crazy valuations!?!?

[damion]

They think that charging £10,000 for something that cost around £10 (a 1000 times increase in price) is greedy and if you can't see their point then you're either naive or arrogant.

I can understand the thought process, because it derives from ignorance, but I can't acknowledge there is a valid point.

It's pure naivety on the side of the people that would find a 1000 times increase on a £10 price in overall greedy, as that would equal to the assumption all domains are equal.

And it's a fact that not all domains are equal, don't you agree?

 

[Brassneck]

I can understand the thought process, because it derives from ignorance, but I can't acknowledge there is a valid point.

It's pure naivety on the side of the people that would find a 1000 times increase on a £10 price in overall greedy, as that would equal to the assumption all domains are equal.

And it's a fact that not all domains are equal, don't you agree?

Admittedly there are a number of domains where this is the case, but for the vast majority of domains I agree with Sean. In my opinion, unrealistically high pricing creates bad feeling amongst the general public and ultimately does have a negative impact on developing a thriving secondary market.

As some of the big portfolio holders get towards middle age / older it will be interesting to see how they cash in their portfolios. I'm not aware of too many buying UK portfolios so I personally expect to see many of those 4-figure domains will be sold at low reseller prices eventually.

For me, a steady stream of sales at prices which end-users can stomach is my strategy and I am happy with the results so far.

Stephen.

 

[damion]

Admittedly there are a number of domains where this is the case, but for the vast majority of domains I agree with Sean. In my opinion, unrealistically high pricing creates bad feeling amongst the general public and ultimately does have a negative impact on developing a thriving secondary market.
.

Agreed, problem is, the general public isn't domain savvy enough to create realistic prices themselves and therefor are to quick to label someone as greedy.

 

[damion]

Indeed Sean, I would have never dared to guess Zoorama.co.uk would sell for a price like that.

 

[Silverz]

Domains are not always worth what the buyer is asking for them, otherwise we wouldn't see the countless threads with sellers lowering their domains by hundreds (sometimes more) over a period of days. In my view a domains value is the price given at the time of sale and not a moment sooner !..sure some sellers can wait months and maybe years looking for the right buyer to come along and that is I guess the tricky part of selling anything (not just domains).

However saying that offering someone $150 is a 'lame' move, is just a silly thing to say in my opinion, as we all know some domains are sold for £10 and sometimes less right here at Acorn !..if a seller comes back saying the price of the domain is $24k or waaaay over what you offered then you move on, simple as that.

 

[domainseller200]

However saying that offering someone $150 is a 'lame' move, is just a silly thing to say in my opinion, as we all know some domains are sold for £10 and sometimes less right here at Acorn !

That is because they are in the car boot section of the domain industry - not knocking some strangers door offering £10 for his BMW (in his eyes)

If you think a car is worth £1,000, you don't offer the guy £100 when you first ring him - do you really expect him to take you serious ?

 

[domainseller200]

As they say, a fool and their money are easily parted and there's plenty of fools out there (or there was) which means it's a numbers game that some sellers are willing to play and when it pays off, it pays off well.

I'm not arguing against a persons right to ask whatever price they want, my point is that you shouldn't then call the buyer for thinking your greedy because he/she may just have a point.

Sean, if someone emailed you offering $150 for your sportswear.co.uk domain name - would you reply ? (serious question)

 

[Brassneck]

If you think a car is worth £1,000, you don't offer the guy £100 when you first ring him - do you really expect him to take you serious ?

The thing is there are millions of cars sold each year and there are a limited number of models so there is really good data available to set market prices. There is limited similar info in the domains market and relatively few sales to end users. So who really knows what a fair price for a domain is.

Just looking here http://www.domainprices.co.uk/Domain_Sales_Prices.php shows the large variations in prices and this is a biased list as it doesn't included loads of Sedo sales which are below £500., including virtually all of mine!

Stephen.

 

[Silverz]

That is because they are in the car boot section of the domain industry - not knocking some strangers door offering £10 for his BMW (in his eyes)

If you think a car is worth £1,000, you don't offer the guy £100 when you first ring him - do you really expect him to take you serious ?

I understand the point you're making domainseller200, and I can totally understand how someone offering you a fiver for a domain you know is worth thousands can seem shocking (and a little insulting), however I'm talking about a situation where the domain has no 'set' price, doesn't have an eye opening amount of Local exacts, or anything really that a buyer could justify spending over a £100 for (for example)..so offering $150 is not lame at all in my opinion.

We also have to take into account that not everyone understands or even knows about things like local exacts or a domain names 'brandability' , so to these people, their offer is not meant as an insult to anyone, and I'm sure in some cases think they are offering a fair amount lol.

I would rather take the time to explain why I as a domain seller feel the domain is worth more..and then at the very least they will understand a little more about the value of domains...who knows they may even come back after reading into it, and offer you a decent, and fair price. I can't see any negatives from this type of communication.

I recently contacted a guy and offered £100 for a domain, he came back and asked for £800, I replied politely why I felt the domain was not worth that amount and he never responded back. 6 months later he contacted me 2-3 times, and the last email was to offer me the domain at £80, lower than I originally offered, however I had already purchased another domain so was not interested anymore and explained this to him..

So my point is sometimes sellers overprice, and sometimes buyers seriously under offer, but if both parties give their own reasons for their expectations/offers, then sometimes a deal can still be met, or at the very least the buyer can walk away with more of an understanding about pricing of domains (what makes a domain more valuable), and the seller can re-evaluate expectations of the domain in question.

 

[BREWSTERS]

The thing is there are millions of cars sold each year and there are a limited number of models so there is really good data available to set market prices. There is limited similar info in the domains market and relatively few sales to end users. So who really knows what a fair price for a domain is.

Cars are not a good analogy - domains are unique, and so are users plans for them. If you want to buy a used Golf GTi you have a wide pool of identical cars to choose from, and your plans for that car are going to be similar to all other buyers. As you know, a single variation from your ideal domain can render it worthless.

There never will be a 'market price' as such for domains due to them being unique...even LL or LLL domains vary hugely...this is the beauty of the domain market and also probably what stops domains from becoming a mainstream investment.

 

[Brassneck]

Cars are not a good analogy - domains are unique, and so are users plans for them. If you want to buy a used Golf GTi you have a wide pool of identical cars to choose from, and your plans for that car are going to be similar to all other buyers. As you know, a single variation from your ideal domain can render it worthless.

There never will be a 'market price' as such for domains due to them being unique...even LL or LLL domains vary hugely...this is the beauty of the domain market and also probably what stops domains from becoming a mainstream investment.

Are we not agreeing then?

 

[EdwinEdwin is verified member.]

Unless you are going to spend your life flipping regfee name after regfee name for a small multiple (very time and labour intensive, but inventory light) then the costs I outlined in the blog posts (carrying cost of unsold inventory, etc.) are REAL and can't magically be brushed under the table. None of us are mind readers - since we can't guess what will sell next, we HAVE to carry lots of inventory to get those relatively few sales. That means that selling a £10 domain for £1,000 is not a massive rip-off but a prudent strategy that falls straight out of the math... and which at the end of the year will hopefully leave a small profit.

Anyone who sees it differently REALLY doesn't understand the essentials of ensuring that a business balances its books.

 

[EdwinEdwin is verified member.]

And the difference between the domain industry and the car industry is that people instinctively understand that cars "cost a lot" because they see all of them lined up at the dealers (inventory is never cheap), realise that lots of expensive raw materials and labour go into making them, etc.

Whereas for most ordinary folk the domain industry is a "black box" that seems to take in regfee names and spit out "expensive" ones. They're not readily able to see inside the box, which is why hackles are easily raised when it comes to domain prices.

 

[Brassneck]

Unless you are going to spend your life flipping regfee name after regfee name for a small multiple (very time and labour intensive, but inventory light) then the costs I outlined in the blog posts (carrying cost of unsold inventory, etc.) are REAL and can't magically be brushed under the table. None of us are mind readers - since we can't guess what will sell next, we HAVE to carry lots of inventory to get those relatively few sales. That means that selling a £10 domain for £1,000 is not a massive rip-off but a prudent strategy that falls straight out of the math... and which at the end of the year will hopefully leave a small profit.

Anyone who sees it differently REALLY doesn't understand the essentials of ensuring that a business balances its books.

Just for fun, here are some worked examples.

My business model

I have 2000 domains, of which I sell 10 per cent at £200 each per year.

My income is £40,000 and my reg costs are £5,000. I have theoretical profit of £35,000.


High-price business model

I have 2000 domains, of which I sell 1 per cent at £1000 each per year.

Income of £20,000 and reg costs are £5,000. Theoretical profit of £15,000.


In my model I can reinvest my profit either in spending time catching more domains or in developing my sites to do more profitable activities such as website development.

In the high-end model I make less theoretical profit to invest elsewhere and in the long-term I will still have to reduce my prices when I want to sell my business.


I know all this is very simplified, but I feel much happier with my approach.

Stephen.

 

[EdwinEdwin is verified member.]

That's a nice simple comparison.

It would be good to put in an amount for "time" though because in the top example especially there's a lot of effort required to achieve those sales (including replenishment of the inventory, which also brings costs which can easily be > reg costs) and of course "time is money", and that affects the numbers.

In the first model, you're also assuming that you're able consistently able to reg/catch/buy 200+ new domains of greater or equal quality to the ones you sold for (£35,000 - all non reg costs) to replenish your inventory.

Anyway, thanks for laying it all out.

 

[fozfoz is verified member.]

I would aim higher, e.g.

I have 2000 domains, of which I sell 10 per cent at £1,000 each per year.

My income is £200,000 and my reg costs are £5,000. I have theoretical profit of £195,000.

Asking £1K for a domain is not absurd, most spend more than that on a logo design.

 

[BREWSTERS]

Are we not agreeing then?

Sorry, yes we are - I misread your post!

 

[thecat]

The common man thinks very differently to the perception many of you seem to have of them.

He wants to buy a domain for his business.
He goes to the url and finds some weird landing page and as this is total junk he assumes the site is not being used for anything.
He then contacts owner and says "hi, you have a domain I want and it's doing nothing so here's a 100 quid ta".

And they'd be reasonable to make that assumption. The domain isn't used for anything. It's junk right? If it was a good domain you would have built a site right?

This is the normal way of thinking.

Doesn't make it "right", but it's how people think.

 

[Brassneck]

The common man thinks very differently to the perception many of you seem to have of them.

He wants to buy a domain for his business.
He goes to the url and finds some weird landing page and as this is total junk he assumes the site is not being used for anything.
He then contacts owner and says "hi, you have a domain I want and it's doing nothing so here's a 100 quid ta".

And they'd be reasonable to make that assumption. The domain isn't used for anything. It's junk right? If it was a good domain you would have built a site right?

This is the normal way of thinking.

Doesn't make it "right", but it's how people think.

Pertinent observation there.

They are also sometimes more intelligent than we think. The savvy ones know how to use whois, wayback machine etc, and they can tell that a domain seller might have had the domain for more than decade and done nothing with it and has obviously not been able to sell it. They might justifiably think that "if nobody else has paid top money to buy the domain for their business over the last 10 years then why should I ?"

 

[namealot]

I would aim higher, e.g.

I have 2000 domains, of which I sell 10 per cent at £1,000 each per year.

My income is £200,000 and my reg costs are £5,000. I have theoretical profit of £195,000.

Asking £1K for a domain is not absurd, most spend more than that on a logo design.

Don't believe a 2000 portfolio would be wide enough to achieve 200 £ 1000 per year..? Do you know of anyone that does.?
Even sedo with the 10s of thousands of co.uk the median sale prices of 300 to 500 over the past few years fall well short of 1k