discuss Am I wrong? Do domains really appreciate in value or is it Fools Gold?

[siyavuya]

I'm really starting to think that domains don't appreciate in value. I took the time to look around and I saw that the value is just pulled from thin air. Basing the value on a few things like length, keyword and sequence of numbers or letters is a hard sell. Has anyone here ever held a domain for some time and saw it go up in value?

One of the mistakes people make is confusing the value of money and the final price of a domain.
Let me give you a simple example:
Money goes down in value over time due to inflation

Most VIPs have a lot of domains which they hold for many years. Has anyone here ever gone back monthly or even yearly to increase the price of their domains or do they stay at the same price until sold?

I'm starting to really think that this is fools gold
Am I wrong?

 

[NickB]

Not all names are equal

sh*t names do not increase in value because they are sh*t (I own a few, so I should know)

You need good names and patience.........

You need to work out your own pricing strategy, hold times, purchases and other variables.

I don't think this can be taught by someone else as everyone probably has a slightly different strategy and what works for one person might not work for the next.......

EDIT
I have taken my last sentence out as it was out of context......

 

[Bob Hawkes]

I am sure your thread will attract some responses. Here is mine...

• Yes, most of us regularly change the prices from time to time on domain names. But it is not strictly increases.
• You ask a good question which is hard to answer. You can of course see how the average price of all sales vary over time on NameBio but that does not necessarily tell you how the price on an individual domain name will change. It might, for example, be true that the domains selling now are less quality than those that sold 10 years ago. If you look at comparable assets, say 5 digit domain names or 4 letter domains you can to some degree look. I am about (maybe later today or if not by end of weekend) publish a look at some data on this.
• Some hold onto domains until they get a high price, and for them prices definitely going up, but the time between sales may also be long.

Is it fool's gold? I will not answer that directly, but would repeat what I have said (more or less) in other threads.

1. I am convinced that on average domain investors lose money. That is if you take the universe of everyone trying to sell a domain name, the average result is losing money.
2. I am convinced that at least several dozen, and quite probably many more than that, are making a full time salary of $100,000 and more solely from domain names, and many others make a very reasonable side gig salary.
3. One needs to be informed, hard-working and disciplined to have a chance to be successful in a significant way. It takes a lot of work and time to get to the point where the odds are in your favour. Domain flipping, contrary to what some articles say, is not fast, easy or sure.
4. If one only wants to make money there are many ways easier than domain investing in my opinion.

But I am still here.

Bob

 

[NickB]

I am sure your thread will attract some responses. Here is mine...

• Yes, most of us regularly change the prices from time to time on domain names. But it is not strictly increases.
• You ask a good question which is hard to answer. You can of course see how the average price of all sales vary over time on NameBio but that does not necessarily tell you how the price on an individual domain name will change. It might, for example, be true that the domains selling now are less quality than those that sold 10 years ago. If you look at comparable assets, say 5 digit domain names or 4 letter domains you can to some degree look. I am about (maybe later today or if not by end of weekend) publish a look at some data on this.
• Some hold onto domains until they get a high price, and for them prices definitely going up, but the time between sales may also be long.

Is it fool's gold? I will not answer that directly, but would repeat what I have said in earlier posts.

1. I am convinced that on average domain investors lose money. That is if you take the universe of everyone trying to sell a domain name, the average result is losing money.
2. I am convinced that at least several dozen, and quite probably many more than that, are making a full time salary of $100,000 and more solely from domain names, and many others make a very reasonable side gig salary.
3. One needs to be informed, hard-working and disciplined to have a chance to be successful in a significant way. It takes a lot of work and time to get to the point where the odds are in your favour. Domain flipping, contrary to what some articles say, is not fast, easy or sure.
4. If one only wants to make money there are many ways easier than domain investing in my opinion.

But I am still here.

Bob

Ahhh Bob,

You have such a way with words Very well put and much more eloquent than me!

 

[ollybod]

I am sure your thread will attract some responses. Here is mine...

• Yes, most of us regularly change the prices from time to time on domain names. But it is not strictly increases.
• You ask a good question which is hard to answer. You can of course see how the average price of all sales vary over time on NameBio but that does not necessarily tell you how the price on an individual domain name will change. It might, for example, be true that the domains selling now are less quality than those that sold 10 years ago. If you look at comparable assets, say 5 digit domain names or 4 letter domains you can to some degree look. I am about (maybe later today or if not by end of weekend) publish a look at some data on this.
• Some hold onto domains until they get a high price, and for them prices definitely going up, but the time between sales may also be long.

Is it fool's gold? I will not answer that directly, but would repeat what I have said (more or less) in other threads.

1. I am convinced that on average domain investors lose money. That is if you take the universe of everyone trying to sell a domain name, the average result is losing money.
2. I am convinced that at least several dozen, and quite probably many more than that, are making a full time salary of $100,000 and more solely from domain names, and many others make a very reasonable side gig salary.
3. One needs to be informed, hard-working and disciplined to have a chance to be successful in a significant way. It takes a lot of work and time to get to the point where the odds are in your favour. Domain flipping, contrary to what some articles say, is not fast, easy or sure.
4. If one only wants to make money there are many ways easier than domain investing in my opinion.

But I am still here.

Bob

@Bob I love the logic behind your assertions. There is a need to digest The 3rd point that read thus; "One needs to be
informed, hard-working and disciplined to have a chance to be successful in a significant way. It takes a lot of work and time to get to the point where the odds are in your favour. Domain flipping, contrary to what some articles say, is not fast, easy or sure". I so much in love with this statement, nice one Bob..

 

[Bob Hawkes]

You have such a way with words

I write so many words, sooner or later I was bound to get a phrase right! You know the saying about monkeys and typewriters and a great novel novels. But thank you for your kind words.

Some other thread had us say what bothered us in domains. For me, really, it is when anyone tells new people that it is easy to make money flipping domain names. I think being realistic from the start is important.

I think, even those who do work hard and are disciplined, there is also a sort of instinctive insight that the true pros in domains have (I keep hoping it will rub off to me, but no luck so far). They just can look at a name and know if it is good and what the price should be. Maybe it came after years of hard work, but even with the work I think some are simply better at this.

Bob

 

[NickB]

I write so many words, sooner or later I was bound to get a phrase right! You know the saying about monkeys and typewriters and a great novel novels. But thank you for your kind words.

Some other thread had us say what bothered us in domains. For me, really, it is when anyone tells new people that it is easy to make money flipping domain names. I think being realistic from the start is important.

I think, even those who do work hard and are disciplined, there is also a sort of instinctive insight that the true pros in domains have (I keep hoping it will rub off to me, but no luck so far). They just can look at a name and know if it is good and what the price should be. Maybe it came after years of hard work, but even with the work I think some are simply better at this.

Bob

Ahh yes the infinite Monkey theorem https://en.wikipedia.org/wiki/Infinite_monkey_theorem

This is anything but easy money!

I think the instinctive part does come with experience, we just have to keep plugging away and learn from past mistakes.

It only takes 10,000 hours to become an expert......

 

[Internet.Domains]

Domains are no different than gold and fools gold......In that respect, you can own domains that more closely resemble gold and you can also own domains that more closely resemble fools gold.

With domains the choice is yours. Finances, skill, knowledge and patience are indicators of those that own gold. While those that have minimal financial resources, no skill, lack of knowledge and no patience are more likely to hold fools gold.

 

[wwwweb]

You seem to have a lot of doubts about this industry from the people within it, to the products that revolve around it.

Maybe this industry is not for you. As with anything there is no promises, or guarantees of anything, but people who run into this industry always expect instant profits for whatever the reason. This is not the case here, be ready for lots of research, plenty of investment, and a lot of time wasted with low ball inquiries. Nobody is going to let you win anything for cheap, and will probably bid you up in spite. Other than that enjoy your ride.

 

[ultradog]

Why would the OP think inflation would have any noticeable effect on the value of domain names, when there are vastly larger events impacting the domains market?

 

[bmugford]

Most good domains appreciate over time. Bad domains do not.

I could expand into more detail, but it is not needed.

Brad

 

[garptrader]

The price of most goods and services is largely a function of supply and demand. While short e-commerce related one-word .Com domains are extremely rare, very few end users are willing to pay the asking prices for them. They generally view domains in low esteem - a three-word or hyphenated .com will do or perhaps some alternative extension or perhaps a social media presence is good enough. So the willingness to pay a premium price for a domain is muted by the perception that spending money on a domain is a waste or that domain sellers are scammers (ticket scalpers). Having hundreds of available extensions makes it easy to bypass the aftermarket unless one has something which is truly unique.

 

[Bernard Wright]

@garptrader makes a good point. There is no cut and dry formula for assessing the value of a domain. Demand can fluctuate depending on market forces, cultural influences, etc. And even then, there is nuance that only an experienced domainer would understand. But here is a simple example we all can grasp: Amazon is dominating retail. First, it was online shops that were taking out the brick and mortar shops on main street; you could just go to BuyThingsOnlineToday.com. But now those online retailers are losing out to the giants like Amazon, Zappos, etc. So, let's say robots are the next big consumer item. Buying up RobotShop.com might not be all it would have been cracked up to be fifteen years ago, because folks who want a robot will go straight to Amazon. It's a dynamic industry.

I am by no means an experienced domainer, but I believe success in domaining is a function of a number of things, including

1. getting the kinks out and overcoming bad habits, incorrect notions, etc.
2. learning the landscape: afternic, brandpa, dofo (thanks Bob), escrow, etc
   
3. learning to optimize the above tools in accordance with strategies that capitalize on your understanding of specific market trends
4. a finger on the pulse of upcoming trends in specific niches, and/or in domaining and internet tech in general
5. patience
6. a bit of luck
7. and plenty more, but I'm still a novice

Value, like beauty, is in the eye of the beholder. There is no secret formula to domaining. If you are expecting to find success in a linear, 1+2=3 fashion, I don't think you will. Domaining seems to be more of a 1 - 2 = -1 ... -1^2 + 1 = 2 ... and maybe you'll eventually get to 3. Read a lot on this forum and enjoy the learning process.

 

[Coral Cove]

I do know that four letter domains were going for very low prices back in 2010-2013. An example is Wiya (.com), which I paid less than $1,000 for in 2013. I don't think you could nab a domain like that for under 5k now. I recently sold the domain for nearly $12k.

 

[siyavuya]

Not all names are equal

sh*t names do not increase in value because they are sh*t (I own a few, so I should know)

You need good names and patience.........

You need to work out your own pricing strategy, hold times, purchases and other variables.

I don't think this can be taught by someone else as everyone probably has a slightly different strategy and what works for one person might not work for the next.......

EDIT
I have taken my last sentence out as it was out of context......

What I was asking is has there been an example of just holding a domain proved to go up in value at a greater rate than inflation because everything gets more expensive over time due to inflation.

 

[siyavuya]

I am sure your thread will attract some responses. Here is mine...

• Yes, most of us regularly change the prices from time to time on domain names. But it is not strictly increases.
• You ask a good question which is hard to answer. You can of course see how the average price of all sales vary over time on NameBio but that does not necessarily tell you how the price on an individual domain name will change. It might, for example, be true that the domains selling now are less quality than those that sold 10 years ago. If you look at comparable assets, say 5 digit domain names or 4 letter domains you can to some degree look. I am about (maybe later today or if not by end of weekend) publish a look at some data on this.
• Some hold onto domains until they get a high price, and for them prices definitely going up, but the time between sales may also be long.

Is it fool's gold? I will not answer that directly, but would repeat what I have said (more or less) in other threads.

1. I am convinced that on average domain investors lose money. That is if you take the universe of everyone trying to sell a domain name, the average result is losing money.
2. I am convinced that at least several dozen, and quite probably many more than that, are making a full time salary of $100,000 and more solely from domain names, and many others make a very reasonable side gig salary.
3. One needs to be informed, hard-working and disciplined to have a chance to be successful in a significant way. It takes a lot of work and time to get to the point where the odds are in your favour. Domain flipping, contrary to what some articles say, is not fast, easy or sure.
4. If one only wants to make money there are many ways easier than domain investing in my opinion.

But I am still here.

Bob

The thing I'm seeing is that you can't really predict the outcome. I mean you might have a short domain and still be stuck with it. Could it be a game of chance and a bit of luck?
Or it's a marketing game?
How can one build a business based on domains alone if you're not a registrar like godaddy?

 

[siyavuya]

I do know that four letter domains were going for very low prices back in 2010-2013. An example is Wiya (.com), which I paid less than $1,000 for in 2013. I don't think you could nab a domain like that for under 5k now. I recently sold the domain for nearly $12k.

My question is if the person who bought it from you put it on the market today, how much would they get?

 

[Bernard Wright]

...because everything gets more expensive over time due to inflation.

Not true. Price is a function of supply and demand, plain and simple.

My question is if the person who bought it from you put it on the market today, how much would they get?

Success will come with proper execution of the strategies you develop from the knowledge you uncover as you try to answer these questions yourself. If you want to see daily sale reports, check Namebio. Not all names are reported there but it should give you an idea. There's also a thread in NP where users post their recent sales. Read. And read more.

 

[Recons.Com]

I'm really starting to think that domains don't appreciate in value. I took the time to look around and I saw that the value is just pulled from thin air. Basing the value on a few things like length, keyword and sequence of numbers or letters is a hard sell. Has anyone here ever held a domain for some time and saw it go up in value?

One of the mistakes people make is confusing the value of money and the final price of a domain.
Let me give you a simple example:
Money goes down in value over time due to inflation

Most VIPs have a lot of domains which they hold for many years. Has anyone here ever gone back monthly or even yearly to increase the price of their domains or do they stay at the same price until sold?

I'm starting to really think that this is fools gold
Am I wrong?

I don't care about the "value" of my names, as in for how much I can resell to other investors. I recognize that this is not a liquid asset, but the return is investment is high enough to cover for that.

And I can just add 2% a year to the prices of my names or even higher, if I care to, to compensate for inflation and rising cost of acquiring quality names.

The math is really simple. You buy names that you can sell to end users at $XXXX and at 1% or higher of your inventory, make sure that you don't overpay acquiring and that is it. You will pay in renewals around 850$ per 100 names and make 1 sale at $XXXX that will leave you with profit.

If you acquire 100 names at $50 average, and make 1-2 sales at $2000 each, then basically you will make $1150 to $3150 on your $5000 investment every year.

 

[NickB]

What I was asking is has there been an example of just holding a domain proved to go up in value at a greater rate than inflation because everything gets more expensive over time due to inflation.

You can do this research for yourself.......

As other have mentioned look the sales thread on here - people provide purchase price, dates and sale prices, you can then then figure out the ROI (some people even mention this as well) there are other sites where you can get this data to.......

 

[Ategy]

What I was asking is has there been an example of just holding a domain proved to go up in value at a greater rate than inflation because everything gets more expensive over time due to inflation.

That's not true at all .. plenty of things in history have plunged in value because of changes in the market.

As some have already mentioned .. pricing is usually closely if not directly related to supply and demand.


When it comes to domains that's where it gets tricky .. as the supply isn't the general 330 million domains registered.

For domains each domain is unique and in it's uniqueness it has it's own demand. Often times it can be categorised like

- Geo's: Certain cities have more demand than others
- Niche: Certain market trends can explode demand like Solar, Canna, etc
- Brandables: even certain keywords that get hot and then cool down like Hero, Gator, Ninja, etc.

The key is to find good domain that are in demand .. then as more of those domains get purchased and the number of alternative choices to the end user has goes down, then the value of the remaining domains goes up. But only for that class/type/niche of domain.

There is a broad scope of supply and demand on domains .. primarily what we are seeing with single word domains as 2L's, 3L's .. the advantage of having those domains combined with their growing scarcity are making their value skyrocket.

But don't expect this to happen with all 2-word .com's nor with 4L .com's ... because the Advantage*Scarcity factor is so much vastly lower than those 1-word, 2L 3L super premiums. That being said, the shortening supply of super premiums will affect other domains like 4L and 2-words, but there are so many that it will only be the best ones ...

The real question is what makes for the best 2-word domains .. well .. there are so many factors involved in that secret sauce:

- Niche demand
- Phonetics
- Radio test (clarity)
- Humour / Cool factor
- Rhyming / alliteration
- Length
- Uniqueness
- Contextual prefixes/suffixes
- Trending prefixes/suffixes
- Something special that can't be described (Je-ne-sais-quoi)
- Etc etc etc ..

In the end it's about what domain fulfils a potential end user's checklist the most. Even that checklist can vary depending on if they are consumer facing or B2B or even something else.

There are no rules .. but it certainly helps if you have a broad knowledge base and have very good language skills.

When you find a good domain in a hot niche with growing demand .. then yes .. the value will go up. More than inflation even. But the fact of the matter is .. that the vast majority of existing domains do NOT fit the very simple criteria of even being a "good domain".

 

[Dave]

Yes plenty of types of domains have appreciated in value over the years. Let's look at some examples.

5N .com's could still be hand registered back in 2007 when I started (without 0 or 4, names like 97898.com). 4N .com's could be had for low to mid $xxx. Whilst numeric domains have had a small dip recently there was a time when 5N price minimum was low 4 figs.

3 letter .com's were still being sold for mid $x,xxx when I joined in 2007. You would be very lucky to find one below $10k-15k these days.

4 letter .com's could also still be hand registered.

CVCV .com's could still be had on reseller market for $500-1000 when I joined in 2007.

All of the above have for sure appreciated in value over time. Other examples include two word brandables, one word .com's for sure

Cheers

 

[Bob Hawkes]

Why would the OP think inflation would have any noticeable effect on the value of domain names, when there are vastly larger events impacting the domains market?

I think the point was not directly around if inflation influenced domain prices (I agree with you that other factors dominate) but rather the point that investments that do not increase in value at least at rate of inflation lose value in real terms. Within domains the time period under consideration and the type of domain influence which domain portfolios increase in value at more than the rate of inflation.
Bob

 

[Bob Hawkes]

Edit Double Post (mods please delete this one)

 

[garptrader]

Even some of the most successful domain traders admit to only selling one in five domains through outbound methods. So despite efforts to acquire meaningful domains which could be used to promote a business, controlling acquisition and renewal costs, one still faces the reality that most end users are reluctant to pay a premium price for a domain. They will opt for inferior domains or a social media site even though the underlying business easily generates a revenue stream to pay for online marketing efforts. So there is no guarantee that acquiring a portfolio of domains will generate a positive Roi.