NameSilo
Bob Hawkes

How Are Domain Name Prices Changing?

Views:
2,892
Comments:
13
By Bob Hawkes, Jan 21, 2021
  1. Bob Hawkes

    Bob Hawkes Top Member NameTalent VIP Gold Account Trusted Blogger

    Posts:
    7,293
    Likes Received:
    23,100
    While NameBio data indicates that average sales prices for .com domain names have been going steadily down year by year, that may not mean that retail prices have been decreasing. I think it is mainly an artifact due to changes in which venues have sales reported in NameBio, and the rise in wholesale acquisition prices resulted in more becoming part of the public part of the NameBio sales record. As a result, the balance has shifted toward more wholesale transactions relative to retail in recent years.

    Last week I looked at how average prices, number of domains sold, and sales dollar volumes in 2020 compared to the previous year. This week I look at average prices, but over a longer time period from 2008 to 2020, and try to extract trends from subsets of retail-dominated sales data. While retail prices are not going down, there seems little support for the view that, industry wide, they are going up either.

    Key Findings

    Here is a summary of key points from the analysis. The sections below provide the data and my logic in reaching these observations.
    1. If one includes all NameBio-listed sales of $100 and up, the average .com sales price has been declining since a high of $5975 in 2010. The $874 average in 2020 was the lowest for any year.
    2. However, the number of sales per year has been increasing. Year 2020 had the largest number of .com sales, about 108,800.
    3. Almost certainly the fraction of wholesale transactions has been increasing each year. This pushes the average price downward, even if there had been no change in actual retail prices.
    4. Starting in 2014 most Afternic sales were no longer reported to NameBio, and this pushed down the average reported price, since there were now fewer retail sales being reported.
    5. Sales from the brandable domain marketplaces are not reported on NameBio, and as more and more retail sales happen at these venues, that keeps the apparent average prices lower than they really are.
    6. If one looks at a venue where the majority of sales are retail transactions, Sedo, while average prices fluctuate from year to year, there is little evidence of a decrease in .com retail prices.
    7. I also looked at average sales prices by year for all country codes combined. There is an indication of a drop in average country code prices with time, although not as noted as for .com. The last five years are fairly constant.
    8. Another indicator of retail-only sales is to see how many sales were above some price point. I looked at the number of .com sales per year at $100,000 and more. The number has not changed systematically, although 2019 and 2020 were two of the three lowest years in the 13 year period.
    9. Since Sedo is the only one of the major general-purpose marketplaces that have many sales reported in NameBio, the rise of DAN, if it has taken significant market share from Sedo, would drive the apparent average price in NameBio reported sales down, as it would mean that more retail sales now take place at venues not reported in NameBIo.
    10. While retail domain name prices may be holding steady, the data do not support any significant rise in retail prices, on average. Clearly there are niches and types of domain names which have risen in retail value, but overall retail I found little evidence for increasing retail prices.
    11. This implies that a more effective strategy than simply buy at market prices and hold will be needed for domain investment success. It is increasingly necessary to make the most of opportunities to acquire good names at attractive prices, and to secure a reasonable rate of retail sales with a significant margin.

    The Decrease In .COM Prices

    As shown below, the apparent average price for .com sales as reflected in NameBio data has been decreasing since 2010. While 2020 and 2019 would have had similar average prices if the voice.com sale was excluded, without that sale the 2019 average would have been down significantly from 2018 and earlier.
    COMallVenuesGraph.png
    However, there have been various changes in venues that are reported in NameBio. In particular Afternic sales stopped being included during 2014. To show the impact, in 2013 about 13,400 of the 36,900 total .com sales in NameBio were from Afternic. That year the average .com Afternic sales price was $2479, so it is not surprising that without those sales the average price decreases.

    The rise of the brandable marketplaces, whose sales do not appear on NameBio, is also responsible for an apparent drop in average prices in recent years, as more and more retail sales are not being reported.


    Number Of .COM Sales Up

    Despite the sales taking place at brandable marketplaces, and the loss of Afternic sales, the number of.com domain sales keeps going up and up as indicated in the graph.
    NumberCOMPerYear.png
    This is perhaps partly driven by more domain investors, or larger portfolios, in recent years, as well as NameBio adding additional venues, but I think the major factor is that the wholesale prices of domain names have gone up, so that many more wholesale transactions are now $100 or more and included in the public part of NameBio. This means that the fraction of all sales that are wholesale keeps increasing.

    There are still huge number of transactions below $100, which are accessible with one of the NameBio membership plans.

    There is a strange effect in that years with small numbers of sales have high average prices. For example, 2010 was the year with the highest average price, $5975, but by far the fewest total sales in .com, just over 14,100. Whether this is simply due to some years domain investors are hesitant, and there are few wholesale transactions driving the balance toward retail, or some other factor is responsible, is not clear to me. On a smaller scale this happened again in 2014, with fewer sales than before or after, but a higher average price. It is possible that the introduction of new domain extensions had some impact in that.


    Country Code Extensions

    I wondered if the downward trend in average prices would carry over to country code domains. In the graph below I plot the average price per year across all country code extensions and all venues.
    AllCountryByYearAllVenueGraph.png
    While there is some indication of a drop in average prices, it is nowhere near as dramatic as for .com. The last five years have seen fairly constant country code average prices. This is possibly related to the fact that the wholesale market is even more dominated by the major legacy extensions than the retail market.


    Retail-Only COM Sales

    To see if retail prices were really decreasing, I restricted my analysis to one venue, Sedo, that is mainly retail transactions. I know that there are wholesale acquisitions on their platform, but only sales of $2000 and up, except for Sedo auction results, are reported in NameBio, and in that price range I think the strong majority of Sedo reported sales are wholesale. The results are shown below.
    SedoOnlyByYearr.png
    While there is a fair amount of variability, there does not seem to be a strong downward trend in retail Sedo .com prices.

    The same trend noted above is present in the Sedo data - when there are fewer sales, even at a retail venue, the average prices correlate higher. For example, in 2009 there were the fewest .com sales from any of the years I checked, just 1697 at Sedo, but the average price of $12,300 was by far the highest. Again in 2014 the number of sales was relatively low at Sedo, but the average price high. Is it possible that in some periods domain investor confidence is higher and they hold out for higher prices?

    I also looked at .com sales data from BuyDomains that just goes back to 2015. There is relatively little fluctuation in average prices by year, the highest was in 2020 at $2212, but the lowest was not much different, $1943 in 2018. It is true, however, that BuyDomains had a superb 2020 in number of sales, 4416 sales, more than double the previous year. Their portfolio seems very strong in the sectors that have been most popular during the pandemic economy.


    Number Of $100,000 Plus Sales

    Another way to look at retail-dominated sales data is to see how many sales take place above some price point. I looked at how many $100,000 plus .com sales took place, across all venues, with the annual results shown below.
    Number100kPlusByYear.png
    The number has gone up and down, as expected for a relatively small value, but seems to me not to have significantly changed in a systematic way. It should be noted, though, that 2019 and 2020 were two of the three lowest years in the 13 year period I studied.

    There are, of course, many major sales that never get reported to NameBio. However, I don’t know of a reason to expect the proportion reported to have changed much over the years.

    While the data in this article shows that the apparent average price may not have dropped much, to me there does not seem good evidence for a significant increase, either. There are not more sales at prices of $100,000 plus recently, nor does the average sale price at retail marketplaces seem to be rising.

    I take this to mean that domain names are not quite like an investment vehicle where you just buy at market rates and hold, and it is likely to be worth more in a few years time. That will happen sometimes with certain domain names and sectors, but at other times even solid choices may decrease in worth. I think success will increasingly depend on being very skilled at knowing wholesale pricing, and disciplined in holding out for opportunities where you can acquire at favourable prices. Success also depends, of course, on maintaining a reasonable sell-through rate and negotiating good retail prices.

    I hope you will share what you think in the comments section.


    My sincere thanks to the people who created and maintain NameBio. The various options in their search interface, including additional year choices added, makes analyses such as this easy to do with their data.
     
    The views expressed on this page by users and staff are their own, not those of NamePros.
  2. Next Article
    Top Topics: Why Are .VC Names Selling for High Numbers?; Plural vs Singular - Which is Better?...
    Previous Article
    Top Topics: Using a Catch-All Email? Beware; Reaction to GoDaddy's Closeout Changes...
  3. Loading...
  4. Bob Hawkes

    About The Author — Bob Hawkes

    Domain analyst, writer and informal educator, with particular interests in domain name phrases and non-business uses for domain names. I am a risk averse domain investor who only invests modest amounts in a variety of extensions and niches. Don't hesitate to contact me - I like to help!

    This is Bob Hawkes's 75th blog post on NamePros. View all blog posts

    Home Page:
    https://namesthat.win
    Actions:
    Follow
  5. Comments (13)

  6. The Durfer

    The Durfer Top Contributor VIP Gold Account

    Posts:
    9,098
    Likes Received:
    13,036
  7. DomainBanana

    DomainBanana Established Member

    Posts:
    399
    Likes Received:
    684
    Thanks, Bob.

    Would be interesting to get @Michael's feedback on this.

    I think it's difficult to draw these kinds of pricing conclusions from NameBio because of what you mention -- the NB data has not been logged consistently over the years.
     
    Last edited: Jan 21, 2021
  8. FolioTeam

    FolioTeam AMDB.tv VIP

    Posts:
    1,567
    Likes Received:
    4,257
    It certainly follows the tech trend that prices are always higher in the beginning then taper off as things become mainstream.

    So, your analysis coincides with how I see the industry. We will see more sales but at lower prices compared to the crazy prices of yesteryears.

    PS: There will always be some exception cropping up once in a while like voice.com
     
  9. Michael

    Michael NameBio.com NameBio Staff PRO VIP ICA Member ★★★★★★★★★★

    Posts:
    2,398
    Likes Received:
    2,579
    Yep, the data doesn't really lend itself nicely to broad market analysis. We've gotten better at tracking wholesale venues over the years, higher number of wholesale auctions creeping out of the sub $100 database into the public one, fewer retail sales being reported, etc. all drag down the average.

    You can see where I joined NameBio in 2015 and re-did all of the tracking in the "Number of .com sales per year" graph for example :) You could look at that graph and say the market was fire in 2015 compared to 2014, but it wasn't really any different. I just added more venues and made better tracking of existing ones.

    You have to get more granular, like just looking at a single venue, or a specific niche of domains, or something like that to get a more accurate picture. It's difficult to even just look at single domains that have sold multiple times at wholesale to see how the wholesale market is doing, because venue arbitrage is a thing and usually both sales aren't at the same venue.

    And even if you get granular, you have to pay close attention to certain years. Like 2015 when I joined and re-did the site. Or late 2006 / early 2007 when NameBio launched, before then most of the sales are back-filled and are skewed heavily towards retail. Or knowing that most new gTLD reports are retail or at least registry premium sales, as not many come up for auction at the venues we track.

    It gets messy to say the least. The data is first and foremost useful for comps and appraisals, and after that it can be used to spot trends in specific categories of domains. But I don't see it as very useful for broad market analysis, you'd have to massage the data too much to avoid the issues mentioned above.
     
  10. BradWilson

    BradWilson Upgraded Member Gold Account

    Posts:
    543
    Likes Received:
    1,455
    Thanks @Bob Hawkes and now @Michael for the excellent thought provoking information.

    My first provoked thought :) was how it relates to the recent comments other members and I had about domains not being "rare" in the thread How to rate the rareness of domains.

    Retail sales here would be closer to the ultimate website customers I mentioned in the other thread and wholesale sales would be domain investors. Both are demanding unique or distinct domains that each group value differently.

    My second provoked thought :) was that @Michael better hire @Bob Hawkes quickly because he'd do a much better job of selling the benefits of NameBio. :ROFL: :xf.grin:

    But all kidding aside, maybe there is a way to make sense of all this data and you two might just be the ones to figure it out.
     
    Last edited: Jan 21, 2021
  11. Keith DeBoer

    Keith DeBoer BrandableInsider.com PRO VIP ICA Member

    Posts:
    2,503
    Likes Received:
    5,425
    Great report, Bob. Yes, the data is flawed but without @Michael 's grand effort we'd have nothing. I think one this is clear; wholesale prices are rising way faster than retail and that means margins are getting squeezed and it's harder to make good profits especially for newcomers.
     
  12. olcayto

    olcayto NameFree.net Blue Account

    Posts:
    385
    Likes Received:
    288
    It's a big luck to have you in this platform. Thanks Bob.
     
  13. Mytz.com

    Mytz.com Top 4L [email protected] ieie.com CuTu.com NeSu.com QAMI.com PRO VIP Gold Account

    Posts:
    9,335
    Likes Received:
    1,138
  14. winst

    winst Established Member ★★★★★★★★★★

    Posts:
    357
    Likes Received:
    407
    I think it is hard to draw conclusions from the report. Like what Bob said, the reported sales were skewed towards wholesale while markets like Brandables and Afternic stopped reporting into NameBio. The reported average prices were down because people continue to take quality names out of the open market. Investors looking to cash in are waiting for large paydays, higher value transactions just rarely get reported. I won't say the report has no value, but very little insight on the overall market.

    My personal feeling is that .com domain name prices are going up as quality names are sold at much higher prices than before.
     
    Last edited: Jan 22, 2021
  15. SoloDomains

    SoloDomains Established Member

    Posts:
    563
    Likes Received:
    106
    Thanks, Bob for the insight !!
     
  16. jim h

    jim h Upgraded Member Gold Account

    Posts:
    2,111
    Likes Received:
    765
    Thanks, sir.
    Great sharing.
     
  17. nydomain

    nydomain Established Member

    Posts:
    1,530
    Likes Received:
    146
    Thought provoking, thanks @Bob Hawkes. Anecdotally speaking, I’ve noticed that “quality” domains are far rarer to come by today. And when they’re available, price is much, much higher.

    So my hypothesis is one of the key reasons the avg price decreased is a higher proportion of “premium” domains are taken or have been sold.

    1. Has the quality of the domains in the market decreased? One somewhat inaccurate way to measure this is we could potentially take an appraisal tool and plug in reported sales in 2010 and reported sales in 2020. My hunch is the ones sold in 2010 will appraise for more. Can someone verify or debunk this? Anecdotally speaking, it seems the supply of generic one word .coms and quality LLLL has dwindled. Has this affected their pricing?
    2. Less reported sales. Top sales are rarely reported, but as mentioned above all these marketplaces popping up could affect number of reported sales
    3. Massive increase in supply.This chart shows growth of domain registrations through 2009. Fast forward to today, there are now over 150M registered .coms. And that doesn’t even include the influx of all the new extensions. My hunch is this plays a role in the smaller sales and reinforces point #1. There are much more “lower quality” domains out there and this leads to lower priced sales.
    Anyway, I could be wrong, but this is all imo.
     
    Last edited: Jan 23, 2021
  18. AEProgram

    AEProgram Top Contributor VIP Blue Account

    Posts:
    1,753
    Likes Received:
    3,464
    There are more domain investors now, you see that based on auction activity. All these sales get reported now a lot better and it causing the overall prices to look like they are going down.

    If you look strictly at what an end user is paying today for a premium .com vs years ago I am confident it will be a lot higher and only going up.

    In no other industry would they gauge the price direction of something by what wholesales and retailers are paying, it is no way to judge anything. Imagine all the sales on namepros for sale section would be thrown into the mix too, you'd have the average cost of a .com at 70 bucks down 12,980% from 2008.
     
biix
  1. NamePros uses cookies and similar technologies. By using this site, you are agreeing to our privacy policy, terms, and use of cookies.
    Dismiss Notice
Loading...