I've been a seller and a buyer. Made a living off it for a while even.

My opinion is 3k is about average for a domain sale. If I recall average sale was in the ~2000-3000 range. It's a pretty reasonable asking price without knowing anything about the domain.

As far as valuing, there is no way, scientific or otherwise to tell you value. My favorite explanation from the sellers side is:

Value = Price * Probability of Sale

(Credit for that goes to Paul Shaw)

It so beautifully encapsulates many of nuances of domain names. There is a unique supply and an infinite demand curve. The probability of getting a sale as you go higher diminishes. There is no 'one' answer to value, but it's completely dependent on the seller's risk appetite and expectations.

Finally, some practical advice. There is nothing you can say, no tool you can use that a rational domain owner is going to accept and act on because you wrote it in your counter offer. You have a max price, they have a minimum price, maybe you'll negotiate to a point where they overlap, maybe not. I would counter offer (doesn't have to be your max price or you can play the ultimatum game) and see the response. Repeat or accept. For such a small number I wouldn't be countering more than once MAYBE twice. I generally consider it a warning flag when the other party is negotiating over almost nothing.

Set your max budget and stick to it. People are irrational towards the end of a deal. Don't overspend and regret. You've done the analysis beforehand, you know what it's worth to you.

Find other names and prepare a backup plan. Don't tie yourself to one name. I hate when a deal falls through because they bought another name, but it makes perfect sense from your side.

Great response. Thanks for your input. I think I'm going to set a max price and use that as my only counter offer. If they don't accept I'll keep looking.

Make them aware of it. I've lost sales I would have taken the counter offer but I didn't realize it was their final offer. It sucks (for both sides) when you could have done a deal both of you would have been happy with had you realized it.

I just used the top post in this thread. http://www.avc.com/a_vc/2011/04/finding-and-buying-a-domain-... Made the owner an initial offer of $750. Didnt hear back from him for a month. The guy countered with $10,000. I used the language in the post above and he agreed to my highest range price of $1500 (I never moved past my first highest range price).

Even if you could prove scientifically that it was only worth $1000, so what? The other party owns the domain. They can refuse to sell it at any price they wish. For a pro domainer a $3k domain isn't too much. They may very well not budge much.

As a rule people tend to be willing to accept a lower counter offer. Your best bet is to make the highest offer you're happy with and make it clear that it is your final offer. Be nice, but firm. Either you get the domain at a price you're happy with or you don't.

Once piece of advice I can offer is to not fall in love with a particular domain. Something strange happens with names. You start feeling attachment very quickly and it clouds your judgement. Trust me, there are other domains that you could like just as much as this one. Don't be afraid to move on.

Unless the domain owner is desperate for cash (i.e. a motivated seller) it will be hard to knock the price down. Firstly by expressing an interest the current domain owner now knows that the domain has some value. And then there's nothing to stop the domain owner from raising the price since you're interested. This isn't like buying a used car since the domain is unique so the idea that you can value a domain and use that to bargain doesn't hold up.

In that case, how would you go about negotiating the purchase of a domain -- in other words, how do you not show interest to keep the domain owner from raising the price? I'm not the OP, but am just curious what a better method would be.

But how can they justify such a high price? Besides them saying that they believe it's worth that much. There's no Alexa data on the domain and it doesn't have any history of back links or pagerank.

The stats don't matter when you're dealing with a commodity of one.

I find that when I get a ridiculous quote, believe me I've had some, the best thing to do is look for an alternative name and spend the savings elsewhere.

It's definitely a tricky negotiation. I've been on both side of the transaction (including deals that fell through for various reasons). ohashi has covered most of what I'd recommend. One thing to include ... seriously consider using an escrow service if you do come to an agreement to protect both side in the transaction.

There is an escrow service that we'd use for the deal. The quote price doesn't include escrow fees.

I hate domain hoggers with a passion. People that sit on domains just so that they can sell them to somebody who thinks it's an absolute necessity to hold a .com TLD, are morally corrupt. I much rather go for one of the other, perfectly acceptable TLD's - .net, .org, .eu., .co.uk etc.