discuss Soccer Jersey and Domain Name Prices

[garptrader]

Most of us here invest in domain names with the idea of selling them at a premium price. Most of us have also faced resistance from potential buyers at paying a premium price for a domain name. Industry turnover has historically been in the 1-2% range but I believe with the launch of hundreds of new TLDs that the average portfolio turn for most investors has fallen below 1%. Buyers have more options and they just do not like paying premium prices for domain names - at least directly from domain investors who they often view as internet scammers who are doing something unethical by hoarding domain names and trying to sell them at what they consider outrageous prices.

As a financial professional I have worked in numerous companies and see how much companies spend on marketing, IT costs, legal services, audit and accounting services, travel, business licenses and all kinds of routine expenditures. It can be really frustrating as a domainer seeing resistance to paying even a low $XXX price when I know businesses are paying $XXXX invoices on a regular basis. In my accounting work I have even seen six-figure invoices that were just a cost of doing business. Why is there such resistance to paying $XXX for a domain name which can be used to promote your business' products and services?

I exercise on a regular basis and thus have a wardrobe of fitness apparel. There is an outlet mall near where I live with stores from the major athletic apparel brands - Nike, Adidas, Asics, Underarmour, Puma, Reebok as well as a Sports Authority which I suppose will be closing soon. I take advantage of sales and can find nice workout shirts for $20-$30 and occasionally have paid a little more. Recently I was in a mall which had soccer jerseys with some spectacular designs and a selection of teams from various countries. Pricing for most jerseys was in the $90 range and in some cases higher. Wow! $100 for a tshirt? Are you insane? Despite the attractive designs, I just could not pay that much for a tshirt.

But that is the reaction we often see from end users who view domain names as low $XX items. Ok they might pay $50 for a really nice keyword but the reason industry turnover is so low is that domain names are just not looked at as items worth paying more than $25 for because you can register a domain name for $10-$15 at Godaddy While weekly sales reports highlight the outliers (rare exceptions), what will it take for aftermarket domain sales to become mainstream (industry turnover of 12% plus)?

 

[Kate]

While weekly sales reports highlight the outliers (rare exceptions), what will it take for aftermarket domain sales to become mainstream (industry turnover of 12% plus)?

I think that the perception of consumers toward domain names is heavily influenced by the registrars, where domain names are heavily commoditized items, even being sold below cost. For instance, godaddy coupons are prominently advertised.
A domain is usually thrown in for free with hosting.
It is a volume business, and the registrars are not making big margins on domain names (at least the handregs). So their model is clearly quantity > quality. For us, it's the opposite.
Because consumers are used to seeing domains as something cheap, almost disposable items, they are reluctant to value them like they should.

Another important factor maybe: domain names are not physical items, they are nothing more than entries in a database. So people assume they cost nothing. Which is not completely true of course, because the DNS relies on infrastructure that is not cheap, and it also requires technical expertise to run efficiently.
A car or a computer is expensive to build, a piece of clothing requires raw materials and machinery or manual labor. So consumers are more willing to pay for physical merchandise that is palpable.

 

[DU]

seeing resistance to paying even a low $XXX price when I know businesses are paying $XXXX invoices on a regular basis.

True in all industries. People will put their parents in the care of people that are not trained cash-in-hand based on price alone. People don't want to pay for quality anymore because everything is disposable.

The problem is that in most industries domains aren't as valuable as people want them to be. Very few domains are self-marketing and require investment and cost to setup, manage, stay up to date. If you're a plastic surgeon (taking a recent thread as an example) you could buy a decent domain for $500-$5000 but what are you going to put on it? A full site with SEO potential, social media integration and quality build / hosting might add another $10K+.

Putting your site on Facebook gets that immediately at a cost of almost nothing. Sure you want to own your brand and domain but now you are talking about something very specific. Most smb can't afford "candy.com" "sweetshop.com" "bikestore.com" so they try and get something close to what they can. A salon can't afford "Edge.com" but might get by with "EdgeSalon.com" or "EdgeHairSalon.com" which still gets their local search volume even though 90% of search will lead to their local page/facebook page.

Domains are simultaneously over and undervalued depending on the market and goal of the buyer - local/national and intent - informational/lead gen/customer acquisition. Most small businesses do NOT need a good website at all. A lot of the marketing is the tail wagging the dog. It's why when you register a name you get 100 people email you asking if you need their services