analysis Holding Costs - The silent portfolio killer.

[bmugford]

Below is a quick look at how annual holding costs can impact a domain portfolio.

I will be comparing .COM and .AI, as both extensions have end-user demand while having very different registration / renewal fees.

This comparison could be used with any extension that has “premium” registration / renewal fees. The math is the same.

Acquisition costs are excluded. This is looking strictly at holding costs.


Assumptions -

• Inbound sell-through rates (STR) for quality domains typically range from 1%–2% per year, at realistic end-user pricing.
  
  
• You need high margins on the domains that do sell, to cover the ones that don't sell.
  
  
• Even strong domains can take many years to sell.

.COM Holding Costs -

Renewal: ~$10/year

Cost to hold 100 domains: $1,000/year.

1% STR (1 sale/year) → $1,000 needed to break even.

2% STR (2 sales/year) → $500 per sale to break even.



.AI Holding Costs (Current) -

Renewal: ~$70/year

Cost to hold 100 domains: $7,000/year.

1% STR → $7,000 break-even sale.

2% STR → $3,500 per sale to break even.



.AI Renewals Increasing to ~$80/year -

Cost to hold 100 domains: $8,000/year.

1% STR → $8,000 break-even sale.

2% STR → $4,000 per sale to break even.



Takeaways -

1.) "Premium" renewals can really change the domain investment math.

2.) For the math to make sense you need a much higher average sales price and/or a much higher sell-through rate.

3.) If you are dealing with high quality single words and short brands, it could make sense even with higher holding costs.

4.) For marginal domains, holding costs can quickly become a crushing financial burden.


Brad

 

[SpareDomains]

I'm old school so I'm a dot com guy. With that said I do see value and I have liked a few extensions in the past .AI, .IO etc... but I haven't invested in any. I think there is money there but more top end. I think ya really need the gems in alternate extensions where .com little easier to go down a bit from the top not only because renewal costs are cheaper but also because it's a .com. I've sold 3 word .coms but not sure how common that is in alternate extensions.

 

[bmugford]

I'm old school so I'm a dot com guy. With that said I do see value and have liked a few extensions in the past .AI, .IO etc... but I haven't invested in any. I think there is money there but more top end. I think ya really need the gems in alternate extensions where .com little easier to go down a bit not only because renewal costs cheaper but also because it's a .com.

Yeah, if you are dealing with top tier terms then the holding costs don't matter that much.

If you have a domain that is worth say $50K realistic end-user price then $10/year or $80/year is a small portion of that.

However, when you start adding expenses without sales it quickly becomes a massive problem.

With other new extensions, many in demand terms were turned into toxic assets with their "premium" renewals.

Brad

 

[bmugford]

I've sold 3 word .coms but not sure how common that is in alternate extensions.

It's not common at all.

.COM is really the only extension where any random term has at least some chance to sell.

If you look at .AI sales, it is clear what is selling. It's mainly single words and short brands.


NameBio shows $47m in total .AI sales.

10 characters or less -

18,800 sales.
$45.2m.


11 or more characters -

1,345 sales.
$1.8m


Brad

 

[SpareDomains]

It's not common at all.

.COM is really the only extension where any random term has at least some chance to sell.

If you look at .AI sales, it is clear what is selling. It's mainly single words and short brands.


NameBio shows $47m in total .AI sales.


10 characters or less -

18,800 sales.
$45.2m.


11 or more characters -

1,345 sales.
$1.8m


Brad

Sorry I edited that line in later after your quote. I write then I read what I wrote then I edit it and add more so ya gotta give me 5 minutes to make sure I'm done messing with it. This post excluded I'm done.

 

[Simon SE]

I think there is money there but more top end.

This. It needs to be quality. For the right .ai names there is always a bidding frenzy. At that level you factor in 10 years of renewals anyway so holding costs aren't an issue (ie budget to add $500 onto the end sale price).

These names usually get listed at anything up to 100x purchase price. It's a different ball game.

 

[Future Sensors]

Another silent portfolio killer:

Finally, asked about future .com pricing, Bidzos reiterated that the company does not guide on price increases. He said VeriSign has the ability to raise prices by 7% in each of the final four years of a six-year period, with a six-month notice requirement. He said the first available opportunity for a price increase would come at the end of October 2026, and that if VeriSign chose to act, an announcement could be made in April—though he did not indicate whether the company will do so.

https://finance.yahoo.com/news/verisign-q4-earnings-call-highlights-071541033.html

 

[Simon SE]

Another silent portfolio killer:

Finally, asked about future .com pricing, Bidzos reiterated that the company does not guide on price increases. He said VeriSign has the ability to raise prices by 7% in each of the final four years of a six-year period, with a six-month notice requirement. He said the first available opportunity for a price increase would come at the end of October 2026, and that if VeriSign chose to act, an announcement could be made in April—though he did not indicate whether the company will do so.

https://finance.yahoo.com/news/verisign-q4-earnings-call-highlights-071541033.html

Imagine the restraint required to be in that position, where a 7% price increase would result in significant extra millions of dollars, and not doing it. I don't think you could even justify that to your stakeholders. So yeah, 99% certain an increase is coming.