analysis Sell-Through Rates

[traderx]

I am curious what sell-through rates folks are experiencing on GoDaddy, Afternic, Sedo, and other listing services.

I would expect the rate to fall as the price goes up. From what I have read, the average rate is 1% per year, but makes no indication on the price range. I would expect the sell-through rate on quality $200 domains to be much higher than quality $2,000 domains. Just curious if folks would be willing to share their experience.

 

[NameBuyer.com]

That sounds good, but to have a sale like this, you need other thousands of domains, you can't count on buying only a domain and wait to sell it. In the meantime, you pay renewals and acquisitions for domains, that at least some of them will never sell. The good thing is that, if you stop buying, you can make a nice profit for years( if something doesn't change in 5-10 years and they loose a lot of they value).

That could be true. But I think the situation is much different than normal in this case. We are taking a name purchased at auction for $10k (by being at the right place, at the right time) and offering it to an end-user for $20k (who wasn't at the right place, at the right time). So for the right end-user, it should look like a deal, because investors will normally 10x the price.

In my case, I'm only targeting names that are widely used by 10+ businesses.

Maybe multiplying this test and doing this with 20+ different domains, where we flip each of the 20 domains for double our cost, trading up and up, could make a portfolio look much differently in 5 years.

If you look at Rick's sale list (ricksblog(dot)com), several of his top sales including Candy, Property and others come from his top 20 domains.

Maybe it works, maybe it doesn't. I might not get a big sale from it, but I should end up with at least one pretty impressive name.

 

[boker]

That could be true. But I think the situation is much different than normal in this case. We are taking a name purchased at auction for $10k (by being at the right place, at the right time) and offering it to an end-user for $20k (who wasn't at the right place, at the right time). So for the right end-user, it should look like a deal, because investors will normally 10x the price.

In my case, I'm only targeting names that are widely used by 10+ businesses.

Maybe multiplying this test and doing this with 20+ different domains, where we flip each of the 20 domains for double our cost, trading up and up, could make a portfolio look much differently in 5 years.

If you look at Rick's sale list (ricksblog(dot)com), several of his top sales including Candy, Property and others come from his top 20 domains.

Maybe it works, maybe it doesn't. I might not get a big sale from it, but I should end up with at least one pretty impressive name.

Yes, that's true , flipping it for 2x-3x should work and doing this for a few years will take you far, but you still have domains acquired 10-15 years ago, that you need to renew and which most of them will never sell, so fro m this point of view will be like a ballast. The ideal way is to accumulate experience, without having to pay lot's of renewals for mistakes from the beginning. Either way, you have accumulated enough experience, so based on this, no matter what you choose, it should still turn out a profit. I think that there are a few new investors who are trying exactly the same strategy, like @Riz M. and @NetworkPearl , so it's working. The main thing is to find the right domain and to not overpay for it. These days, if it will reach an auction, it will demand high $. As an example, I've tested the waters by contacting some old owners, but most of the times, they don't reply or they reply like the owner of TheWorld.com, with a price of $9 millions, so you can have a deal, but you need to have patience and luck.

 

[NetworkPearl]

That could be true. But I think the situation is much different than normal in this case. We are taking a name purchased at auction for $10k (by being at the right place, at the right time) and offering it to an end-user for $20k (who wasn't at the right place, at the right time). So for the right end-user, it should look like a deal, because investors will normally 10x the price.

In my case, I'm only targeting names that are widely used by 10+ businesses.

Maybe multiplying this test and doing this with 20+ different domains, where we flip each of the 20 domains for double our cost, trading up and up, could make a portfolio look much differently in 5 years.

If you look at Rick's sale list (ricksblog(dot)com), several of his top sales including Candy, Property and others come from his top 20 domains.

Maybe it works, maybe it doesn't. I might not get a big sale from it, but I should end up with at least one pretty impressive name.

Flipping usually only works when you’re not purchasing from auctions. Prices on auctions end up really really high now a days. Many times I decide to bid till $2k on a domain at Godaddy and surprised to see it end at like around $8k.

I know some people who purchase certain domains for 3figs from auctions such as Godaddy/Namejet and flip them for low xxxx on Flippa. However, this all depends on the price you pay for the domain in the first place and also the quality of keywords. I have noticed EMD or keyword rich domains do well on Flippa and I have flipped a couple there too.

 

[EmpireNames.com]

Yes, that's true , flipping it for 2x-3x should work and doing this for a few years will take you far, but you still have domains acquired 10-15 years ago, that you need to renew and which most of them will never sell, so fro m this point of view will be like a ballast. The ideal way is to accumulate experience, without having to pay lot's of renewals for mistakes from the beginning. Either way, you have accumulated enough experience, so based on this, no matter what you choose, it should still turn out a profit. I think that there are a few new investors who are trying exactly the same strategy, like @Riz M. and @NetworkPearl , so it's working. The main thing is to find the right domain and to not overpay for it. These days, if it will reach an auction, it will demand high $. As an example, I've tested the waters by contacting some old owners, but most of the times, they don't reply or they reply like the owner of TheWorld.com, with a price of $9 millions, so you can have a deal, but you need to have patience and luck.

my strategy is always buy names below wholesale market price.. my few purchases in last few months

Naturopathy // com : 3800
Electric // co : 1000
Courier // co : 1000
Magazine // co : 1000
Shoby // com : 222
Super-Market // com : 100
Roze // com : 2600
Fibu // com : 3600
Antony // com : 5000

alot more i bought but i remember these now straight...

these i can cash anyday for doubling so here my selling rate will be 100% anyday...if not double still i will make good profit on them if i sell these to other reseller ..

 

[jim h]

To tell you the truth, the cheaper the high-quality domain name, the better sales, this is certain.
But on the whole, most of the domain names sold are less than US $1000, and those with medium quality can be sold at about $2000. There are few examples of high price sale. The media always focus on the explosive sales cases.

 

[boker]

my strategy is always buy names below wholesale market price.. my few purchases in last few months

Naturopathy // com : 3800
Electric // co : 1000
Courier // co : 1000
Magazine // co : 1000
Shoby // com : 222
Super-Market // com : 100
Roze // com : 2600
Fibu // com : 3600
Antony // com : 5000

alot more i bought but i remember these now straight...

these i can cash anyday for doubling so here my selling rate will be 100% anyday...if not double still i will make good profit on them if i sell these to other reseller ..

Roze, Super-Market, Electric and Courier should bring the better ROI. I'm curious, did you bought them from other domainers or did you contacted owners who had them for long time?

 

[EmpireNames.com]

Roze, Super-Market, Electric and Courier should bring the better ROI. I'm curious, did you bought them from other domainers or did you contacted owners who had them for long time?

its mixed of pvt and purchases from other domainers as well..
i am against auctions all the time i dont like to bid unless i like name alot so my maybe 5% acquisitions are from auctions..

 

[Nihar Khurana]

Well it's probably closer to 2009 ($30k), 2010 ($30k), 2011 ($35k), 2012 ($40k), 2013 ($40k), 2015($52k), & 2017 ($61k).

So about $288k for the missing years.

I think it's important to look at it as investment income instead of an income of $xx,xxx per year from a job or a business. I created and ran an import business for years, and was able to get the revenue much higher, and much quicker, but we actually ran a warehouse and were dealing with orders every day.

Because now, if I do nothing, I still have the same $134k+ per year in sales and $64k+ per year in profit.

So if I get up to 30,000 names and I'm happy at that number of domains, I'll have no new acquisition costs (besides replacing sold domains) and the revenue should be $615,000+. If we allocate the same percentage to expenses, the profit should work out to just under $300k. I can live with that.

I'm still tweaking things. I dropped 573 domains last year, and purchased around 1,000. Since creating NameWorth, I definitely put more analysis and research into each purchase. So my numbers are still evolving.

Also, even though my spreadsheet looks very linear and predictable, I have about 4-5 new strategies that I'm trying out just in the last 6-12 months. So maybe it just takes a strategy that matches your expectations.

I remember a post from Rick that said something to the effect that "the difference between a $30,000 sale and a $300,000 sale, is the seller". It appears there is a lot of truth to that. I have one client that is very enthusiastic about one of my names that match their app name. The domain is listed at $29k, and they have no concern about the price. Their only concern is how do they finance it and get it sooner than later in a way that is affordable. I'm realizing, that if proposed in the right way, it is very feasible to get royalties or equities as Rick has done. If you look at his sale of Teem(dot)com. It is a good domain, but has no real-world meaning other than sounding like "team". The sale portion of the agreement was for $36,000, plus stock (see below). Many startups can do something like that, and the potential payout, once they are acquired by a larger company, is enormous.

Show attachment 164324


Another thing that Rick posted recently was a path of selling 18 domains to be a multi-millionaire. While it may take much longer than 18 months, it does get you to think differently. Many people have the idea that success just fell in his lap because he purchased a bunch of cheap ultra-premium names in the 1990s, but his biggest domain sale, candy(dot)com, was not purchased until 2005, and for $100k. Very few of us are buying names for $100k, but reflecting on the Twitter post below, I can see how thinking differently can put in you a much different position as far as acquisitions and sales.

https://twitter.com/x/status/1275370852272439297

Hi NameBuyer,
Thanks for sharing great insights. Very useful for people with lesser experience like me.

One question keeps popping in my head whenever I see bigger domain portfolios like yours, isn`t rhere a fear of considerably reduced profits over the years with .com renewal price slated to increase significantly in the years to come? It is currently on hold because of COVID but eventually it has to happen. And What I have read is .com renewal price would be nearing $13-$14 in about 10 years time. So maintaining the portfolio would be nearing double of what it is today.


This thought hinders me personally in moving towards a bigger portfolio. Would be grateful if you can share your thoughts on this.

 

[NameBuyer.com]

Hi NameBuyer,
Thanks for sharing great insights. Very useful for people with lesser experience like me.

One question keeps popping in my head whenever I see bigger domain portfolios like yours, isn`t rhere a fear of considerably reduced profits over the years with .com renewal price slated to increase significantly in the years to come? It is currently on hold because of COVID but eventually it has to happen. And What I have read is .com renewal price would be nearing $13-$14 in about 10 years time. So maintaining the portfolio would be nearing double of what it is today.


This thought hinders me personally in moving towards a bigger portfolio. Would be grateful if you can share your thoughts on this.

If they were only raising prices for you, I'd say you've got a problem. But since they're raising prices for everyone, I think you'll see the median domain sale slowly rise from around $1,000 each currently to about $1,550-$1,650 each. The rest of the market will adjust with this.

Gas was about $1.10 per gallon in California 25 years ago. When the prices started rising, a co-worker said when it gets to over $3.00 a gallon, he was going to bike to work and would stop driving. Prices eventually went up to $4+ per gallon, the freeways were still packed, and my co-worker was still driving to work. People adjusted by making more money or by being more efficient and using hybrid cars. Minimum wage back then was $4.25 per hour, where now it is $12 per hour. So I think from the macro economic view, everything will work out just fine.

So if all domain investors need to raise prices for their profits to make sense, they'll all increase prices eventually. HugeDomains, BuyDomains and other large portfolio holders will be the first to do so, and others in the market will likely follow soon after.

So I'd suggest if costs are increasing by 59%, then increase your prices by 59% and make sure there is a lease option to make it just as affordable as it was before the price increase (via monthly payments). Then go through and get rid of the bottom 5-10% of your portfolio that are less likely to sell and use the money saved to buy better names that are more likely to sell. This way, you are increasing your prices to compensate for the cost and at the same time improving efficiency.

 

[Nihar Khurana]

If they were only raising prices for you, I'd say you've got a problem. But since they're raising prices for everyone, I think you'll see the median domain sale slowly rise from around $1,000 each currently to about $1,550-$1,650 each. The rest of the market will adjust with this.

Gas was about $1.10 per gallon in California 25 years ago. When the prices started rising, a co-worker said when it gets to over $3.00 a gallon, he was going to bike to work and would stop driving. Prices eventually went up to $4+ per gallon, the freeways were still packed, and my co-worker was still driving to work. People adjusted by making more money or by being more efficient and using hybrid cars. Minimum wage back then was $4.25 per hour, where now it is $12 per hour. So I think from the macro economic view, everything will work out just fine.

So if all domain investors need to raise prices for their profits to make sense, they'll all increase prices eventually. HugeDomains, BuyDomains and other large portfolio holders will be the first to do so, and others in the market will likely follow soon after.

So I'd suggest if costs are increasing by 59%, then increase your prices by 59% and make sure there is a lease option to make it just as affordable as it was before the price increase (via monthly payments). Then go through and get rid of the bottom 5-10% of your portfolio that are less likely to sell and use the money saved to buy better names that are more likely to sell. This way, you are increasing your prices to compensate for the cost and at the same time improving efficiency.

Thanks for sharing your views...Agree with you.. prices will have to increase to accommodate higher renewal costs!

 

[gericsb]

Since I responded to your direct message with a similar question, I thought I'd post it here as well. I saw this question earlier in the week, but didn't have time to try and get rough numbers together until now.

Last year I probably had about 6,700 domains. In the last few months I've bought quite a few so I'm probably closer to 7,500 again.

From my experience, sell-through rates have been something like this.

Average Sell Price $1,450 - 1.5% sell-through rate (prior years, 3,000-5,000+ domain portfolio)
Average Sell Price $2,000 - 1.0% sell-through rate (67 sales per year - prior year ending in 2019)
Average Sell Price $4,681 (this is where I'm at now) - 0.43% sell-through rate (29 sales per year)

So for me, the price increase resulted in slightly higher sales revenue ($137k vs $134k) , plus I'm selling less than half as many domains, which is also fine with me.

Some investors in the industry go by the strategy of buying domains and selling at 10x the price. So if they buy it at $500, they will price it at $5,000. If you do this, your sell-through rate will likely be closer to 2-3% I would guess. In this case if you buy 100 domains for $100 each, you are going to invest $10,000 and get back $2,000-$3,000 from your 2-3 sales in the first year.

On the other hand, I've seen people target ultra-high demand domains and buy them in auction for high $xxx to low $x,xxx and sell them for low to mid 5 figures and make $100k in sales within 2 years with less than 100 domains

So there are many methods and strategies to choose from, and several of them work in different ways (ex. higher return in first year vs higher return in subsequent years, or less domains vs more domains).

If you are starting out, i would only pick .com domains that other businesses currently use. If the name does not have any other businesses using the name currently, I would avoid it. If you pick 100 domains with low demand and low usage, you'll have a lower demand portfolio that will cost you the same to renew as a medium demand portfolio.

Keep in mind, if you are selling quality $200 domains, your sell-through rate will need to be 4.25% just to break even to cover your renewal costs alone. If you are starting out low, I would bump that up to the $450 range so just 2 sales will cover the renewal fees for 100 domains.

If you aren't sure what type of domains sell, or what type of companies buy domains you can start by taking a look at my posts below that give you a visual of websites created from companies that have bought domains from me in past years.

https://www.namepros.com/threads/where-are-your-previous-domain-sales.1193193/#post-7799834

Excellent post and advice...thank you!!

I do have a question regarding your advice that "If you are just start out only buy .com that other companies use..."

Do you mean if a company is using a domain that is too generic to fall under a Trademark, buy something similar?

Or did you mean only buy .com domains that you think another company MIGHT use?

This is great advice for beginners, I am just making sure I interpret it correctly

 

[gericsb]

Ok....think I am getting the concept.

This may be one of the best threads I have ever reag regarding domain buying and understanding the potential end users and who they are and how they might see value.

I keep reading the key posts over and over and over

 

[gericsb]

I try to pick names that I can envision a specific use for and that use has to be valuable to the right person using a viable business model.

I would also keep the definition of a "winner" in the appropriate context. I feel like some of the winners I picked in 2007 are still "winners", but remain unsold "winners". Domain investing takes years, and sometimes over a decade of patience for a particular domain.

All domains are unique, but what gives domains value is the demand. That demand has to be useful by an industry or business model that has proven it can make money. If it cannot make money for a business/person, the value is limited.

I sold PlanToGrow(dot)com in March for $24,500. I paid $19.47 for it 4 years earlier. There wasn't any demand when I purchased it, and no notable sites, but I could envision it for a marketing campaign or an organization. This was speculation in a Lower Demand Domain, but I've gotten to be pretty good at my speculation over the years.

Compare that to MetroAutoSales.com(dot)com that I purchased via Auction in May for $740. If you do a search for Metro Auto Sales on Google, there are a ton of results from actual car dealerships. These businesses have an inventory of cars that are valued at $200k to over $500k (ex. 40 cars x $10,000 each). A business like this potentially spends a lot on marketing and when comparing it to the products they sell, buying a domain for $30k is not a big deal. This is an investment in a Proven Business Name.

So when buying a domain you are either a speculator buying lower demand names or an investment analyst buying proven business names. If you're speculating, you better have a knack for it, or work at improving it by paying attention to business names and advertising trends. If you don't have skills in that area, you can focus on investing in proven business names. It is much easier to determine a value for a proven business name. Just look at the current businesses, determine what the best version of that business would look like, and price accordingly (similar to what I did for MetroAutoSales above). Come up with some simple numbers in a spreadsheet. A good example I've used in the past is my domain ASliceAbove(dot)com. To single pizza restaurant with this name, the domain may be worth $1,750, but to a chain with 10-15 locations, it could be worth $20k or much more.

Two Generalized Types of Successful Domain Investing

• Speculation of Lower Demand Domains - Domains where the use of the term is widespread and obvious (or looks good as a brandable), but there is little or no current use. No businesses with significant earnings are using the phrase. (example PlanToGrow(dot)com)

• Investment in Proven Business Names - Domains where there is at least some significant use in commerce. (example MetroAutoSales(dot)com)

If you are starting out, and trying to keep costs down, a good place to begin is in the gray area between these two. Find domains that match 1 or 2 current businesses that are really small but growing.

When there is zero current use for a domain, or very low use, you need to be very realistic with yourself, and good at determining the likelihood that someone will use this domain for a commercially viable purpose in the future.

I think the key to ensuring success for anything is to ask yourself deep questions, and answer them realistically. What would the website look like? What type of business model would it be? How much would the business make off of each purchase? How many sales could the business make each month? That's what gives a domain value. It can't be an abstract business model either, it needs to be something that exists or is expected to exist in the next x number of years.

I think Rick said it best a couple months ago when he defined the types of domains that exist, and they appear to be ordered from most valuable to least valuable. The ones below the white space would be generally considered to have little or no value.

https://twitter.com/x/status/1271375292628680704

Below is some basic advice I gave in the past on Domain Buying & Selling.
https://www.namepros.com/threads/wh...r-selling-domains.1129585/page-2#post-7194467

Here is prior post of mine on Selling and Domain Valuation
https://www.namepros.com/threads/my-biggest-sale-yet-24-5k.1182153/page-4#post-7696071


If you really want to ensure you are picking a "winner". Try to "talk yourself out of each purchase" as I mentioned in the post below.

Show attachment 163959
https://www.namepros.com/threads/i-...-org-artoflux-com.1187598/page-2#post-7761949


Abdul Basit also has some great guidelines on the details of valuing a domain below. If you value a domain when you buy it, that will give you the best indication on if you are buying a "winner" or not.

https://www.namepros.com/threads/how-do-i-valuate-domains-and-set-an-asking-price.951601/


Lastly, the main places that you are going to find domains is via the expired market. 60,000+ dropping each day. Use ExpiredDomains(dot)net and GoDaddy. But it won't be easy. You might only find 3-4 worth purchasing for every hour you search.

Incredible stuff!!!

Thank you!!!

 

[alcy]

talks like this are like trying find patterns in stocks or bitcoin. there is none.

there is just u .. your hard work and countless hours of learning and trial and error ... and just plain old experience.

every moment spent on topics like these is basically just getting away from the real deal we should be doing.
which is not wasting our time with sell thru rates...percentages...averages etc..

jmo

 

[gericsb]

talks like this are like trying find patterns in stocks or bitcoin. there is none.

there is just u .. your hard work and countless hours of learning and trial and error ... and just plain old experience.

every moment spent on topics like these is basically just getting away from the real deal we should be doing.
which is not wasting our time with sell thru rates...percentages...averages etc..

jmo

The value in this thread has absolutely NOTHING to do with Sell Through rates

 

[alcy]

The value in this thread has absolutely NOTHING to do with Sell Through rates

the title has everything to do with sell thru rates... and my post was about that.

its of course jmo but talking about sell thru rates is a major waste of time.

some will agree. some will not that's life... and the beauty of freely sharing whatever opinions we have.. cheers