sales How Much Are Your Domains Really Worth? Part 1

[Whizzbang]

Over the last few years there has been a rush of capital into the domain industry from two major sources, Chinese investors and speculators. I have written quite a lot on the Chinese investors but have largely ignored the speculators.

Speculators have hoped to win the lottery by having a domain that a cashed up major company wants to desperately buy. They hear about the successes of “old-time” domainers and dream about find the pot-of-gold at the end of one of their domain rainbows. I don’t mean to rain on your parade but this is unlikely to happen and here’s why.

Read more...

 

[Dotword]

You may easily have enough money to repeatedly pay the renewal fees (they are usually not that much) to sit out a long time waiting for your prince to come. But that's just a lottery. If you want to sell (and I mean sell not play the lottery) then you need to reach out to buyers; it is kind of obvious.

Many people do not have it within them to contact potential buyers. Many people do accept if they are not interfacing with end users then they are one link in a chain and they cannot therefore expect a kings ransom.

People talk about "leaving money on the table" as a fear factor for owners when thinking about how to price their domains. They should instead think about "taking money to the grave" instead.

If you want to play the lottery then buy a lottery ticket. You probably have more chance of winning.

 

[nvdomains]

Everyone is an expert to dish out advice to unasked people.

 

[tandiono]

Awesome...

 

[Bullock]

"The difference between worth and value is demand."

 

[biggie]

with all the fluff, hype and celebrity praising that's going around, it's good that someone can write a common sense article once in a while.


imo....

 

[smarni]

@Whizzbang what is the best place to list domains. I own more than a 100 cool names. thanks.

 

[frank-germany]

Just because you paid $10,000 for a domain name does not mean that its worth that much. It could be you were the last patsy in a long line of people that are part of a global Ponzi scheme!

You may be carrying a $10,000 valuation in your balance sheet but the domain hasn’t earnt anything (ie. no traffic revenue) and there aren’t any buyers coming through the door. Since there aren’t any regular enquires this means the domain is actually worth $0 but strangely speculators are still putting their hope in a big payday.

Speculators tend to do is say to themselves, “I know that I’m going to sell this domain for an absolute fortune one day…..I just need to wait it out.” They’ve actually convinced themselves that it’s just a matter of time. The problem with this strategy is that the time may be a LONG way off (if at all) and the expenses keep on clocking up year after year.

"Just because you paid $10,000 for a domain name does not mean that its worth that much"

but maybe it is worth something ..
if you renew it for 100 years
you only added 10% of your initial costs

after 100 years it may be worth 3 billion


"I know that I’m going to sell this domain for an absolute fortune one day…..I just need to wait it out."

most probably you will sell it for something if you wait long enough


"The problem with this strategy is that the time may be a LONG way off "

thats not a problem thats a strategy


You are really negative, my friend.

hope everybody sold their 4l.com meanwhile..
(as whizz bang told you so)


are you really a domainer??????

 

[Whizzbang]

For a start I would like to thank everyone for their comments....both positive and negative. This is the first article I plan on writing that will explore pricing, worth and value. I do apologise if it came across a little negative....I wasn't meaning to. I love the domain industry and one of the reasons why I've been writing my blog for the past 9 years is that it often causes me to reflect on exactly what a domain investor (like myself) is doing.

To answer Frank's question, I've been a domainer for the past 15 years, speak at all of the different conferences around the world and I'm also one of the founders of Parklogic.com (we optimise domain traffic to the highest bidder). What's really important for me is there is always a business driver that underpins any strategy. I find that sometimes assumptions can be made that are actually not grounded in reality because domain investors get caught up in the hype rather than the numbers....

@Whizzbang what is the best place to list domains. I own more than a 100 cool names. thanks.

My recommendation is to ensure that all of your domains are listed in all of the marketplaces. It's all about maximising your potential catchment. Next, have your domains point to a landing page that highlights each of YOUR domains.....if the domains are then clicked on then they will go to the marketplace of choice. This maximises the possible flow through of your own traffic for selling your inventory. I hope that helps you out.

 

[Kate]

I don't think the article is negative. Too many domainers are just being unrealistic.

1. Portfolio size & quality
A portfolio is expensive to carry and renew. A domainer could be making sales from time to time and still lose money because the sales do not offset the renewal costs.Most domainers are losing money. Proof that it's not easy.
Quality > quantity. The market is unforgiving toward those who forget this rule. A good portfolio must be balanced, that means a healthy percentage of liquid domains (ie LLL, generics, short domains), not 100% regfee or new extensions.

2. Time
I think the time factor cannot be overestimated. I have made some sales after 10 years of holding the domain names. Most domainers are not prepared to wait that long. I am not saying that you should. But this is a game that rewards the patient and punishes the dreamers. Be careful, plenty of players with vested interests are trying to sell you dreams in bulk as we speak.

3. Liquidity
The valuations in this industry are pretty much worthless (they are subprime-like as hinted in the article). The vast majority of names held by domainers are simply not liquid, their value is therefore very questionable. If they had to liquidate in a rush due to a medical emergency or the like they would maybe fetch $$$ on a good day. We are millionaires on paper only. Reality: look around you.

 

[Whizzbang]

I don't think the article is negative. Too many domainers are just being unrealistic.

1. Portfolio size & quality
A portfolio is expensive to carry and renew. A domainer could be making sales from time to time and still lose money because the sales do not offset the renewal costs.Most domainers are losing money. Proof that it's not easy.
Quality > quantity. The market is unforgiving toward those who forget this rule. A good portfolio must be balanced, that means a healthy percentage of liquid domains (ie LLL, generics, short domains), not 100% regfee or new extensions.

2. Time
I think the time factor cannot be overestimated. I have made some sales after 10 years of holding the domain names. Most domainers are not prepared to wait that long. I am not saying that you should. But this is a game that rewards the patient and punishes the dreamers. Be careful, plenty of players with vested interests are trying to sell you dreams in bulk as we speak.

3. Liquidity
The valuations in this industry are pretty much worthless (they are subprime-like as hinted in the article). The vast majority of names held by domainers are simply not liquid, their value is therefore very questionable. If they had to liquidate in a rush due to a medical emergency or the like they would maybe fetch $$$ on a good day. We are millionaires on paper only. Reality: look around you.

Kate - I couldn't agree with you more.
The challenge for all of us is to be realistic about our domain portfolios rather than drinking the kool-aid and then getting frustrated because sales don't instantly happen. Just putting together article 2 in the series at the moment.

 

[alcy]

imo the only sure good way to make money here is to come in with a big bunch of money to play with and invest with.. then buying liquids with it.. with sure stable value.. but looking for deals... like people needing quick cash etc.. which tends to happen regularly once you begin to talk about larger sums of money like 5 or 6 figures... be it for a 3l.com 2l.com... or nice 1word.com gems... and many other types of valuable domains..liquids...

if u come in with a lot of cash to invest and know what you are doing... I think you are pretty sure to make money.. maybe even a lot of it!! as in.. money makes money.

otherwise.. like was said.. for most of us.. this is no different from gambling..
it's just that the roulette takes a whole year to stop spinning on you...

 

[Bullock]

@frank-germany, @Kate, IMO, time selling depends on the quality of domain name.

 

[Kate]

otherwise.. like was said.. for most of us.. this is no different from gambling..
it's just that the roulette takes a whole year to stop spinning on you...

Ah ah ah love this quote

@frank-germany, @Kate, IMO, time selling depends on the quality of domain name.

Yes and no. You probably mean that good domains will get more inquiries, more often, so they are likely to sell faster. I agree with that. But if you own good names, you will also have to decline a number of low offers until the right buyer comes around.
This is typical with LLL.com: you get several inquiries per week via E-mail, but most offers are lowball from curious/dreamers/domainers/all of the above. You'd get higher offers posting the name here at NP. But the domains are potentially worth 6 figures to the right end user. At least these names are liquid.

But it might take 10 or 20 years to achieve the perfect sales. I'm not kidding. I have made sales after 10 years of wait time, and Rick Schwartz sold names that he had been holding for 20 years. The major sales almost always involve aged domains.
You really must be in for the long haul in this industry.

 

[dordomai]

If we assume that the aftermarket will not routinely allow high profile domain sales below fair domain value we see even great domains not being worth that much.

Stroke.com a category killer generic sold for 60k on Namejet.

If it is worth more why didn't the smart money pay more for it?

How many generics sell for more than 100k on Namejet?

 

[Bullock]

@Kate, I agree with you. I mean that a "gem" can be managed to get the best ROI.

 

[loredan]

This article is a breath of fresh air in the sea of "how can you get rich fast by selling domain names" crap out there.
Negative? Naah Realistic? Quite a lot as @Kate pointed out

Many thanks @Whizzbang for taking the time to write this and share it with us!

 

[Whizzbang]

This article is a breath of fresh air in the sea of "how can you get rich fast by selling domain names" crap out there.
Negative? Naah Realistic? Quite a lot as @Kate pointed out

Many thanks @Whizzbang for taking the time to write this and share it with us!

Thank you for your kind comment. I've just published part 2 in the series and I'm just about finished mapping out part 3......trust me when I say there is light at the end of the tunnel

 

[Brandon.Domains]

Thanks, good read!

Brandon