survey Domain Optimal Pricing Research - NP Survey

[Ostrados]

Hi,

I am currently doing a research on optimal domains pricing, the goal of the research is to:

1. Determine sell through rate (STR) for different pricing ranges
2. Derive a formula for the relationship between STR and Domain Price
3. Using formula from #2 we can make simulation for different pricing scenarios to find optimal pricing strategy
4. Ultimately deriving a domain pricing formula (in a separate future study).

This study requires a lot of data, I collected some data using Dofo, Sedo, Namebio.

Here is a sneak peak of what I got so far:

However the results I got are inconclusive, and I need more accurate data.

To get more accurate results I am asking Namepros community to help me collect more data, and for that I have created the following Survey:

https://freeonlinesurveys.com/s/OqGsfT2s

* The survey is totally anonymous there is no way to tell who sent it.

* The survey is for all extensions and not specific to .com

* The results of the study will be published at Namepros, I believe the results will be insightful for all of us.

* Contribution will be greatly appreciated especially from big portfolio sellers and from marketplaces that have enough data.

@Sedo @GoDaddy @DAN.COM @LaszloSchenk @GrantP @James Iles @DaaZ @aoxborrow
@AbdulBasit.com
@bmugford
@Recons.Com
@JudgeMind
@xynames
@twiki
@Acroplex
@Bob Hawkes
@Name Trader
@MadAboutDomains
@tonyk2000
@ResoluteDomains
@Leo Angelo
@Nikul Sanghvi
@TERADOMAIN
@Yusupbabay

...and all others please contribute.

Thanks

 

[Ostrados]

Thank you very much for doing this. Even though the sample size will be small for the survey, it will be interesting to see the results.

For the graphs you have compiled, how far back do those sales go? Like are those sales from past 5 years or all data available (like all years)?

I looked at past 3 years (but Dofo data is only for 1 year)

The survey covers only past 2 years

 

[mdrn]

I looked at past 3 years (but Dofo data is only for 1 year)

The survey covers only past 2 years

Great, thank you.

I don't want to go in circles, but if you are serious about the analysis,, I would recommend the books in the attachment. Or there newer version. These are my keepers from my MBA.

I would also recommend taking college or grad level classes on the subject.

Show attachment 230299

@Ostrados has a masters in domaining

 

[Recons.Com]

I have Master's degree in engineering

Then, assuming Masters in Engineering entails studying statistics in depth, you should realize that the input you are seeking won't let you get even remotely accurate output.

I am surprised I have to explain all this.

I checked out your survey. It askes for the number of names priced at each price point and sales. Again, this doesn't consider differences in quality of names. So by definition, any conclusion would be misleading, as you are throwing in together apples and oranges.

If you are proficient with stats, maybe where the problem arises is the science of economics. Please read about price elasticity. Again, you can't get price elasticity for all watches. A luxury watch will have different one at different price level, casio might get another one at another price level and a cheap vanilla-brand one will get completely different one at the lowest price levels.

 

[Ostrados]

Then, assuming Masters in Engineering entails studying statistics in depth, you should realize that the input you are seeking won't let you get even remotely accurate output.

I am surprised I have to explain all this.

I checked out your survey. It askes for the number of names priced at each price point and sales. Again, this doesn't consider differences in quality of names. So by definition, any conclusion would be misleading, as you are throwing in together apples and oranges.

If you are proficient with stats, maybe where the problem arises is the science of economics. Please read about price elasticity. Again, you can't get price elasticity for all watches. A luxury watch will have different one at different price level, casio might get another one at another price level and a cheap vanilla-brand one will get completely different one at the lowest price levels.

I answered all your concerns in my previous replies
Thanks for your valuable input

 

[Recons.Com]

I answered all your concerns in my previous replies
Thanks for your valuable input

Good luck in your endeavor. Please do share your results after you apply the pricing recommendations from your research to your portfolio.

 

[bmugford]

I appreciate the effort to study this, but I think it is going to be hard to read much into the results.

The problem is unlike other products, every domain is one of a kind with highly subjective value.
The quality of the domain really matters when it comes to pricing and STR.

It seems logical that the lower the price, the higher the STR.
The higher the price, the lower the STR.

However, that doesn't tell the full story.

The pool of buyers is naturally smaller in higher price ranges. No matter how good a domain is, most people don't have a spare $50K+ to spend on a domain.

Domains come in so many different types, formats, extensions, etc.

If there was a way to narrow the results down, it would be more useful.

For instance what is the STR for different types of LLLL.com in various price ranges?

Brad

 

[Ostrados]

The problem is unlike other products, every domain is one of a kind with highly subjective value.
The quality of the domain really matters when it comes to pricing and STR.

It seems logical that the lower the price, the higher the STR.
The higher the price, the lower the STR.

It seems my opening post is confusing? I didn't say we will blindly change prices of all domains and see what happens

We want to find the relation between STR and Price by:

1. Finding STR for each price group separately (ex: for different domains qualities)
2. Assuming that all domains were priced correctly

Price groups can be imagined as baskets containing different quality/tld/LLLL objects (you name them). Or we can recall them tiers like tier1, tier2, tier3...etc.


After we find STR formula then we can move to pricing part in which we:

• Find optimal price range (lets say +/- 50% of domain value)
• Do several simulations using STR formula to see what happens

For example:
If you have a domain with fair retail value of $20k,
Lets say optimal price range for this domain is $15k to $25k
What is the price that will give highest ROI?

I talked before about cutoff STR limit after which domain STR will drop to 0.

So for our $20k domain example the STR should look like this:

This chart is not to be confused with the general STR chart in first post, this is the STR cutoff region for one price range.

If you notice, if the price is increased too much outside the optimal range, STR will drop fast to 0.

To sum things up:

1. We price domain at fair market value
2. We define optimal price range (ex: +/- 50%)
3. We use STR formula to predict which price within our optimal range will give best ROI

 

[Recons.Com]

I appreciate the effort to study this, but I think it is going to be hard to read much into the results.

The problem is unlike other products, every domain is one of a kind with highly subjective value.
The quality of the domain really matters when it comes to pricing and STR.

It seems logical that the lower the price, the higher the STR.
The higher the price, the lower the STR.

However, that doesn't tell the full story.

The pool of buyers is naturally smaller in higher price ranges. No matter how good a domain is, most people don't have a spare $50K+ to spend on a domain.

Domains come in so many different types, formats, extensions, etc.

If there was a way to narrow the results down, it would be more useful.

For instance what is the STR for different types of LLLL.com in various price ranges?

Brad

I am glad someone gets what I have been trying to explain.

We want to find the relation between STR and Price by:

1. Finding STR for each price group separately (ex: for different domains qualities)
2. Assuming that all domains were priced correctly

Finally! Here is the thing though. You CAN'T with any level of accuracy or confidence assume that, even if you would manage to define what is CORRECT pricing.

 

[Ostrados]

I am glad someone gets what I have been trying to explain.



Finally! Here is the thing though. You CAN'T with any level of accuracy or confidence assume that, even if you would manage to define what is CORRECT pricing.

As I mentioned before there is no exact pricing but range pricing, most domainers that have above average experience know how to appraise a domain in low xxx, high xxxx, mid 5 figures...etc.

 

[Armageddon]

I have no clue what you say @Ostrados
but...
What i notice if is the same price on all marketplaces for the same domains , the sale is more quick & no room for errors with all this integration / fast transfers / mls / bls / cls / amg ( mercedes )
I talk with @bmugford & was very upset that many names of him not show properly as price or type of listing ( make offer or bin ) based should be as is land page / ns so... i decide that all my domains to have same price on Uniregistry , Sedo , Dan & Afternic ( NS dont matter ) - The result was my first xxxx $ sale on 2023 & i think more will come , because is a decent price for end buyers but also as resale price for investors in domains
For my domains i have is the right move ( imo )

I made the survey you create ( no more 'hahanonymus' )

 

[Ostrados]

Update:

I got 7 responses so far on the survey. Thanks a lot for the participants your contribution is appreciated.

But we still need lot more data, I hope more will contribute.

11 days left for the survey so there is still plenty of time.

It takes less than 10 minutes to complete the survey. The only question that is time consuming is this:

But it can be done in less than 5 minutes, here is how:

> IF you have your domains in an excel sheet then from your price column you can use filter->Numbers Filter->Between:

> Then enter the price range (ex: $500 to $1000):

> Now select the entire column and read "count" from Excel bottom right bar.

Thanks for your time

 

[Namingfy]

I forgot to mention that the Survey will expire in 14 days

You can still edit the main post add the expiry date, so that the new comers is aware of the date

 

[Recons.Com]

As I mentioned before there is no exact pricing but range pricing, most domainers that have above average experience know how to appraise a domain in low xxx, high xxxx, mid 5 figures...etc.

1. That is a huge assumption to make. Even the most successful and experienced investors admit that there is no exact science to pricing currently. And yet this assumption is core to your research.

2. For the research where you are trying to nail down the pricing to STR correlation ACCURATELY, your base for it is acceptable pricing accuracy of "high xxxx" or "mid 5 figures" or "low xxx"??? What's high xxxx? 6000 to 9999? So someone who values the same domain and prices it at $6000 has the same accuracy that values it 66% higher? Really?

Anyway, my last post on the subject. Good luck again.

 

[Bob Hawkes]

I filled out the survey. Quite apart from the debate on the merits of the proposed research, I found it illuminating to actually think about my own situation as I completed the survey.

It is too sparse data to mean much, but it seemed to show that my really low-priced names were underperforming, and my high-priced names also unperforming. Small number stats though. There does seem to be a sweet spot.

I think the exercise of looking at how many sales and how many are listed at different price BINs is a useful exercise to periodically do.

Now the next part, on a personal level, is to ask why certain names are underperforming. Is it because the low-priced names have no audience really at any price? For some of mine, yes.

For the higher-priced names, is it because I have them over-priced, or inherently the STR is just lower for these names, because audience pool lower, or maybe I have them for sale at the wrong place? All possible.

Anyway, just say I found worth completing it, personally.

-Bob

 

[Ostrados]

1. That is a huge assumption to make. Even the most successful and experienced investors admit that there is no exact science to pricing currently. And yet this assumption is core to your research.

2. For the research where you are trying to nail down the pricing to STR correlation ACCURATELY, your base for it is acceptable pricing accuracy of "high xxxx" or "mid 5 figures" or "low xxx"??? What's high xxxx? 6000 to 9999? So someone who values the same domain and prices it at $6000 has the same accuracy that values it 66% higher? Really?

Anyway, my last post on the subject. Good luck again.

I know domain prices look chaotic. but beneath every chaotic system there is order. Domains prices are ultimately governed by the law of supply and demand like any other business, but in domaining it looks more chaotic and complex than anything else. However if we look closer at the data then I am sure we can find some strong relationships and correlations. I hope that with the advances in AI some research will be done on this subject.

The STR formula I am seeking will be general and depends on data from users, there will be some overpricing and underpricing, but the study assumes that the law of average will make these ripples cancel out.

 

[Ostrados]

BTW @Recons.Com raised a very important point in his previous posts regarding of his concerns of using any STR formula for blind pricing, so I have to strongly assure the following especially for new domainers:

IMPORTANT:

An STR for a specific price range, does not mean you can raise your prices to that range!

For example: @AbdulBasit.com reported an STR of 1.5% for $6000 Average sale price on 2022, that does not mean to go crazy and raise your hand reg domains to around $6000 and hope that you will achieve same STR as his, you will end up with STR close to 0.01% and you will lose moeney. Do your homework and price your domains correctly.

 

[Ostrados]

UPDATE:

Still only 7 responses so far on the survey!

If I don't get enough data then I will not publish any results because they will be inconclusive.

This study was supposed to be first step in a new series of studies, it was a step into uncharted new area.

I spent a lot of time on this, my goal was to share it with domaining community! but it seems very few bother spending few minutes on a short survey.

Thanks

 

[Bob Hawkes]

Urge others to complete this survey. Yes, caveats to any analysis, but I think with enough responses this could be worthwhile information for us all. Please take the few minutes to complete it.
Thanks,
-Bob

 

[Ostrados]

BTW:

@Recons.Com said in another thread

- I am concerned with the stable cash flow on overall portfolio level. I am pricing to maximize profits, as well as smoothing the cash flow out through the year. Hence I group my names into several categories based on some predictor parameters and for each price at the point where price times STR gives me the highest return. I am not concerned if for any specific name I am leaving money on the table.

Me explained in this thread:

We want to find the relation between STR and Price by:

1. Finding STR for each price group separately (ex: for different domains qualities)
2. Assuming that all domains were priced correctly

Price groups can be imagined as baskets containing different quality/tld/LLLL objects (you name them). Or we can recall them tiers like tier1, tier2, tier3...etc.

Spot the difference!

But negativity must exist

 

[branding]

Your opening post is confusing... Don't these graphs just show a higher STR for lower priced domains as would be expected?

Bigger pool of buyers = higher STR.

Even so... A low STR doesn't mean you're underperforming if the profit is there. High end sales specifically.

Obviously there's a sweet spot with a correlation between $ and str % but... Str and pricing don't factor in net profit (acquisition, taxes, labour, overhead different for everyone) so...

Really not sure what you're trying to accomplish...

 

[bmugford]

An STR for a specific price range, does not mean you can raise your prices to that range!

For example: @AbdulBasit.com reported an STR of 1.5% for $6000 Average sale price on 2022, that does not mean to go crazy and raise your hand reg domains to around $6000 and hope that you will achieve same STR as his, you will end up with STR close to 0.01% and you will lose moeney. Do your homework and price your domains correctly.

I agree. You need the domain quality to support it.

Just randomly raising prices is not going to magically yield better results, in fact it is likely to yield far worse results.

Brad

 

[bmugford]

I filled out the survey. Quite apart from the debate on the merits of the proposed research, I found it illuminating to actually think about my own situation as I completed the survey.

It is too sparse data to mean much, but it seemed to show that my really low-priced names were underperforming, and my high-priced names also unperforming. Small number stats though. There does seem to be a sweet spot.

I think the exercise of looking at how many sales and how many are listed at different price BINs is a useful exercise to periodically do.

Now the next part, on a personal level, is to ask why certain names are underperforming. Is it because the low-priced names have no audience really at any price? For some of mine, yes.

For the higher-priced names, is it because I have them over-priced, or inherently the STR is just lower for these names, because audience pool lower, or maybe I have them for sale at the wrong place? All possible.

Anyway, just say I found worth completing it, personally.

-Bob

I think most domain investors would come to a similar conclusion if they did a deep dive.

Lower priced domains underperform in general because they are lower quality. Even for low prices, they are not that likely to sell if the pool of potential buyers is small (or non-existent).

Higher priced domains underperform for one of two reasons -

1.) The domain is overpriced and not worth the asking price.
2.) The domain is priced well, but you hit budgetary restraints of potential buyers.

Even for the best domain, not many people have tens of thousands of dollars or more available.
Even with a large pool of potential buyers, the actual pool of serious potential buyers would be much smaller.

I think the sweet spot is around $2K - $5K, at least for domains that are are priced relative to the quality.

Brad

 

[Ostrados]

Your opening post is confusing... Don't these graphs just show a higher STR for lower priced domains as would be expected?

Bigger pool of buyers = higher STR.

Even so... A low STR doesn't mean you're underperforming if the profit is there. High end sales specifically.

Obviously there's a sweet spot with a correlation between $ and str % but... Str and pricing don't factor in net profit (acquisition, taxes, labour, overhead different for everyone) so...

Really not sure what you're trying to accomplish...

Yes I know my first post was confusing, I explained in details in replies after that.

The objective of this study is to compare real life sales with portfolio pricing, to derive STR values for different price groups.

I will give simple example:

Lets say your portfolio consists of the following domains (numbers are just for illustration):

Groups	Type of Domains	Selling Price Range	STR
Tier 1	* Premium domains * One word domains ...etc	$30,000 to $100,000	??
Tier 2	* High value keywords * EMD domains .. etc	$15,000 to $30,000	??
Tier 3	* Strong value domains * Pronounceable LLLL ...etc	$5000 - $15,000	??
Tier 4	* Average value domains * GD Closeouts ...etc	$2000 - $5000	Maybe 1% to 2%
Tier 5	* Hand Reg domains * Obscure TLDs ...etc	$500 - $2000	Maybe 2% to 4%

What we know:

• The only known STR for us is for Tier 4 & 5, and we only have an approximate STR range.
• Unkowns: STR for Tiers 1,2 and 3.

Lets say I want to build strong portfolio with only Tier-1 domains where I will pay $10k+ on each domain acquisition. I want to make a feasibility study and find expected ROI in next 5 years. I can't do that without knowing the expected STR, if you ask anyone how much STR for selling $50k+ domains nobody will give you an answer.

 

[bmugford]

• The only known STR for us is for Tier 4 & 5, and we only have an approximate STR range.
• Unkowns: STR for Tiers 1,2 and 3.

Lets say I want to build strong portfolio with only Tier-1 domains where I will pay $10k+ on each domain acquisition. I want to make a feasibility study, and know expected ROI in next 5 years. I can't do that without knowing the excpeted STR, if you ask anyone how much STR for selling $50k+ domains nobody will give you an answer.

The STR for domains priced well into 5 or 6 figures is going to be extremely low.

It is largely because a bunch of garbage domains are priced in that range, but also because not many buyers have that much money.

However, when you start playing in higher ranges I would argue STR doesn't matter as much. Then you start to factor in things like upside, downside, wholesale value, etc.

If I buy a LLL.com for $15K I know I can always sell it around there. The downside is limited.

If I find an end user to pay $75K great, but it doesn't matter that much as the renewal fee of $10 is such a low cost compared to the value of the domain.

Also, these higher end domains tend to appreciate in value over time far more than lower end domains.

I think the STR matters much more towards the low to mid tier, where holding costs (renewal fees) make up a much larger portion of the domain value.

Brad

 

[Ostrados]

The STR for domains priced well into 5 or 6 figures is going to be extremely low.

It is largely because a bunch of garbage domains are priced in that range, but also because not many buyers have that much money.

I am sure marketplaces like Afternic and Sedo have big data to give very accurate STR in any price range up to the 6 figures range. But they will never share such info with us.

I think the STR matters much more towards the low to mid tier, where holding costs (renewal fees) make up a much larger portion of the domain value.

I agree with you STR is more important in the high volume range where domains are usually priced in 4 figure range and where most of sales happen. But I am extremely interested to know the STR for all price ranges ($10k to $15k, $20k to $25k ... etc) and I believe that will be valuable info.