I've just noticed a weird thing on Namepros. In the Request Domains section I've seen 2 threads where very low prices were offered for BB names (less than $10 for accepted and less than $20 for published names). I find it ridiculous, I've sold a few accepted names for more than $30! What do you think, what is the real minimum price for BB accepted/published names?
OK, so this leads me to comment that I think wholesale pricing is too often out of alignment with expected return. If you have a large portfolio (say 500-1K names) published you know your sales rate on BB. You have to make a
faulty assumption* that all names are equal, and then your expected return in year 1 for any name is:
((listing price * 0.7) - 100) * sales rate
Taking a name listed for $2,000 the income from a sale is:
(2,000 * 0.7) - 100 = 1300
Now assuming your sales rate is 3%, the expected return in year 1 is:
1300 * 0.03 = $39
Unless it's a really great name that would sell itself I wouldn't want to pay more than around 60% of my expected return at wholesale**. You need to factor in the $10 listing cost, plus the cost of renewing the name during the year. Now the economics don't look so rosy.
Just posting the above as I think there is a group of new brandable domainers rushing in without a realistic view of the economics of selling on BB. It's like stock-picking - sure some sellers will outperform, but it's a zero-sum game here since for some sellers to outperform others have to underperform. As your portfolio on BB grows to the 500-1K names you'll likely approach the market average sales rate, so that's what you should really expect IMO. A healthy wholesale market is a good thing, and supportive of a healthy primary market, but right now I think we're seeing a bubble, and I think there's going to be a lot of disappointed sellers in 9-12 months time trying to figure out why their sales are not as stellar as they expected them to be.
Just my current $0.02...
* Other than assigning a probability to each domain of selling, I think this is about as good as it gets with large portfolios. It's very similar to diversification in stock theory.
** I just offered 100% of my expected 12-month return for 6 listed names, while the buyer wants exactly double that. I can understand where he is coming from entirely, but paying 24 months expected return for domains priced sub $4K isn't going to pay the mortgage.
