sales Don't Shoot for the moon

[equity78]

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?

Read more at Namebio

 

[Michael]

Michael - I loved this article, so first of all, thank you for writing it...

I run a very similar stepped model. The multiples need some revision but it's roughly like this: https://twitter.com/hypernames/status/1122780585125130245

I think it would be interesting to see your equation run in the opposite direction, using a high/medium-probability retail value to determine a wholesale price range. Then the purchase becomes the theoretical point at which the money is made.

If investors don't use enduser prices to determine wholesale values, a few things could happen:

• Higher chance to overpay for the acquisition at wholesale = poor deployment of capital
• Once an investor has overpaid at auction/wholesale, a static multiple (like 10x/100x) forces a low-probability retail price (moonshots) and a weaker sell-through rate
• If end-user prices are static, but particular domains are getting more expensive on aftermarket, margins will become tiny.
• If we ignore end-user prices and trade on wholesale only, domains will end up getting used as a store of value. Then we get stuck in an asset bubble, passing money around to each other.

The model seems very reasonable to me, good stuff. The only reason I don't have it stepped is it gets weird at the edges, like a $999 acquisition might be priced quite a bit off from a $1,000 acquisition.

It wouldn't work in reverse though because retail prices don't have predictive value, you need to solve for wholesale and then extrapolate to retail. I'm just talking from an AI perspective though. You could certainly look at a name on auction and say to yourself "I think that could reasonably sell for $25k retail, I'm willing to pay around a grand for it." But it wouldn't work for an AI to try to guess at retail and work back to wholesale, there's not enough data and it's too random.

That's why I believe automated appraisers are crap right now, they don't exclude retail and it muddies the waters to the point where it all becomes nonsense. It's even hard for a human to peg a retail value, if you ask 10 experts you'll probably get 10 different answers. Used to happen all the time on DomainSherpa's Guess that Price segment or whatever it was called, guesses were all over the place.

I agree though, domainers need to give more thought about retail valuation when buying. Many are just bidding because others are participating, and are buying names for a grand or more that aren't likely to sell to an end user for more than a few grand. That doesn't work if you're only selling one out of every few hundred names. Perhaps they are just banking on the wholesale value going up so they can flip it, which as you say leads to a bubble. It works for massive buyers who are only trying to grow their top line though and are ok with a 10-year ROI, and they're squeezing the margins to the point that the little guy can't play.

I think we've been there for 2-3 years now actually. End user prices are not keeping up with the growth in wholesale prices, not by a long shot.

 

[Paul 11]

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?

Read more at Namebio

What I know for sure is that this is an important conversation to have for all of us. We must always be willing to look honestly at what we're doing and smartly make needed adjustments.

 

[Paul 11]

What I know for sure is that this is an important conversation to have for all of us. We must always be willing to look honestly at what we're doing and smartly make needed adjustments.

Also, this means that regardless of whether we like or dislike someone's reply, it is a valued contribution to this discussion. This is the strength of our community!!!

 

[DpakH]

Thanks for sharing indepth analysis and information.

Regards
DpakH

 

[barman]

I'm shooting for the moon, or as I like to call them "Hail Mary"s on a small portion of my names, the best ones, that I'm willing to hold onto for a decade or longer.

The rest - I'm taking a much more reasonable approach, similar to @Nikul Sanghvi 's chart. I've had plenty of "down to earth" sales, which has kept me in business.

Still waiting on my one moon shot though!

 

[domainventure]

Great analysis Michael. Liked Nikul's approach as well.

 

[55Domains]

they did it in `69
so why wouldn't you?

If i may, they didnt.

 

[manpreet]

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?

Read more at Namebio

Great advice.

 

[oskaaay]

Nothing bad to give the moon a try and when no landing space your crash back to earth with your domains...at least it better than going down from earth to blackhole without end and disappear for life.

 

[imadoer]

I shoot for the moon on names that are a very long term hold that I see appreciating in the future. I get realistic with the med tier stuff and move and recylce when things get slow.

 

[Sutruk]

I shoot for the moon on names that are a very long term hold that I see appreciating in the future. I get realistic with the med tier stuff and move and recylce when things get slow.

Me too. That's the way to go.

 

[equity78]

Me too. That's the way to go.

Agreed, It's good to have a few where you say I will look for more than I expected.

 

[lock]

Most of time your dealing with fake information to start who cares about shooting for moon then.
Eg fake name at @ gmail address you remember searching for similar earlier in week and now your supposed to fall for email from a broker wanting to buy to resell. If I have a real customer know who it is then all changes.

 

[Mister Funsky]

Yep...shoot for the moon on the top tier domains...take reasonable offers for the rest of the herd.

I've got several 4L's that are 'really' pronounceable (I say 'really' because of the abundance of posts here touting 'pronounceable' letter combos). There are a few one word and many two word domains I consider top tier as well. To give the theory a try, I will shoot for the moon for the next 6 months and see what happens.