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.

 

[poweredbyme]

I agree with you. The idea here was, thay if someone bought all the domains with the appraisal prices, they would have to pay an insanely high price. This is often used when cryptocurrency predictions seem suspiciously high

I want to say price is not a real factor of profit. Prices are uncontrollable and change faster than your competition power. Anyone wants to buy below the market price or sell above the market price. It can happen but those are rare lucky events. In the lucky times good profits are made, in the unlucky times good losses are made. It's not a sustainable business model. To be successful you need to focus on the value you offer to the market rather than focusing on the prices, including appraised prices. Prices, including appraisal are not static. Predictions on cryptocurrency market or stock exchange market, FX market, all markets are personal opinions, not investment advises. I don't think someone make decisions based on those free of charge and free of responsibility type predictions. People make decisions based on their own predictions or professional paid predictions supported with detailed analysis. Ironically, if a prediction becomes a publicly available info, it's no longer valuable. If I predict I will make good profits for trading something, I wouldn't share it with everyone.

 

[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)

 

[poweredbyme]

If you buy something that you know is worth more you don't need to sell above market price.

You probably say you always buy below market price as you say you disagree.

If you don't always buy below market price, then you don't disagree with me, you have enough expertise level and capital to offer value to your market and don't need to sell above market price. That's a sustainable business model.

If you always buy below market price, yes you disagree with me. You can always buy cheaper or sell higher than most people within market price range. Buying cheaper than most people doesn't mean buying below market price. You need to buy cheaper than everyone, not most people. You need to buy below the lowest known price for the similar thing. Lowest price is within market price range. You need to create a new lowest price each time you buy in order to always buy below market price. It can happen for a few times only and usually in the times market prices are in a long term downtrend.

 

[passini]

You probably say you always buy below market price as you say you disagree.

If you don't always buy below market price, then you don't disagree with me, you have enough expertise level and capital to offer value to your market and don't need to sell above market price. That's a sustainable business model.

If you always buy below market price, yes you disagree with me. You can always buy cheaper or sell higher than most people within market price range. Buying cheaper than most people doesn't mean buying below market price. You need to buy cheaper than everyone, not most people. You need to buy below the lowest known price for the similar thing. Lowest price is within market price range. You need to create a new lowest price each time you buy in order to always buy below market price. It can happen for a few times only and usually in the times market prices are in a long term downtrend.

Yes you right. I had a second read to your post, before your reply (the first time I had a distraction while reading) and I wanted to change something in my reply but it was already too late to edit. So yes I agree to your points

 

[zomainhacks]

You probably say you always buy below market price as you say you disagree.

If you don't always buy below market price, then you don't disagree with me, you have enough expertise level and capital to offer value to your market and don't need to sell above market price. That's a sustainable business model.

If you always buy below market price, yes you disagree with me. You can always buy cheaper or sell higher than most people within market price range. Buying cheaper than most people doesn't mean buying below market price. You need to buy cheaper than everyone, not most people. You need to buy below the lowest known price for the similar thing. Lowest price is within market price range. You need to create a new lowest price each time you buy in order to always buy below market price. It can happen for a few times only and usually in the times market prices are in a long term downtrend.

Your reasoning doesn't take into account that there's asymmetric information in the market. Perfect competition exists only in first year college economics textbooks.

 

[poweredbyme]

Your reasoning doesn't take into account that there's asymmetric information in the market. Perfect competition exists only in first year college economics textbooks.

I first thought I missed it. But after reading again what I wrote, I see I didn't miss. I said "lowest known price" and excluded unknown prices. If you point out hidden infos about domains for sale in the market, it would be the topic of another long discussion. But in the end, it wouldn't make my reasoning wrong.

Perfect competition theory helps to make the things comparable. Those textbooks were saying it doesn't exist in the real World when I read some decades ago. It is possible that new textbooks say the opposite.

 

[Mike Goodman]

@poweredby the statement "prices are fixed by the market" comes straight out of classical economic theory. The thesis was, and still is in academia, that economics was a scientific phenomenon and could be studied separately from the rest of human activity.

As an undergraduate I questioned this from my first term as a fresher and was told how it would all fall into place through the degree course. I graduated with honours, in economics, in 1980 still asking the same question. Today, 40 years later I no longer ask it. I dismiss the whole concept as bunkum. Just examine any of the mathematical "proofs". They too are bunkum because they sit upon bunkum assumptions.

Markets do not fix prices. Humans do. The Ferrari - Renault comparison is false. The prices are fixed at the behest of boardroom members, not by some "invisible hand".

In the case of domains on the second hand market, which is what it is in reality even though everybody including me prefers to call it the aftermarket, prices are fixed by two people doing the deal and the boundaries are so wide in so many cases as to be virtually irrelevant. Two other people doing that same deal would inevitably reach a different price. Only a few categories, the most traded ones, and we all know which they are because they are discussed time and again in forums such as this one, the recently held NamesCon and so on and so forth, could be considered to have any boundaries at all and even they are flexible.

How do we know the price for a domain isn't an end user sneaking into a "pro's" site? What is to stop a new domainer finding an end user market and believing the prices they are seeing are a wholesale price?

Making stickable prices for domains, or indeed for any classification of second hand goods, is not so simple as many on here claim.

That, if understood and used wisely, is of great benefit to domainers.

 

[Lord Antares]

@poweredby the statement "prices are fixed by the market" comes straight out of classical economic theory. The thesis was, and still is in academia, that economics was a scientific phenomenon and could be studied separately from the rest of human activity.

As an undergraduate I questioned this from my first term as a fresher and was told how it would all fall into place through the degree course. I graduated with honours, in economics, in 1980 still asking the same question. Today, 40 years later I no longer ask it. I dismiss the whole concept as bunkum. Just examine any of the mathematical "proofs". They too are bunkum because they sit upon bunkum assumptions.

Markets do not fix prices. Humans do. The Ferrari - Renault comparison is false. The prices are fixed at the behest of boardroom members, not by some "invisible hand".

In the case of domains on the second hand market, which is what it is in reality even though everybody including me prefers to call it the aftermarket, prices are fixed by two people doing the deal and the boundaries are so wide in so many cases as to be virtually irrelevant. Two other people doing that same deal would inevitably reach a different price. Only a few categories, the most traded ones, and we all know which they are because they are discussed time and again in forums such as this one, the recently held NamesCon and so on and so forth, could be considered to have any boundaries at all and even they are flexible.

How do we know the price for a domain isn't an end user sneaking into a "pro's" site? What is to stop a new domainer finding an end user market and believing the prices they are seeing are a wholesale price?

Making stickable prices for domains, or indeed for any classification of second hand goods, is not so simple as many on here claim.

That, if understood and used wisely, is of great benefit to domainers.

Market price isn't a magical, fixed amount at which all deals will be struck. It is an EXPECTED price based on other, similar sales. There is absolutely a market price for cars and most other physical goods. Most are traded within the market price range.

If you strike an outlier deal, you paid either below or above market price. It has nothing to do with one single transaction.

For domains, market price is less defined and very loosely based because no two domains are alike and as such, no established price is there.

 

[Mike Goodman]

@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.

 

[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.

 

[zomainhacks]

I first thought I missed it. But after reading again what I wrote, I see I didn't miss. I said "lowest known price" and excluded unknown prices. If you point out hidden infos about domains for sale in the market, it would be the topic of another long discussion. But in the end, it wouldn't make my reasoning wrong.

Perfect competition theory helps to make the things comparable. Those textbooks were saying it doesn't exist in the real World when I read some decades ago. It is possible that new textbooks say the opposite.

You can always buy in a market venue where prices are lower compared to other market venues. In this case you always are profiting when you buy.
This is absolutely possible with domaining. Even if you take into account only the wholesale market, you can "easily" hand register a domain and resell it immediately for reg fee + a profit (there are many real cases of this in this forum).
Anyway it's a complex topic and my reply wanted to be just an argument of discussion