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Your domain has more than one price. (#3rd beginners tips post)

Labeled as guide in Domain Buying and Selling Discussion, started by twiki, Mar 4, 2021

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  1. twiki

    twiki Top Contributor VIP Gold Account

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    (Note, I'll be discussing average priced domains below, as top domains are a different thing.)

    Each domain in the "regular" price zone (xxx to xxxx range) actually has more than one potential price. And none of these multiple prices is necessarily wrong.

    Yes, really. There is certain flexibility in pricing domains, and the pricing strategy differs from one domainer to another.

    ( Side note automated pricing is rubbish even for this additional reason - they tell you a single price (incorrect in most cases) while the reality is that the domain can have a wide range of different prices depending on how you position yourself in the market and what you aim for. )

    Depending on your profit calculations, goals and strategy, you might find yourself using a different price, higher or lower than first evaluation you did. There can be valid reasons for this.

    Also, you will often see even in reported prices for sold domains out there, that some might appear underpriced, and some appear overpriced. That is not necessarily wrong when underpriced. There are retail buyers out there (rare), and market price buyers (frequent) - their pockets and prices paid are indeed very different. And there's also an in-between zone as well.

    For now let's a assume that a domain has a full retail price of 3k. Your end buyer will pay that much fo the domain, but not more. Here are some pricing options:

    1) Full retail price, say $2995. This offers max revenue over time per domain, but it might require one or many renewals until sold. Or might even never get sold at this price point. So you really have to keep an eye on your profit math here. Sometimes a $2488 price is a winner, instead of the $2995 for the sole reason that this domain is cheaper than others currently available at 3k+, if more or less similar option to the buyer. I do use that price point for certain names.

    Please note that with full retail pricing and 1%+ annual sales rate average, you'd need 100 years to sell all your domains. So a lot of these will never get sold in the end, unless you do cleaarance at some point.

    Tip: Search for your words on Godaddy, afternic, sedo etc and see what others come up with in prices. This might help you position your pricing better; although, careful, no 2 domains are really ever the same, and words by themselves are not a guarantee that your combo of words will meet its intended end buyer anytime soon. Luck is, still, a residual factor in domaining especially with a small portfolio, but you can overcome that with budget, experience, a large portfolio of well selected names and a well-designed pricing/sales strategy.

    2) "Good price". Let's assume you drop the price to $1499 or $1099. This might make it more affordable for certain buyers and expand your sales base so you can, in theory at least, sell it faster. If you look in Namebio at diverse price ranges for .coms, you will see the difference. I personally use the $1k ... 1.6k range for this.
    Is it worth pricing domains like this? Well, again, do your math. If your domain sales ratio increases a lot by doing it, say to 4%, it might be worth it. But it also depends on your domain entry cost. If it was a $7.99 hand reg, then the answer is likely yes. If it was a $59 backorder, maybe not - if you do the math with that sales ratio you might discover that overall you don't cover your original purchase costs and renewals for the whole portfolio, so in such case it might be a non-profitable option for you.

    3) "Middle zone price". This is what I call pricing in the high xxx range. This is good for me as it gets more buyers, but it is less volume than the market range (below). You have to watch the sales ratio closely though, to make sure it is worth for you. Not all domains are good for this range, so please assess this price zone carefully. It might be very good though for those that are not really worth 1k or more. I tend to stick to $499-$750 range for this as it seems best for my domains. Might be different for you. Check Namebio reported sales, the actual names and also how many have been sold for domains wiht your words, and see how it matches your own situation. So it might be good for you or not depending on that.

    4) "Market price" = this is the low xxx range, between $100 and $300. This range brings the best volume but you have to get that volume for it to be worth it. If you have $0.99 xyz domains or .co deals, or 3-word coms catched at drop (less expensive), this bracket might be the one you should aim for.

    Side note, important: Even if your domain is worth 10k full retail, an average individual will still not pay more than $300 for that, as this is their budget and for many it is what "a domain would be worth, tops". The common individual buyer expectation is somewhere in a couple benjamins range, unfortunately. Again sales reporting tools will show you the sheer difference in number of sales between this range and the retail one.

    5) "Clearance price" = anything below $100 is often clearance. You can get $50 or $75 on Afternic or Sedo, or sell quick for $10-20 on Namepros in bulk. You don't have to renew them if you don't want to - this helps covering losses with expired domains so it's all good. See also NameLiquidate.com for the same purpose, it does help.

    there is also:

    0) The "never price". And here is the biggest pricing mistake I see with beginners.

    Most beginners are really, really overpricing their domains, in such way that they will never get sold. If you want to see examples of these, join Facebook groups for domainers - most users there will post domains for sale with absolutely ridiculous pricing.

    For example basic multi-dashed domains priced at 10k+, 4-5 words with no true value, misspells , invented words etc etc. Or even prices of $3 million(!) for a perhaps $500 worth domain. Such pricing has a special name, keep it well in mind: It's called LOSS pricing. Cause that's what you end up with, and the only winner is the registrar. Often many of these domains can be sold for say $20 or $100 (again, it depends) if they make sense, but not at that ridiculous pricing.I often get domains that were previously placed on Afternic for $500k but I'm very happy to get $500 or $1k for that one, because that's its value. By overpricing, they sell nothing and then they get either discouraged or without cash so domains get dropped.

    Beginners tend to replicate strategies of more experienced domainers (often they do full retail only, $2k ... 5k and above), but unfortunately in most cases their domains aren't worth anywhere near that, because they are lack experience; so most domains they have won't be that good. You have to admit that you are a beginner, evaluate your strengths and especially weaknesses, and plan for it so you move upwards in pricing as you get more experience. By overpricing, chances are you will set yourself for failure in domaining.

    So the question is now, which kind of domainer are you, regarding pricing? Answer that carefully, and it will bring profits, as it will help you get more clarity on how to price your domains from now on and also what to purchase or not further..

    Personal note: I am a multi-tier domainer and have prices all over the board, which is maybe unusual. This might confuse some who see my reported sales, so please don't draw any quick conclusions. I do have a lot of $200 and also a lot of 4-figs and 5 figs as well.

    With the 4-5 figs I get solid profit over time, BUT I am prepared to renew those as long as necessary. Time is on your side with those. With the low 3-fig I get immediate cashflow, and quite significant volume; and the ability to buy more and renew the lot, while also learning a lot about sellable names with each domain sold. This keeps the bank account happy today, costs covered while I still grow my portfolio. Because note this: There are always more domains that you can buy, than buyers ready to buy those domains. There is a ton of domain volume out there, you just need to get better at your game if you can't yet get the right ones.

    The drawback of this all-over-the-board pricing strategy I use is the sheer work volume; and it's kind of mind-wrenching when pricing. You have to wear several "pricing hats" when pricing your domains and test them a lot. Some go up others go down etc. But it works for me as domaining is a passion, I dedicate time for it, and the multiple-tiered pricing helps reaching my goal of growing my portfolio.

    There is also a catch with lower priced domains. I have a lot of volume in purchases so it works for me; but if your domains are not so easy to get and/or more expensive (not just the reg cost), as for example auctions or expensive purchases or backorders, pricing them in the market range will likely not bring you profit, so you'd rather simply stick to the higher, retail pricing and wait as long as needed.

    Patience is a very good differentiator for successful domainers. Often you have to wait 3 years or more to sell your good .coms. The longer you hold them, the more seasoned they will be and price will be higher, so chances are that end buyer with good pockets will drop a BIN payment on that domain.

    So it might be better in such cases to simply price retail, correctly, and hold. It's also least volume of work. Set your renewals on automatically and then enjoy more or less constant revenue further.

    In the end, I'm going to answer the following question:

    "Well I'm a newbie domainer. I've read all this, but now I wonder, what kind of price range should I actually use for my domains"?

    The simplest answer I can give you here is this: Stick to the xxx range. And now I'm going to explain.

    As a beginner, it's clear that you don't have enough experience, which BTW takes several years to gather. So I don't expect you to drop 10K right now on a true premium at auction, to sell it for 30k later. First off you might not have the budget, and secondly it would be a big mistake - as you can't really properly evaluate the prices for such top domains.

    So chances are you will be doing either: Some hand reg of freshly invented .coms or freely available nTLDs, backorder something or reg something manually at drop, or win a low value auction, or get clearance domains here on NP, on NameLiquidate or other such places. Lower barrier of entry domains, actually.

    Guess what all these sources have in common? 99% of the domains you're going to get there are NOT 4-fig domains. Most likely they are in the low to mid xxx range, while some might go to 1k but not often.

    Now - I don't say you should never price 4-fig a domain. Perhaps you just got lucky with a good name. Or, perhaps you know some outbound client that pays well that for a particular domain. And you still have to test the 4-fig range as well, even if, like for some newer domainers here, a couple years have passed already and you haven't sold any 4-fig. It's okay, you need to have some prices there too and time will likely reward that patience.

    But the bulk of your domains are still going to be in the xxx range. You need to be aware of this as the odds are somewhere in this range for most new domainers. Don't believe GD appraisal c*** that your domain is worth 2k or more. Such tools are utterly useless. Search past domain sales, ask for appraisals here on NP etc.

    Divide your domains into segments as per their value, and set some prices for each then start selling. You might also want to use a min offer value as well, but unless you want to deal with lowballers (I don't) make that a bit over $100, like $150 or $200. The min offer will get you more sales but also a chance to finetune your prices AND to learn more about negotiating domains wherever /whenever possible.

    Good luck, and if any questions, feel free to ask. Thanks for reading!
     
    Last edited: Mar 4, 2021
    The views expressed on this page by users and staff are their own, not those of NamePros.
  2. ddesigns

    ddesigns 24Designs.in - Web Development and more... VIP ★★★★★★★★★★

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    Excellent post. Nice insight on pricing. I am sure it will help many newbies domainers and even some experience domainers.

    Great guide as always...

    Thanks.
     
  3. Fayyadh

    Fayyadh Established Member

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    Thank you for the guide twiki, appreciate you taking your time writing this to help us out! :)
     
  4. ArielT

    ArielT Top Contributor VIP

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    Thanks for sharing

    Any special reason you use 88, 95, 99 endings and not zeros?
     
    Last edited: Mar 5, 2021
  5. Emmyang

    Emmyang Established Member

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    Great post. Thank you for this!
     
  6. twiki

    twiki Top Contributor VIP Gold Account

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    It's a psychological trick, makes the price look smaller. Mostly used in retail but I found it effective in domains too. For example a $99 domain usually has a faster sales rate than $100, at least in my experience.

    However the difference is not big, so if your domain is priced right at say $500, go for that.

    I sometimes use it to break through a pricing barrier. If a buyer might spend $1k on a given domain, I found I can up that to $1088. More than that seems excessive to them. But you can definitely use 1050 or 1000.

    88 is better, for example I find $2488 much more readable than 2495 and seems smaller than 2500. Although in the end it's not a big difference.
     
  7. ZorillaBiz

    ZorillaBiz Established Member

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    Very insightful article. Will check your other writings.
     
  8. FolioTeam

    FolioTeam AMDB.tv VIP

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    Thanks for the post. I find what you've outlined very useful
     
  9. NameSpirit.com

    NameSpirit.com Established Member ★★★★★★★★★★

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    Really useful series of articles, thank you @twiki!
     
  10. J4wd

    J4wd PeerIdeas.com Gold Account

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  11. freety85

    freety85 Established Member

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    @twiki nice post

    Do you track STR for all price ranges and TLD's or you do overall? As you have a big portfolio, we could draw conclusions if you could share approx STR per price range. In case it is public...
    thanks
     
    Last edited: Mar 8, 2021
  12. twiki

    twiki Top Contributor VIP Gold Account

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    I don't have STR tracked as per domain price. There is a ton of daily work already and for the moment at least, adding one task like that is close to impossible. I'm currently working on other far more urgent tasks. At some point it will be done as well but will also need to centralize daily sales from a ton of different sources. Might be able though to do that as an extension in the billing program used.

    I'm not sure, however how these numbers would help anyone, since domainers are different, portfolios are wildly different, prices and sales strategies, venues and even sourcing is different.

    The short question is, does the STR increase if you reduce price? Yes, but everyone doing that should test test test and choose their best range for that. the higher the purchase price, the less you can discount for a faster sale. I usually buy most domains at reg fee and can discount those. The others which I buy from other owners or at auction etc, I usually price full retail at (minimum) 1.5k+ and up, depending on its evaluated retail price.

    Edit: I do however carefully watch bottom line and investment size, and it's good.
     
    Last edited: Mar 8, 2021
  13. twiki

    twiki Top Contributor VIP Gold Account

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    Here is one way how you can determine if pricing should be lower or higher for your own domains:

    1) decide on a few price ranges (say $150-250, 250-500 etc)

    2) search Namebio for such sales on domains similar to yours (tld, words, length etc)

    3) write down the total number of sales for those (it shows that)

    4) multiply the median value of your price range (e.g. $200) with the number of sales and you get the potential for your domains at the given bracket (let's call it "your niche size"), BUT BEING SURE IT IS NOT OVERPRICED - cause otherwise it will likely never sell at that price.

    5) compare these "niche sizes" and also factor in average purchase cost and renewals involved and you can get a better estimation for yourself.

    Edit: Note, I was actually talking about profit calculation above (niche size); but just for STR %you just use the difference between lower and higher bracket sales numbers. Say if sales are double in the lower bracket and you usually have STR of 1%, you can determine a 2% STR for that lower bracket).

    It's not simple but it can give you the answers you need, if done correctly.

    Also please note that the more you discount, the more you deplete your portfolio of valuable names. So everything should be balanced. This is why I price all over the board, if I'd discount everything then yes I'll be making money today but depleting my portfolio for the future, and that's the worst thing to do.

    Discount is for cashflow and some money in the bank today, plus turnover (perhaps), while retail pricing is for long profits. So it's a balance between a better today and a better tomorrow. If you buy high and your domain sources are limited then you should mostly stick to retail pricing, which BTW is the option of most high value domainers and it is also a more passive option. I do however treat domaining at a business and see it from my business experience, somewhat different than the average, perhaps.

    Edit: Please note that Namebio numbers are hints, not certainties. The actual figures will be generated by your later sales. So, as always, test test test.
     
    Last edited: Mar 8, 2021
  14. Altoz

    Altoz Established Member

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    Nice and very helpful article
     
  15. TauseefKhan

    TauseefKhan Top Contributor VIP

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    Not much written on domain pricing. I think this area needs lot of improvement as well as learning material.

    Thanks for sharing this great stuff.
     
    Last edited: Mar 15, 2021
  16. Altoz

    Altoz Established Member

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    It's much harder to do then one think. Specially for made up word domains (possibly brandable). Actually, I like these the best and successfully sold few in the past in xxxxx figures, even if the "usual" appraiser was very low or non existent. One also has to go by feel and see the potential etc. Anyone can do plus/minus appraiser for dictionary word, no brainer there. Then the most important step is to find the right client who will also like and buy that domain.
    Question is HOW will that right person will find your domain! It needs exposure, but where, with what market place or go direct approach (that is the question). The right pricing helps ;)
     

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