NameSilo

Do you or should you factor inflation when you price your domain?

Labeled as question in General Domain Discussion, started by WhoaDomain.com, Jul 12, 2021

Replies:
26
Views:
1,070

  1. WhoaDomain.com

    WhoaDomain.com WhoaDomain.com VIP Gold Account

    Posts:
    9,588
    Likes Received:
    11,092
    Hello NP,
    This question is pretty specific so I hope it’s not moved to another thread.

    so we’ve all done this or at least we should.

    when we get a price inquiry for our domains from either Afternic or Uniregistry or Sedo because we have not put a price on it yet. We jump on Namebio or similar and check for comps and then act like we know what we are doing lol and decide what price to ask.

    how exactly do we honestly, realistically and fairly price our domains based on Comps?

    also more important if the closest comp based on Keywords sold in 2018 or 2010 how exactly do you calculate the price of your domain you might sell today in 2021 which is 11 or 9 years later?

    Or

    do you simply price your domain based on a similar comp from 2018 or 2010?

    or do you ask for a price factoring in the years since that comp’s sale?

    do you factor into price inflation? Or ask for 2018 prices for 2021 selling domains?

    yes or no?

    or are you like Hugedomains and price everything around $1600 to max $8500. Nothing publicly priced above $10,000 just to move inventory.
     
    The views expressed on this page by users and staff are their own, not those of NamePros.
  2. DanSanchez

    DanSanchez Earn Bitcoin 48hr.com VIP ★★★★★★★★★★

    Posts:
    1,559
    Likes Received:
    3,504
    I've been mentioning inflation with every inquiry, now I'm doing monthly price increases instead.
     
  3. Compassion

    Compassion Celebrate Life PRO

    Posts:
    10,663
    Likes Received:
    4,035


    I feel this angle is important.

    As fiat currencies are printed ad infinitum, one of a kind assets like a supreme domain are a wonderful hedge.

    The whole industry ought to take note of the collapsing purchasing power of fiat currencies and level up as one industry.
     
  4. Samer

    Samer Top Contributor VIP

    Posts:
    10,879
    Likes Received:
    21,133
    I think inflation is the “big bad boogeyman”
    always overstated.

    The beauty of living in the U.S.

    LOW inflation (even if it’s creeping up like mad
     
  5. bmugford

    bmugford www.DataCube.com PRO VIP ICA Member ★★★★★★★★★★

    Posts:
    13,403
    Likes Received:
    24,085
    I agree with multiple points here...

    Samer - Inflation is always the boogeyman. Yep. Things inflate over time but fiat currencies backed by major countries that have power are not going to just collapse.

    Compassion - Domains are a great hedge vs inflation. Agreed.

    I think you need to worry about inflation over a long period of time, not like month by month. We are coming off a pandemic where people basically did nothing for over a year. It is natural to have transitory inflation as more people are spending money and doing stuff like traveling.

    You can make the same argument about money being printed as shitcoins being made daily or NFT. Those are things that literally can be made in an unlimited manner.

    Actual assets, with actually scarcity and demand, are always good hedges. I would not worry about inflation on a short time scale.

    When it comes to domain sales, not all types of domains have gone up in value over the years. While most have, many are outliers or formats that are not worth as much today.

    Brad
     
    Last edited: Jul 12, 2021
  6. ultradog

    ultradog Established Member

    Posts:
    511
    Likes Received:
    668
    Checking NameBio is one part of pricing process, but hardly the best one. There’s been a surge in demand for really good names and if that’s what you have, your price should reflect that. What you’d have to spend to replace your domain should be part of your thinking; and NameBio is not really good for that. Auctions — many of which are shown in NameBio — tend to go for lower prices. But single purchases can go terribly high. I’d look for what comparable domains to yours are being priced at.
     
  7. WhoaDomain.com

    WhoaDomain.com WhoaDomain.com VIP Gold Account

    Posts:
    9,588
    Likes Received:
    11,092
    Thanks for all the replies NP.

    keep them coming.

    so here’s some scenarios.

    the highest comp for my domain is $1000. Very similar to mine. But sold in 2012 so the captain obvious easy bet would be price my domain at $1,000 and call it a day or a win but that would be 2012 money. So how would you go about increasing from $1,000 for inflation?

    $100 per year? $500 per year? $1000?

    what if the highest comp was $10,000?

    $1,000 per year? $2000?$3000?$5000?

    @ultradog

    “What you’d have to spend to replace your domain should be part of your thinking;”

    Wow.... I like this. How have I never thought of using this statement? Too busy trying to show value to a buyer to buy my domain. Never looked at it as what I would lose if I sold for cheap.


    I think I’ll use that angle from now own.

    a buyer doesn’t need to know that I had no plans for the domain.

    from now on I think I’ll say “I plan to develop all my domains. Here are the comps for similar domains. If I sold this domain to you for $100 or $1000. I’d be out a $35,000 or $50,000. And it would cost me that much to REPLACE IT.”

    That’s brilliant. No reasonable person could argue with you on that.

    thanks @ultradog
     
    Last edited: Jul 12, 2021
  8. bmugford

    bmugford www.DataCube.com PRO VIP ICA Member ★★★★★★★★★★

    Posts:
    13,403
    Likes Received:
    24,085
    Yeah, that is more important than any of the inflation stuff. Quality domains have mainly been going up in value because of demand, not inflation.

    I rarely factor in what I paid for a domain. It is worth what it is worth independent of that.
    I might have bought a .COM for $1,000. I would not sell it for $5K when it would cost $20K+ to replace it.

    It works the other way also. I might have spent $5K on a domain that is worth $1,000 today. If you can do better things with the money sometimes it makes sense to cut your losses.

    Brad
     
  9. bmugford

    bmugford www.DataCube.com PRO VIP ICA Member ★★★★★★★★★★

    Posts:
    13,403
    Likes Received:
    24,085
    Really any decent .COM has the potential to sell for mid $X,XXX+ to the right buyer.

    I would not worry about comp sales in such a low range, especially from (9) years ago. It was a different market then. You could pick up solid (2) word .COM for low $XXX easily. Nowadays the same quality domains are selling for mid $XXX to low $X,XXX even on the reseller market.

    This is not really inflation related, it is more demand related.

    Brad
     
  10. bmugford

    bmugford www.DataCube.com PRO VIP ICA Member ★★★★★★★★★★

    Posts:
    13,403
    Likes Received:
    24,085
    From my experience if a potential buyer brings up the "you are not using it" logic, it almost always leads to a non-serious lowball buyer.

    Who cares if the domain is a developed website. The logic is flawed.

    Your usage is as an investment, like in any other field where people invest in things.

    Brad
     
    Last edited: Jul 12, 2021
  11. biggie

    biggie GreenFriendly.com VIP ★★★★★★★★★★

    Posts:
    11,039
    Likes Received:
    12,871
    Hi


    i totally agree

    if the domain was being used as a developed website, then most likely the "name" wouldn't be for sale.
    therefore, we/domainers are doing a service, by having such names available.
    :)

    imo...
     
  12. 900Worldwide

    900Worldwide Top Contributor VIP Gold Account

    Posts:
    4,195
    Likes Received:
    2,551
    Comps don't matter much if no ones see the same value..
     
  13. lock

    lock DomainUsed.com VIP

    Posts:
    5,793
    Likes Received:
    6,151
    You are negotiating one at a time unless you are price pointing. If your name is too cheap it doesn't matter if nobody knows. If they see a bargin and bin it you will be taking it as is the asking price. Inflation doesn't matter unless your selling names for $20.
     
    Last edited: Jul 13, 2021
  14. oldtimer

    oldtimer Do some good for humanity and the environment VIP ★★★★★★★★★★

    Posts:
    3,645
    Likes Received:
    5,326
    Interest and demand by end users for your domain which in turn correlates to how many offers you might be getting, the strength and stability of your financial situation which in turn determines your negotiating powers and your need for cash flow, the size and scope of the market and the economy that the category and field of your domain relates to which in turn might be an indication of if you are dealing with a multibillion dollar company or a small mom and pops business, and the inherent potentials built into your domain to increase the prestige and the bottom line for the end user's business should determine what price you set for your domain. In my opinion these factors are more important than the inflation.

    Disclaimer: This opinion is not based on my personal experience since as a collector and hobbyist I don't have a big track record when it comes to domain sales.
     
    Last edited: Jul 13, 2021
  15. BrandPlease

    BrandPlease BrandPlease.com VIP Gold Account

    Posts:
    1,057
    Likes Received:
    3,170
    Dont overthink it, price it appropriately to the current market value - mixing in "finance" related terms into a domain name discussion (to a potential customer) will get you 1. into a conversation you are not prepared to have - unless you are an economist. 2. A lost sale.

    Overcomplicating the sales process - particularly for the buyer - will cost you $.

    GL as always!
     
  16. BrandPlease

    BrandPlease BrandPlease.com VIP Gold Account

    Posts:
    1,057
    Likes Received:
    3,170
    Comparable Domains:
    • ‘Whats is the replacement cost of the domain? What's your cost to you to replace the domain name once sold, in today's market & environment?.
      • Comparables should be no more than 12 to 24 months old while 6 months is better.
      • Comparables should ‘like’ in as many ways as possible including category, length, age, extension and more.
     
  17. twiki

    twiki Top Contributor VIP Gold Account

    Posts:
    2,212
    Likes Received:
    10,407
    Domainers are an integral part of a sane domain ecosystem.

    Unfortunately there are a lot of uneducated idiots out there who don't understand this. For some weird reason they think good domains should be free and up for their grabs.
     
  18. twiki

    twiki Top Contributor VIP Gold Account

    Posts:
    2,212
    Likes Received:
    10,407
    @WhoaDomain.com

    You worry about the wrong thing in my opinion - inflation. This is important on longer term, but not on shorter term.

    What matters right now is how well the market is going and especially where the prices are. I can tell you that in 2021 prices of .com domains at least have gone up. Not just from NB data but from my own observations as well.

    The impact of sales trends is way bigger than inflation on a daily basis.

    So the question is - what do you want to do?

    If you want to become cheaper, keep prices as they are. You will indeed get cheaper as time goes by.

    If you want to maximize profits, and your sales % has been good, why not matching the market increase and up them accordingly. Actually I think this has to be done by any domainer on an annual basis. Domains are being increasingly scarce, especially .coms, so... the answer is pretty obvious.

    I've increased my prices a lot in 2021 and preparing to go even further.

    Edit: Also, a very important factor at play is how liquid you are.

    If you have great liquidity and are not pressured to sell, then increasing prices might be a good idea.

    On the other hand if you are pressured for cash to pay for renewals, you might want to even reduce them a little - this will probably get you some cash faster at some reduction in the number of your names. It's for each seller to decide.
     
    Last edited: Jul 13, 2021
  19. twiki

    twiki Top Contributor VIP Gold Account

    Posts:
    2,212
    Likes Received:
    10,407
    How would you define a decent .COM in this case?
     
  20. DuDD

    DuDD Established Member

    Posts:
    1,436
    Likes Received:
    1,901
    You must have a premiumdomain name
     
  21. scithe

    scithe Upgraded Member Gold Account ★★★★★★★★★★

    Posts:
    287
    Likes Received:
    276
    I like to bump prices for older domains because of the increased cost of goods sold. Doesn't mean I won't agree to the same offer from a previous year, but I definitely like to increase the asking price.
     
  22. secretagentdad

    secretagentdad Upgraded Member Gold Account ★★★★★★★★★★

    Posts:
    172
    Likes Received:
    94
    In the bigger picture, reg fee's have stayed low enough relative to usd real inflation that domains at a macro level are a decent enough inflation hedge. Just can't have a total loser of a portfolio.
     
  23. blogspotter

    blogspotter Top Contributor VIP ★★★★★★★★★★

    Posts:
    1,745
    Likes Received:
    4,506
    NO.
    Inflation should be the last thing you should consider while pricing domains.

    The only consideration you should take is, what is the price Point that maximizes the returns from my portfolio over a time period. That is it. Otherwise you are just wasting time over details that will add no value to your investment or returns.

    Rest are all secondary.

    Another thing could be trends. If health related names are selling like hot cakes, I might as well tweak price, again to Increase the returns on my portfolio.

    Meaning, from a particular subset or sample of domains, should I rather sell 5 domains at 1000 a pop in one year, or should I sell 2 domains at 2K.

    1000 is a clear winner.
    BUT, if you also sell 2 domains at 3k Pricing, then 3K is the winner since it brings 6K revenue.

    If increasing pricing reduces your overall return, then it is not a good factor to consider.

    Also, inflation is what 5%? if you can price at 5 higher without reducing total sales, you should increase regardless of inflation or deflation. If decreasing by 5% increases sales by more than 5%, you should decrease.
     
  24. Lox

    Lox _____ VIP

    Posts:
    3,581
    Likes Received:
    6,168
    Inflation is the decline of purchasing power, meaning, tier 1 domains ultimately leads to price acceleration (higher price / $ reserve), while tier 2 / tier 3 etc domains leads to a deceleration (lower price > sell-out).

    Wayback, if you follow the acquisition rhythm vs $ flow, usually, you'll see that any tier 1 is more in-the-spotlight vs tier 2 etc, .

    During the inflation we'll see more of "investment grade / expansion" domains vs "liquid / SME" domains. If you are in the possession of any tier 1 domain, you should follow the acquisition rhythm and price up accordingly. Otherwise, for tier 2, tier 3 etc the price should go down because there's not enough $ .

    Current $ flow (selling) /exceptions apply/:

    tier 3 (C grade) $-0 -$600
    tier 3 (B grade) $300-$1200
    tier 3 (A grade) $500-$1600
    tier 2 (C grade) $800-$2000
    tier 2 (B grade) $1200-4000
    tier 2 (A grade) $2500-$10.000

    Investment grade:

    tier 1 (C grade) $15.000 - 50.000
    tier 1 (B grade) $25.000 - $100.000
    tier 1 (A grade) $40.000 - $250.000
    tier 1 (pure) $150.000 - 7/8 fig. $M (swap deals are common eg. recently, SquareSpace swapped 1 domain worth $500K)

    imo

    Regards
     
    Last edited: Jul 18, 2021
  25. Start

    Start Established Member

    Posts:
    183
    Likes Received:
    206
    If a comp is only $1000, I tend to not even mention it.

    But to figure out what a 2012 amount is in 2021 dollars, the formula if assuming 3%/year inflation (which may be on the high side for the past decade, but reasonable) is:

    old price * (1.03)^[number of years]

    So in this case, that's:
    1000 * (1.03)^9
    = $1305

    I think inflation in the US has still really only averaged 2% over the past ~25 years. It will probably increase in the next couple of years, but 1% to 3% has been the target since the 1990s. Doing a quick search, here's a chart and graph:
    https://www.macrotrends.net/countries/USA/united-states/inflation-rate-cpi

    Some people talk a lot about inflation all the time, but even gold isn't much higher now than it was in 2012 (and actually was lower for several years in between).

    And with even just 2% per year inflation, after 20 years, that means that if something cost $100 in 2000, its price can be $150 in 2020 and that's effectively the same price, even though it's 1.5 times higher.

    Yes, the printing of money will be an issue eventually, but the markets haven't reflected it yet, and if sellers try to give some really high % for inflation, they will get pushback from buyers + it in the buyer's view, it can cause a loss of credibility regarding other points you tell them.


    But yes, if I think a buyer is serious (such that it's worth my extra time), I give conversions to 2021 dollars when I tell about comps... because especially if a sale was 10 to 15 years, it can be a pretty good increase when converted to 2021 dollars.
     
    Last edited: Jul 18, 2021

Want to reply or ask your own question?

It only takes a minute to sign up – and it's free!
NameWorth
  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...