, and I am happy to hear your offer. Does that sound good?"
Generally, their reply will be one of the following:
Moving on, to reply to "Sure, I am willing to offer [this ridiculously low price]" you use a technique called the "Flinch." This is a technique talked about by Roger Dawson (an incredible negotiator) extensively. This is where you react with shock and surprise at the other sides offer.
*A little rule to live by. NEVER EVER use confrontational negotiation. You are NOT to disturb the inner fighter in anyone. Once that person feels confrontation, their main objective will turn into proving you wrong. So keep it very, very light and open!*
Now, it's easier in person, but with a few exclamation points and questions marks you can make your flinch quite clear in the response email. There are a few different ways to respond to a low offer:
Now to respond to "You contacted us.. what is the price?" is a tricky one. You NEVER want to tell them the exact price you had decided on earlier. Always ask for more. In fact, the less you know about the buyer, the more you should be asking for. Why? Because you just might get it. Have you ever made an offer on GoDaddy for $5,000 only to have the seller respond with a counter of $350,000? You think they are just crazy? Well, some of them are, but most of them know this simple rule. Always ask for more than you think you'll get. It gives you the ability to allow the other side to feel like they have something to win (by talking you down). So, to respond to "You contacted us.. what is the price?" you can:
Alright, now if they use some line to beat down the value to them, you immediately use the Feel, Felt, Found tactic. More often than not, when you reach out, the buyer will pretend to be reluctant to purchase. They will do everything they can to beat down the value before making an offer. So, in response to their first attempt you use a tactic called "Feel, Felt, Found."
Here is an example:
Someone tried to tell me that the domain name was only valuable to their company and they were the only ones who would want it, so I should lower my pricing expectations.
In response, I wrote:
This can open up a can of worms, and if the price has not been spoken about yet, it surely will be spoken about now. With either the response "I am willing to offer [this ridiculously low price]" or "Well, what's the price?" then you can refer back to the responses above for these scenarios.
Now that you have opened up the pricing negotiations, it's time to really get down to it. The middle of the negotiation is the hump. You are now at the top of the hill and you have to set into motion a very gentle roll down to the closing side.
Now that you have made your proposal, you will likely get flinched by the other side with some variation of "$45,000?! That's a lot of money for a domain name! You want an email address and free advertising too? I'm not sure we can move forward with this offer!" In which case, you can simply give them power by saying, "No problem. Since we are here and to be fair to both sides, what would the deal have looked like in order for you to move forward?"
If they truly want the domain name, this is where they will make their initial offer. Let's say for instance they offer $3,500 with no email and no advertising. Now flinch, vise ("You will have to do better"), make your "counter offer," and "check with your partners" to see if you can make a deal happen.
This is how it would look:
"Yikes, I'm not certain we could move forward at that price! We are pretty far apart here; however, my partners are fairly reasonable. Can you provide a better offer for me to take to them?"
That right there will generally get you a little more out of their side. Otherwise, they'll tell you that $3,500 is the best they can do. If they tell you that is their best, at least run through a financing option or a more affordable option before parting ways. However, if they open with a $3,500 counter, you are usually well on your way to your magic $10,000 profit number.
You will likely play this back and forth for a while until you get closer to your $10,000 number. You will have to keep telling them to do better in different ways! Once you feel or see that they are maxed out, that's when you step in with, "Tell you what, I will try to create a shortcut for us here. Do I have your permission to run a $12,500 offer by my partners? Just to see what they will say?" Base the number you run by your partners on the highest offer they've given you so far. If they've come up to $7,500, run $12,500 by your partner. They will either tell you yes or "no, you do not have permission." If no, you could reply:
This is part one of the negotiation dose. Remember, this is a very, very basic introduction to outbound negotiation. There are thousands of strategies, tactics, and chess-like moves to learn. Every negotiation will differ, but the fundamental strategies will remain the same. Usually the above information will likely get you through a simple domain name negotiation.
You do, however, want to be extremely knowledgeable in all things sales and negotiations in order to become truly successful. A simple blog post from me will not make you a master negotiator. You must read every single book you can get your hands on in order to reach your peak. There is one must read book. It will change your life as it's done for me. "Secrets of Power Negotiating" - By Roger Dawson. It is the best negotiation book I have ever read and it will make my blog post seem like a grain of sand on an endless beach. If you do not read this book, you will find yourself getting beat up left and right at the negotiation table. You must ALWAYS be the better negotiator at the table. For that reason, read it now!
Update on May 25, 2016: Negotiation Tactics Part 2 | Inbound - A Few Different Approaches
An expert negotiator will beat you to a pulp while making you feel like you're the one in control. They will make you feel like YOU won the negotiation. That being said, the first thing you need to do is take your ego and throw it out the door. It is not welcome at the negotiation table!
*I use these strategies 95% of the time with end-users only. I throw out a few of these lines to other domain investors, but there really is no point as we both know what each other is up to anyway and most of us don't have the patience for it! Generally, an investor will tell you his bottom line regardless, so leave these insanely annoying tactics for end-user negotiations!*
My # 1 rule of negotiating
Know what you want! I cannot stress this enough!
- Where do you want to end up?
- What is the purpose of you selling this product or service?
- Money? How much money?
- Other things? Like what?
- What will make you happiest at the end?
If not, make one. A thorough list of all the things you MUST have at the end.
Now that you have the list of MUST have's, add a bunch of fluffy wants to it.
Most of these fluffy's you will not walk away with. In fact, that's the point. Bare with me; you'll see why soon.
The Outbound Negotiation
More often than not, you will be doing outbound, so I will cover what happens in an outbound negotiation from my personal experience.
You've sent the outbound email out, they've opened it a bunch of times, and a few days later they email you back with the line "How Much?" If you tell them without ever trying to pull a number out from their side first, you've risked leaving money on the table.
*Before moving forward, I must say this one thing: NEVER BE AFRAID OF LOSING THE DEAL. If you are investing in the right type of domain names, you should never fear that!*
These days, my reply to the "How Much?" question is almost always a variation of "To be fair to you, I will leave the table clean for your offer to be placed on. I am certain you've done your due diligence, and I am happy to hear your offer. Does that sound good?"
Generally, their reply will be one of the following:
- "Sure, I am willing to offer [this ridiculously low price]"
- "You contacted us... what is the price?"
- They will use some line to beat down the value to them. In this case, you will use a method called Feel, Felt, Found. We'll get into that in a bit.
Moving on, to reply to "Sure, I am willing to offer [this ridiculously low price]" you use a technique called the "Flinch." This is a technique talked about by Roger Dawson (an incredible negotiator) extensively. This is where you react with shock and surprise at the other sides offer.
*A little rule to live by. NEVER EVER use confrontational negotiation. You are NOT to disturb the inner fighter in anyone. Once that person feels confrontation, their main objective will turn into proving you wrong. So keep it very, very light and open!*
Now, it's easier in person, but with a few exclamation points and questions marks you can make your flinch quite clear in the response email. There are a few different ways to respond to a low offer:
- "Oh! I'm sorry, but we are not prepared to let this domain name go for that price! If you'd like, we can offer the option to rent the domain name for a year to see how it works out for you. At the end of the year, you can decide whether you'd like to acquire the domain name. Does that sound good?"
- "Wow! I'm sorry, but we are not prepared to give this domain name away. You will have to do better."
- "While I appreciate your offer, there is no way we could let this domain name go for that price. If you'd like, I can point you in the direction of more affordable options. Does that sound better?"
Now to respond to "You contacted us.. what is the price?" is a tricky one. You NEVER want to tell them the exact price you had decided on earlier. Always ask for more. In fact, the less you know about the buyer, the more you should be asking for. Why? Because you just might get it. Have you ever made an offer on GoDaddy for $5,000 only to have the seller respond with a counter of $350,000? You think they are just crazy? Well, some of them are, but most of them know this simple rule. Always ask for more than you think you'll get. It gives you the ability to allow the other side to feel like they have something to win (by talking you down). So, to respond to "You contacted us.. what is the price?" you can:
- Ask this first "Let me first ask, If we can agree to a price, would there be anything holding us back from wrapping the deal up this week?"
- Whatever their response is, as long as it's a confirmation that they will move forward at an agreed upon price, you've already begun to close the deal while leaving the price negotiation door open. Once they reply, you can move forward with your first proposal: "Great! I've spoken with my partners. Based on comparable sales, our team has valued this domain name at $45,000. We would also like to keep a [email protected] email along with the inclusion of advertising space on the homepage. Does that sound good?"
- Or, get straight to it: "I've spoken with my partners. Based on comparable sales, our team has valued this domain name at $45,000. We would also like to keep a [email protected] email along with the inclusion of advertising space on the homepage. Does that sound good?"
Alright, now if they use some line to beat down the value to them, you immediately use the Feel, Felt, Found tactic. More often than not, when you reach out, the buyer will pretend to be reluctant to purchase. They will do everything they can to beat down the value before making an offer. So, in response to their first attempt you use a tactic called "Feel, Felt, Found."
Here is an example:
Someone tried to tell me that the domain name was only valuable to their company and they were the only ones who would want it, so I should lower my pricing expectations.
In response, I wrote:
I understand that you may feel it is only valuable to your company. Many other companies have felt the exact same way about other domain names. However, based on the comparable sales, I have found that these domain names have value beyond the measure made by a single entity. They are a liquid asset and an investment. Domain names that cost thousands in the 1990’s sell for millions today. For you to acquire this domain name, you are making an investment along with acquiring a very important asset. Would you like me to direct you toward a comparable sales chart? I can also provide a list of companies that own generic, premium domain names. Would that help in your valuation of this domain name?
This can open up a can of worms, and if the price has not been spoken about yet, it surely will be spoken about now. With either the response "I am willing to offer [this ridiculously low price]" or "Well, what's the price?" then you can refer back to the responses above for these scenarios.
Now that you have opened up the pricing negotiations, it's time to really get down to it. The middle of the negotiation is the hump. You are now at the top of the hill and you have to set into motion a very gentle roll down to the closing side.
Now that you have made your proposal, you will likely get flinched by the other side with some variation of "$45,000?! That's a lot of money for a domain name! You want an email address and free advertising too? I'm not sure we can move forward with this offer!" In which case, you can simply give them power by saying, "No problem. Since we are here and to be fair to both sides, what would the deal have looked like in order for you to move forward?"
If they truly want the domain name, this is where they will make their initial offer. Let's say for instance they offer $3,500 with no email and no advertising. Now flinch, vise ("You will have to do better"), make your "counter offer," and "check with your partners" to see if you can make a deal happen.
This is how it would look:
"Yikes, I'm not certain we could move forward at that price! We are pretty far apart here; however, my partners are fairly reasonable. Can you provide a better offer for me to take to them?"
That right there will generally get you a little more out of their side. Otherwise, they'll tell you that $3,500 is the best they can do. If they tell you that is their best, at least run through a financing option or a more affordable option before parting ways. However, if they open with a $3,500 counter, you are usually well on your way to your magic $10,000 profit number.
You will likely play this back and forth for a while until you get closer to your $10,000 number. You will have to keep telling them to do better in different ways! Once you feel or see that they are maxed out, that's when you step in with, "Tell you what, I will try to create a shortcut for us here. Do I have your permission to run a $12,500 offer by my partners? Just to see what they will say?" Base the number you run by your partners on the highest offer they've given you so far. If they've come up to $7,500, run $12,500 by your partner. They will either tell you yes or "no, you do not have permission." If no, you could reply:
- "What if I could convince them to forget the advertising and come down to $10k? Does that work for you?"
- "What number do I have your permission to run by them? $11,000? $10,000?"
This is part one of the negotiation dose. Remember, this is a very, very basic introduction to outbound negotiation. There are thousands of strategies, tactics, and chess-like moves to learn. Every negotiation will differ, but the fundamental strategies will remain the same. Usually the above information will likely get you through a simple domain name negotiation.
You do, however, want to be extremely knowledgeable in all things sales and negotiations in order to become truly successful. A simple blog post from me will not make you a master negotiator. You must read every single book you can get your hands on in order to reach your peak. There is one must read book. It will change your life as it's done for me. "Secrets of Power Negotiating" - By Roger Dawson. It is the best negotiation book I have ever read and it will make my blog post seem like a grain of sand on an endless beach. If you do not read this book, you will find yourself getting beat up left and right at the negotiation table. You must ALWAYS be the better negotiator at the table. For that reason, read it now!
Update on May 25, 2016: Negotiation Tactics Part 2 | Inbound - A Few Different Approaches
