discuss I think some $3000 domains are worth more than other $3000 domains

[Lord Antares]

I know for a fact that some domains purchased in the $300 range at an auction sold at a $3000 range to an end user. I also know many hand regs or bargain bin domains sold for the same range so where does the disparity come from?

While browsing the appraisal section on the forum, I saw a lot of brandable domains get a $4X appraisal and I also saw a lot of EMDs and keyword domains get the same appraisal, even though I'd value the latter a lot more in some cases.

The difference is in sell through rates. I think brandables (specifically made up words or two word combos) can be so utterly specific, that very few people would consider buying them. Whenever they do, they were going for that specific name for a reason and they won't settle for alternatives because there are none similar. On the other hand, more generic domains are easy to think of and will thus attract more buyers. This results in a faster sale, even if the price ends up being the same.

My point is, appraisals don't tend to acknowledge this and this might mislead people. It's easy to appraise a hand reg brandable at $4x and it technically would be right as they tend to sell over at brandbucket and similar websites in that range but there are people who specialize in hand regging and selling brandables who have to struggle to sustain a positive ROI. These people typically need to have large portfolios to have regular sales and don't forget the eternal renewal loop. On the other hand, a portfolio of expensive liquid domains might need to be a fraction of that size to achieve the same number of sales.

This might be obvious to seasoned domainers, but newbies might leave thinking they just got free money after getting their hand reg appraised at $1500; an appraisal which might not even be wrong in a technical sense. Then they will do it again and again, thinking they are multiplying money. I think it might be helpful to indicate this somehow while doing an appraisal.

P.S. I have nothing against brandables. I was using them because they are the easiest example. Obviously, a brandable domain like Neva.com will blow this notion out of the water. I generalized for convenience.

What do you think about this? Discuss.

 

[bmugford]

The truth is any domain can sell for $3000 to the right buyer. The difference is the likelihood.
The better domains have much higher odds of that happening.

Brandables are far more subjective than other types which have a more defined use.

Brad

 

[bmugford]

Exactly my point. Therefore, I just want to express that a $3000 appraisal might not mean much and might mislead people into believing that they have more than they actually do.

Yep. Just look at NameBio.com sales between say $2,500 - $3,500. Some domains in that range are incredible and could be resold easily and others are just garbage. It is the nature of domains and subjective values to a specific buyer at a specific time.

In a perfect world appraisals would include likelihood of a sale and consider liquidity.

Brad

 

[frank-germany]

A domain is only worth what a buyer is willing to pay

you a victim of a popular fake news approach


you are not obliged to sell the domain to an offer you receive

that why the contrary is true:
a domain is worth what you are willing to sell it for

 

[NameBuyer.com]

I know for a fact that some domains purchased in the $300 range at an auction sold at a $3000 range to an end user. I also know many hand regs or bargain bin domains sold for the same range so where does the disparity come from?

I think there are a couple factors in play here.

• Some domain investors sell at 10x their purchase price as a general rule
• Speculation in a lower-demand domains vs Selling a proven business names

Investors Selling at 10x their Purchase Price

For those that sell at 10x their purchase price, I would suspect they can achieve sell-thru rates of 3-4%, while someone selling lesser demand domains probably gets 1-1.5% in this price range ($3k).

The question is then, why would investors pay $30k for 100 names when others are spending just $850-$2,000 for 100 names.

Like it was mentioned above, I think this comes down to sell-thru rate and the demand for the domain. Plus, their registration carrying costs (per name) will be less with a model like this. If you can achieve a 4% sell-thru rate that would yield $12,000 per year for every 100 domains and only $850 in renewal fees (using the $3k per sale example), that's pretty good after the initial purchase. For the lower-demand domain portfolio, the revenue could be as low as $3,000 per year (at 1%), with $850 in renewal fees. If I wanted a high-power small portfolio, you can get some great revenue and profit margins like this with just 300 domains. If you had 300 domains achieving 4% sell-thru, that would be $36k, with a nice $32.2k in profit after purchasing replacement domains.

What a lot of people also don't factor in is time. To get to 8,000 domains it took me 100s of hours, but for someone to get to 100, 200, or 300 domains, there is far less time invested, and it is much more manageable. It is also much easier to find decent names at auction for $200-$300.

Speculation in Lower-Demand Domains vs Proven Business Names

The other factor that comes into play is investors buying lower demand domains (and speculating there will be future demand) vs proven business names (with higher confidence there could be a buyer). For lower quality names with less demand, there is more speculation that is being done, and some people aren't good at speculation. So for some, it is probably much easier for them (skill-wise) to invest in a strong brand that 3-4 other businesses are already using.

I mentioned this in detail in the post below:

I sold PlanToGrow(dot)com in March for $24,500. I paid $19.47 for it 4 years earlier. There wasn't any demand when I purchased it, and no notable sites, but I could envision it for a marketing campaign or an organization. This was speculation in a Lower Demand Domain, but I've gotten to be pretty good at my speculation over the years.

Compare that to MetroAutoSales(dot)com that I purchased via Auction in May for $740. If you do a search for Metro Auto Sales on Google, there are a ton of results from actual car dealerships. These businesses have an inventory of cars that are valued at $200k to over $500k (ex. 40 cars x $10,000 each). A business like this potentially spends a lot on marketing and when comparing it to the products they sell, buying a domain for $30k is not a big deal. This is an investment in a Proven Business Name.

So when buying a domain you are either a speculator buying lower demand names or an investment analyst buying proven business names. If you're speculating, you better have a knack for it, or work at improving it by paying attention to business names and advertising trends. If you don't have skills in that area, you can focus on investing in proven business names. It is much easier to determine a value for a proven business name. Just look at the current businesses, determine what the best version of that business would look like, and price accordingly (similar to what I did for MetroAutoSales above). Come up with some simple numbers in a spreadsheet. A good example I've used in the past is my domain ASliceAbove(dot)com. To single pizza restaurant with this name, the domain may be worth $1,750, but to a chain with 10-15 locations, it could be worth $20k or much more.

Two Generalized Types of Successful Domain Investing

• Speculation of Lower Demand Domains - Domains where the use of the term is widespread and obvious (or looks good as a brandable), but there is little or no current use. No businesses with significant earnings are using the phrase. (example PlanToGrow(dot)com)

• Investment in Proven Business Names - Domains where there is at least some significant use in commerce. (example MetroAutoSales(dot)com)

https://www.namepros.com/threads/sell-through-rates.1193687/#post-7904404

 

[Lord Antares]

The truth is any domain can sell for $3000 to the right buyer. The difference is the likelihood.
The better domains have much higher odds of that happening.

Brad

Exactly my point. Therefore, I just want to express that a $3000 appraisal might not mean much and might mislead people into believing that they have more than they actually do.

 

[Lord Antares]

Thanks for a perceptive argument in your OP @Lord Antares and an excellent topic for discussion. I agree that it is easy to overlook the critical sell-through rate and that the same probable price can have different probabilities of sale.

I listened to an interview lately with the BB founder and she mentioned that the best brandable names could apply to many different businesses, so don’t entirely agree that brandable names have narrower audience.

The sell-through rates to the degree reported seem better at brandable marketplaces than industry wide for the TLDs they handle, I would assume largely because the selection process eliminates many unlikely to sell names.

But to your main point I agree. An ideal appraisal would in my opinion include price, probability of sale, and supporting evidence for both to the degree possible.

Thanks again for a great topic for the thread.

Bob

I would just like to point out that I was comparing the demand of a singular domain, not the size of the target niche.

Obviously, non-keyword brandables have the widest niche of all as they might fit any company, I was just saying that any singular made up brandable will typically have lower demand than a typical EMD.

I think everything is subject to interpretation. I do deal in brandables as many others do and I think at times the opposite is true- some marketplaces routinely undervalues domains and that tends to be much more likely than to overprice them. The domainers in this scene tend to just accept these subjective valuations. I have seen names that should not have such low price tags and yet they do. Have also seen garbage that should not be there at all.

No one can declare with certainty any domain will sell be it EMD or brandables. Let’s face it, brandables are popular because EMD is not snazzy and is rather boring. Different strokes.

As far as the newbs, if they come here they are warned immediately not to trust any valuation as gospel. Some people have to register crap to later find out what is not crap. Others are able to learn from others mistakes.

I just used brandables as a practical example. Brandables can be very good. Even those that aren't can be very cheap to compensate.

Talking of successful names,
One domain get sold for $200,000 and then gets resold for 120k? Where is the pattern in that.

A well funded startup might be willing to pay a lot more for a generic keyword .com
The same generic keyword will have a a different perceived value if two buyers are different industries
Book.com will be valued very differently by an accounting firm vs a book shop vs a betting company?

There is no standard at all.

People give a higher price tag and wait. Some people lower the price for liquidity.

Please give example of a repeatable pattern.

Even on Domain sherpa, different people will value a domain very differently. A 100% range is not a pattern, but the prices can vary as high as 10x in what we value and it they get bought for,


I think we are going off tangent from your main post though. I totally agree with your main posts. regarding your main posts.
The valuation of the brandables are totally pointless. Most of the The buyers are actually paying for a "Naming" service, not really a domain name. And it is best to differentiate the two.

We are not talking about science, only things that tend to be true a lot of the time.
Things like:
- shorter brandables generally being more valuable than longer ones (pronounceable 4Ls sell for more than pronounceable 6Ls in general)
- some suffixes/prefixes being better than others. "City" tends to sell more than "bungalow". Therefore, sportcity.com should rightly be considered more valuable than sportbungalow.com
- .com is the most valuable tld. .net is less valuable, .mobi less still etc. Lots of evidence to support this claim

Patterns are real, they're just not science.

 

[BuyBrandWeb.com]

We will just agree to disagree. Everyday there are more surprise auction wins that makes no sense. But that is wholesale where most people have a set acquisition price for resale. And the pattern is nothing but the buyer's own logic.



@BuyBrandWeb.com does this successfully. @Bob Hawkes

It works for selected domains only with massive end-users; better to send a mail to 5 qualified leads than spamming hundreds of business owners.

 

[Lord Antares]

of course, but every domain name is unique. While some class of domains are higher priced than others, the price is still what a buyer is willing to pay. You asking price is not a price is there are no buyers for eternity

But you can't appraise a domain at "beauty is in the eye of the beholder". If you take a trash hand reg by a noob for example, I think it would be more helpful to appraise it as worthless than "you never know".

Otherwise, he might end up like That Name Guy hoarding trash believing he's got gold.

 

[karmaco]

I think everything is subject to interpretation. I do deal in brandables as many others do and I think at times the opposite is true- some marketplaces routinely undervalues domains and that tends to be much more likely than to overprice them. The domainers in this scene tend to just accept these subjective valuations. I have seen names that should not have such low price tags and yet they do. Have also seen garbage that should not be there at all.

No one can declare with certainty any domain will sell be it EMD or brandables. Let’s face it, brandables are popular because EMD is not snazzy and is rather boring. Different strokes.

As far as the newbs, if they come here they are warned immediately not to trust any valuation as gospel. Some people have to register crap to later find out what is not crap. Others are able to learn from others mistakes.

 

[Lord Antares]

I can price a domain name 1 million and never sell it and it won't be the value of the domain.
Anyway, my point was how the same domain can have different value.
of course a transaction requires both a sale and a purchase, and then there is the seller market and there is buyer market depending on cirscumstance

But that was the entire premise of the argument. You said it's not possible to evaluate a domain name due to the randomness of the sales. I claimed that it is, as clearly evidenced by patterns above.

My point is, "a domain is worth whatever someone is willing to pay for it" is a non-genuine response as there are clearly superior and inferior domains and domainers need to be able to differentiate between them if they don't want to lose money.

 

[passini]

Anyone wants to buy below the market price or sell above the market price. It can happen but those are rare lucky events.

I disagree about this because I have doing this for 26 years in my full time job (art dealer) and 17 years in domains. I always made the money when buying, I am good at this. I know others make the money when they sell. If you buy something that you know is worth more you don't need to sell above market price. I am not probably a so good seller, I have more fun searching and purchasing something I know it will sell for more so I focused my businesses on acquisitions. And yes it is all about knowlege and prices and not rare lucky events. IMHO (and experience)

 

[Ostrados]

The difference is in sell through rates. I think brandables (specifically made up words or two word combos) can be so utterly specific, that very few people would consider buying them. Whenever they do, they were going for that specific name for a reason and they won't settle for alternatives because there are none similar. On the other hand, more generic domains are easy to think of and will thus attract more buyers. This results in a faster sale, even if the price ends up being the same.

On the contrary I believe there is much higher demand on brandable domains but supply is much higher at the same time, and thats lower STR considerably. Most startups prefer to chose brandable names (that are madeup names, short names, creative names..etc) because such names provide uniqueness and are easier to remember (imagine that Uber picked a name such as "HireCab" instead of "Uber" for example).

But as you said the main problem with brandables is that there are too many free options out there, which contributes also to high supply mentioned above.

Main advantage of brandables is that the acquisition cost is much lower and thus you can scale up on the go, while in EMDs acquisition cost is much higher and hard to scale if you dont have decent starting capital.

That being said I feel the appraisal are just fine, because appraisal are just static appraisals with no mention to selling probability, it would be great if appraisals include expected STR but I think it is very hard to estimate. From my experience I estimate that brandable 4Ls have at least 5x higher STR than normal brandables, but I dont know how 5L domains compare to 2 words domains or one word brandable vs EMD..etc

 

[Lord Antares]

A domain is only worth what a buyer is willing to pay

This is true but there are still objectively better or worse domains, i.e. domains that are more likely to sell and/or sell for a higher price.

 

[bmugford]

A domain is only worth what a buyer is willing to pay

I see that saying a lot, but IMO it is kind of a meaningless platitude.

There are certainly domains out there that a lot more people are willing to pay premiums for than others.

There is a difference between educated investing and playing the lottery. It comes down to odds and likelihoods.

But you can't appraise a domain at "beauty is in the eye of the beholder". If you take a trash hand reg by a noob for example, I think it would be more helpful to appraise it as worthless than "you never know".

Otherwise, he might end up like That Name Guy hoarding trash believing he's got gold.

Yep. Well said.

Brad

 

[blogspotter]

But you can't appraise a domain at "beauty is in the eye of the beholder". If you take a trash hand reg by a noob for example, I think it would be more helpful to appraise it as worthless than "you never know".

Otherwise, he might end up like That Name Guy hoarding trash believing he's got gold.

Who is this Name Guy lol? The one with Ideas and no time?

When I say the price is what a buyer is willing to pay, I am not referring to the trash domains that the regger thinks is gold. What I mean is, you can't say this is a one word insurance domain so it is xxx,xxx

Or more like every domain is unique depending on the timing, how badly the buyer wants it, what kind of position the buyer is in and a lot of different factors, and every transaction is unique, and at the end it al depends on how much the buyer is willing to pay at the end of it.

Not saying every domain has some value. And definitely not talking about keeping a shit domain until a crazy buyer comes along.
I am talking about the uniqueness of how people price domains. There is no pattern at all, except some liquid domains in the wholesale.

 

[blogspotter]

Anyway, I agree that every domain is unique but I disagree that there are no patterns. There are patterns for successful domains, even if there are a lot of anomalies due to subjective factors.

Talking of successful names,
One domain get sold for $200,000 and then gets resold for 120k? Where is the pattern in that.

A well funded startup might be willing to pay a lot more for a generic keyword .com
The same generic keyword will have a a different perceived value if two buyers are different industries
Book.com will be valued very differently by an accounting firm vs a book shop vs a betting company?

There is no standard at all.

People give a higher price tag and wait. Some people lower the price for liquidity.

Please give example of a repeatable pattern.

Even on Domain sherpa, different people will value a domain very differently. A 100% range is not a pattern, but the prices can vary as high as 10x in what we value and it they get bought for,


I think we are going off tangent from your main post though. I totally agree with your main posts. regarding your main posts.
The valuation of the brandables are totally pointless. Most of the The buyers are actually paying for a "Naming" service, not really a domain name. And it is best to differentiate the two.

 

[Lord Antares]

I still don't get what is the disagreement


Inferior and Superior domains are of course there, but that is not the point. All domain pricing is still arbitrary.
Which is also why Auction is so common in the domain industry. Auction is nothing but price discovery. How much a buyer is willing to pay. The rest of the all high value sales are nothing but salesmenship. How good you are in persuading someone who has no idea about the domain industry in buying something you just picked up for 1200 in an auction a few weeks back. because if the buyer was aware of how the industry works, he would have been in That Auction.

Again, saying that Insurance.com is more expensive than Bacassurance.com is not a pattern

But what range the auction is going to end in can be guessed to a statistically significant degree of accuracy. Have a pro domainer vs a noob guess what amount the auction is going to end at. The pro will win. The more auctions they are guessing, the more convincing the pro's victory will be. This means that the prices are not completely "arbitrary", there's a pattern based on various factors.

I had never thought about it that way - interesting concept. So auctions that mainly appeal to domainers can be used for wholesale price discovery.

Have any of the brandable places (or somewhere else with retail focus - I guess things like Sedo auctions are wholesale-retail mix) ever tried retail-target auctions where a name with a variety of potential end users is auctioned off after some period of promotion to get noticed? Would be interesting for retail price discovery. I do realize that some brokers announce on social media a premium name and period accepting offers, which is somewhat similar I guess, although submissions not publicly known.

Bob

Some domainers have reported doing outbound in this manner. They would send a link to their auction to all potential end users and hope for a competitive fight. I don't know what their results are, can't remember if anyone reported success.

 

[blogspotter]

But what range the auction is going to end in can be guessed to a statistically significant degree of accuracy. Have a pro domainer vs a noob guess what amount the auction is going to end at. The pro will win. The more auctions they are guessing, the more convincing the pro's victory will be. This means that the prices are not completely "arbitrary", there's a pattern based on various factors..

We will just agree to disagree. Everyday there are more surprise auction wins that makes no sense. But that is wholesale where most people have a set acquisition price for resale. And the pattern is nothing but the buyer's own logic.

Some domainers have reported doing outbound in this manner. They would send a link to their auction to all potential end users and hope for a competitive fight. I don't know what their results are, can't remember if anyone reported success.

@BuyBrandWeb.com does this successfully. @Bob Hawkes

 

[poweredbyme]

Anybody who has taken any officially accredited economics course is only too aware it is based upon armchair philosophy totally unrelated to anything going on in the real world.

Now, back to this discussion. I have got a headache.

If it was correct anything in the real world would be irrelevant to anything going in the real world.

The point here was that all of the appraisals cannot be correct.

There are 2 opinions in the previous posts:
One opinion says price is determined by buyer and the another opinion says price is determined by seller. Both of them is incorrect. Price is determined by market in a free market economy.

That means no single entity or person has enough power to control market prices. Every goods in every market have a market price. As each domain is unique, people in domain market tend to think they can set any price they wish, based on scarcity, based on how much buyer needs it or how urgently seller needs cash. Those are wrong thoughts.

Domainers usually forget they operate in domain market and each domain has a market price like other goods such as oil, rice, computers, etc. Average price per domain can be $30, $300, $3,000 or $30,000. Price is just numbers, means nothing. Because true profits and losses are determined mostly competiton power in market. You can not make true profit or true loss form something that you can't control. So appraisals are not needed, their accuracy has no importance.

Main reason of those wrong thoughts is that many sellers and buyers in every markets think they have made extra profits by price manupulations using some marketing/promotion/purchase strategies and tactics. In fact those extra profits are not sustainable and frequently turn into extra losses. People tend to ignore frequent negative events, keep rare positive events in mind. All they have to do is to bring domains to the market that have demand and not to waste their energy to create extra demand that can not exist naturally in the real world.

 

[Lord Antares]

@Lord Antares you are agreeing with me for the second time in this discussion in the generality at least. However, because there is variation in price there can by definition be no such thing as "the" price. But that is not the more widely understood or inferred meaning of the way prices are set. That is done within, not by, markets, which is another central point most do not grasp. There is not such thing as "the market". There are many of them.

However, it is away from the point I was addressing. @poweredbyme made the statement "Price is neither determined by buyer nor by seller. Anyone who took econ101 course would know this." The fact is, in a second hand market, the buyer and the seller are the only ones who can set the price.

That's enough for me on this topic. I shan't be responding to any more posts on it, whether they be correct or incorrect.

But then we are arguing pragmatics. The laws of economics aren't wrong, you're looking at them differently.

 

[blogspotter]

A domain is only worth what a buyer is willing to pay

 

[Lord Antares]

I think people pricing brandable domains higher is not because they are newbies, most of them intuitively knew those names are lesser chances to get picked up and if there is a buyer in favor of it then could be much more wanted than EMDs.

Yes, that's my point. They aren't wrongly priced but they can give the wrong idea to newbies.

Have you ever encountered someone selling a portfolio or talking about his portfolio? I find it funny how people will consider the best case scenario when appraising these portfolios.

Like if somebody has 100 domains like govop.com (hand regs), they say they have about $200,000 worth of domains because each can be sold for $2000 lol. They treat it like they have an asset that's automatically worth that kind of money because each of those domains has a minuscule chance of getting sold for $4x. I've seen this kind of thing before on this forum.

Who is this Name Guy lol? The one with Ideas and no time?

When I say the price is what a buyer is willing to pay, I am not referring to the trash domains that the regger thinks is gold. What I mean is, you can't say this is a one word insurance domain so it is xxx,xxx

Or more like every domain is unique depending on the timing, how badly the buyer wants it, what kind of position the buyer is in and a lot of different factors, and every transaction is unique, and at the end it al depends on how much the buyer is willing to pay at the end of it.

Not saying every domain has some value. And definitely not talking about keeping a shit domain until a crazy buyer comes along.
I am talking about the uniqueness of how people price domains. There is no pattern at all, except some liquid domains in the wholesale.

Yes, that name guy is the guy who knows and has personally negotiated with CEOs of every single fortune 500 company, has friends in every world renowned organisation and knows every lawyer and celebrity on earth. I think he even said he named a country. Entrepreneurs beg him to name their company yet his brandables are not selling, weirdly enough.

Anyway, I agree that every domain is unique but I disagree that there are no patterns. There are patterns for successful domains, even if there are a lot of anomalies due to subjective factors.

 

[Bob Hawkes]

Thanks for a perceptive argument in your OP @Lord Antares and an excellent topic for discussion. I agree that it is easy to overlook the critical sell-through rate and that the same probable price can have different probabilities of sale.

I listened to an interview lately with the BB founder and she mentioned that the best brandable names could apply to many different businesses, so don’t entirely agree that brandable names have narrower audience.

The sell-through rates to the degree reported seem better at brandable marketplaces than industry wide for the TLDs they handle, I would assume largely because the selection process eliminates many unlikely to sell names.

But to your main point I agree. An ideal appraisal would in my opinion include price, probability of sale, and supporting evidence for both to the degree possible.

Thanks again for a great topic for the thread.

Bob

 

[blogspotter]

But that was the entire premise of the argument. You said it's not possible to evaluate a domain name due to the randomness of the sales. I claimed that it is, as clearly evidenced by patterns above.

My point is, "a domain is worth whatever someone is willing to pay for it" is a non-genuine response as there are clearly superior and inferior domains and domainers need to be able to differentiate between them if they don't want to lose money.

I still don't get what is the disagreement


Inferior and Superior domains are of course there, but that is not the point. All domain pricing is still arbitrary.
Which is also why Auction is so common in the domain industry. Auction is nothing but price discovery. How much a buyer is willing to pay. The rest of the all high value sales are nothing but salesmenship. How good you are in persuading someone who has no idea about the domain industry in buying something you just picked up for 1200 in an auction a few weeks back. because if the buyer was aware of how the industry works, he would have been in That Auction.

Again, saying that Insurance.com is more expensive than Bacassurance.com is not a pattern