https://namebio.com/blog/dont-shoot-for-the-moon/
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Rob Monster of Epik recently started an
interesting discussion over at NamePros about “shooting the moon” when selling your domains. Basically the premise was that you don’t know how much the buyer would be willing to pay, so you might as well ask for an astronomical number and see what happens.
After all, you can’t get a high price if you don’t ask… right? Plus you can always offer a lease as a cheaper alternative, or you can walk your price back down.
For 99.99% of you this is terrible advice. Why?
Because getting a crazy sale is a numbers game, and you don’t have the numbers.
By the Numbers
Mike Mann is notorious for selling seemingly
mediocre domains for shocking prices. I hear this all the time from new investors, and also surprisingly from some seasoned players:
If Mike Mann can sell something bad like AnimalsUnited.com for $39k why can’t I do the same? Maybe I should raise my prices… my domains are better than that one.
Well maybe, but you don’t own 352,316 of them.
Let’s look at how Mike Mann actually prices his names:
Range Number Percentage
$250 or Less 1,368 0.4%
$500 or Less 9,026 2.6%
$1k or Less 20,257 5.7%
$1.5k or Less 32,744 9.3%
$2.5k or Less 81,661 23.2%
$5k or Less 134,837 38.3%
Higher than $5k 217,479 61.7%
Higher than $10k 175,426 49.8%
Higher than $25k 68,358 19.4%
Higher than $50k 20,090 5.7%
Higher than $100k 3,863 1.1%
50% of his names are priced at four figures or less, 38% are priced in the sweet spot at $5k or below, and 6% of his names are even priced in the three-figure range. Even the poster boy for ridiculously awesome sales is not just blindly shooting for the moon on every domain.
In the past year Mike Mann has reported 25 sales in the five-figure range. While he probably doesn’t report every sale, that is only a 0.014% sell-through rate for names in that range.
Let’s pretend for a minute that your entire portfolio was of similar quality to the cross-section of names he has priced at $10k+, and that you priced them all $10k+.
At that rate, if you own 500 domains it would take you around 14 years to get a single sale. If you only own 100 domains you would only make one sale your entire life.
For most of you, if you shoot for the moon you’re going to end up missing and floating around in space until you suffocate. Dark, I know… but it’s true. You won’t make any sales, you’ll bleed money from renewals and new acquisitions, and you’ll eventually say the domain industry is rigged and rage quit.
Survivorship Bias and Retail Comps
Retail comps have no predictive value whatsoever. If Mike Mann sells a mediocre domain for mid five-figures that says absolutely nothing about what your domain would sell for. Not even if your domain is very, very similar to his or is different but better. Let that sink in for a minute; read it again if you have to.
Your buyer is not Mike Mann’s buyer when he gets a crazy sale, your buyer is almost always Mike Mann’s buyer when he sells for 3-4 figures. You don’t have enough inquiries to stumble across the person with big plans and an even bigger wallet with any consistency. It might happen once a decade. It might never happen.
You are not Mike Mann either. He is making multiple sales a day, so if one deal falls through he’s not going to starve. That puts him in a very strong negotiating position. He probably does more end user sales in a day than you do in a year. You can’t afford to not care if a buyer walks, even if you do your best to adopt that attitude to project strength.
With retail sales all you hear about are the lightning strikes; the big sales; the often lucky sales. You don’t hear about the hundreds of thousands of domains that are overpriced and never get an inquiry. You don’t hear about the people struggling to make renewals because they’re shooting for the moon and missing. And perhaps most importantly, you don’t hear about all the solid sales the seller missed out on trying for that one lottery ticket.
You only hear the success stories, and that makes you believe you can do it too.
Why You’ll Probably Never Make a Crazy Sale
Let’s go back to the $39k sale of AnimalsUnited.com that I mentioned earlier. Crazy right? If only you owned the name that could have been your conquest. But what most people don’t fully appreciate is that to get a sale like that you have to first turn down $500, $1k, $2.5k, $5k, $10k, $15k, $30k, and $35k before you finally get to $39k.
Could you really turn down a $5k offer on a name you probably got for $50? I know I probably couldn’t. And even if you could… should you?
It’s much more likely that the buyer ghosts you at that point than increases his offer. At the end of the day you’ll score more by hitting a lot of singles and doubles, than swinging for the fences and striking out 7,000 times in a row (the odds of Mike Mann hitting a home run).
If you’re not in a position to turn down phenomenal returns you’ll never make those legendary returns. Even if you had the right name, in the right place at the right time, with the right buyer; you weren’t the right seller. Everything has to come together. So stop trying, you’re just scaring away solid sales playing extremely long odds.
What should I do?
That depends on where you are now and where you’re trying to get to. Maybe you’re just doing this for fun, you only own 50 good names, and you couldn’t care less if you make a sale as long as you live. If that’s you, by all means, shoot for the moon every time. You’ll probably never make a sale, but who cares.
I suspect most of you have small to medium sized portfolios, domaining is currently your side hustle, but you’re trying to grow it into a serious revenue stream. If that’s you, don’t get distracted by this sideshow of “shooting the moon”. Price your names reasonably, re-invest into better names after each sale, and be patient and consistent. It will happen eventually.
Only if you already have a large, high-quality portfolio can you play the lottery game of going for crazy sales and actually win. But like Mike Mann, you should only do it with a small percentage of your portfolio. The rest should be reasonably priced for steady cash flow.
Regardless of your status, list all of your domains for sale on Afternic and Sedo, price most of them and make it a reasonable number, and opt them into the MLS/DLS so they get into the registration path. If you do that you’ll be ahead of most domain investors, and well on your way to growing your portfolio.
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Michael Sumner
Michael Sumner is the CEO of NameBio.com, and is the lead developer at State Ventures which owns and operates geo domains such as OceanCity.com and Maryland.com. Michael is also the co-founder of DN Media, a company that has been involved in seven figures worth of domain name transactions.
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