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discuss Your next sale is a factor of your current cash flow

NameSilo
Impact
874
I have often thought about certain domain sales and wondered:

How could a seller price this domain so high?
and
How could a buyer pay so much for this domain?

The answer is, your next sale is a function of your current cash flows. If you have a decent cash flow, you don't have to worry about 'just closing a sale' mindset. And that provides one a huge room to price better, negotiate better and ultimately, sell better!

Here is my learning

Every name that you add to your portfolio, impacts the sale of every other name in your portfolio. Thoughts?
 
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NYJimbo

Domain Re-Animator
Impact
5,791
Every name that you add to your portfolio, impacts the sale of every other name in your portfolio. Thoughts?
Disagree. Don't see how they affect each other. I bought 5 names this weekend. Sold one already for $1688. How does that one affect any others ?
 

Recons.Com

Top Contributor
Impact
16,604
I have often thought about certain domain sales and wondered:

How could a seller price this domain so high?
and
How could a buyer pay so much for this domain?

The answer is, your next sale is a function of your current cash flows. If you have a decent cash flow, you don't have to worry about 'just closing a sale' mindset. And that provides one a huge room to price better, negotiate better and ultimately, sell better!

Here is my learning

Every name that you add to your portfolio, impacts the sale of every other name in your portfolio. Thoughts?

Not sure if you are in the right industry :)

While it is true that if your cash flow is tight and you are struggling you might be constantly leaving money on table adding to your woes, you can't stretch this indefinitely. If you are not liquidating the illiquid asset, which most domains are, your end user prices have certain price elasticities and you'll need to experiment to find the price point at which your profit is maximized.

E.g. a class of domains might sell at 1% at $2500 and at 0.5% at $3500. If your acquisition costs are low, you'll net considerably more at $2500 price point than at $3500 price point.
 
Impact
6,892
The buyer never has to see the portfolio you have control of where name points.
 
I have often thought about certain domain sales and wondered:

How could a seller price this domain so high?
and
How could a buyer pay so much for this domain?

The answer is, your next sale is a function of your current cash flows. If you have a decent cash flow, you don't have to worry about 'just closing a sale' mindset. And that provides one a huge room to price better, negotiate better and ultimately, sell better!

Here is my learning

Every name that you add to your portfolio, impacts the sale of every other name in your portfolio. Thoughts?
I am not sure about that.

Your current financial situation does matter though. If you have a greater need to make a sale then you have far less flexibility.

But if you don't have an immediate need for income, buying domains doesn't fundamentally change much.

Brad
 
Not sure if you are in the right industry :)

While it is true that if your cash flow is tight and you are struggling you might be constantly leaving money on table adding to your woes, you can't stretch this indefinitely. If you are not liquidating the illiquid asset, which most domains are, your end user prices have certain price elasticities and you'll need to experiment to find the price point at which your profit is maximized.

E.g. a class of domains might sell at 1% at $2500 and at 0.5% at $3500. If your acquisition costs are low, you'll net considerably more at $2500 price point than at $3500 price point.
There is certainly an art to pricing.

If you underprice domains, it is going to be very hard to sustain your business as inventory will be hard to replace.

If you overprice domains, you have to turn down a lot of good and great offers to get one outlier sale.

Somewhere in the middle works best - end user sales at a standard sell-through rate.

I have done lots of AB testing in the past on this. When I lowered my pricing my sell-through rate did not go up enough to offset the lower prices. I was better off with slightly higher prices, but with a slightly lower STR.

Brad
 

Recons.Com

Top Contributor
Impact
16,604
There is certainly an art to pricing.

If you underprice domains, it is going to be very hard to sustain your business as inventory will be hard to replace.

If you overprice domains, you have to turn down a lot of good and great offers to get one outlier sale.

Somewhere in the middle works best - end user sales at a standard sell-through rate.

I have done lots of AB testing in the past on this. When I lowered my pricing my sell-through rate did not go up enough to offset the lower prices. I was better off with slightly higher prices, but with a slightly lower STR.

Brad

The art part comes with the nuances like ending in 88, 99 or 00 ))

The other part is purely economic science of identifying the price elasticity for the category of the names. For most of my names, that price point seems to be around $2.5k. 3k seems to be the psychological barrier for the brandables for most buyers. What is the price point you have arrived for the usual brandable type of names that you can replenish from the closeouts, e.g.?
 
The art part comes with the nuances like ending in 88, 99 or 00 ))

The other part is purely economic science of identifying the price elasticity for the category of the names. For most of my names, that price point seems to be around $2.5k. 3k seems to be the psychological barrier for the brandables for most buyers. What is the price point you have arrived for the usual brandable type of names that you can replenish from the closeouts, e.g.?
I tried the weird number ending before with numbers like 77, 88, 99, etc. There are some supposed psychological triggers when it comes to pricing, but I did not really notice the results in reality. I ended up moving back to $50 increments generally as it seemed to work the same, and was easy for me to manage. Most priced domains end in $50 or $00.

I will say though I think there is certainly merit when it comes to thresholds. I don't think there is much difference between $2,950 or $2977, but there is a massive difference vs $3,000.

There are natural thresholds at 3 figures, 4 figures, 5 figures but even on a small scale $2,500 I think yields far more sales than $3,500...but I have not found $3,500 vs $4,500 being much of a difference.

For an easily replaceable domain, generally one you could get for $50 to low $XXX I would generally price these somewhere in a $2,500 - $4,500 range. It just depends on many factors like the type of domain and liquidity.

I would generally shift GEO domains down a bit, and quality generic (2) word .COM up a bit.

Though in fairness I don't even price that many domains anymore. It is not really a strategy, I am just lazy. It certainly leads to fewer higher dollar sales. Though, I still sell quite a few priced domains via venues like Afternic and Dan.

Brad
 

Recons.Com

Top Contributor
Impact
16,604
I tried the weird number ending before with numbers like 77, 88, 99, etc. There are some supposed psychological triggers when it comes to pricing, but I did not really notice the results in reality. I ended up moving back to $50 increments generally as it seemed to work the same, and was easy for me to manage. Most priced domains end in $50 or $00.

I will say though I think there is certainly merit when it comes to thresholds. I don't think there is much difference between $2,950 or $2977, but there is a massive difference vs $3,000.

There are natural thresholds at 3 figures, 4 figures, 5 figures but even on a small scale $2,500 I think yields far more sales than $3,500...but I have not found $3,500 vs $4,500 being much of a difference.

For an easily replaceable domain, generally one you could get for $50 to low $XXX I would generally price these somewhere in a $2,500 - $4,500 range. It just depends on many factors like the type of domain and liquidity.

I would generally shift GEO domains down a bit, and quality generic (2) word .COM up a bit.

Though in fairness I don't even price that many domains anymore. It is not really a strategy, I am just lazy. It certainly leads to fewer higher dollar sales. Though, I still sell quite a few priced domains via venues like Afternic and Dan.

Brad

Great minds think alike ;)

Your observations are spot on with mine. When I am going through the spreadsheet pricing 500 new names, I just first populate it with 2500$ and then adjust 10-20% up depending on how much I like the name and if I think it is harder to come by the similar names. Or if I have potential own use for the name. Generally, if I think the name is worth less than 2500$, I don't buy it. What is the point, if I can still find $2500+ names and the buying costs are similar?
 
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Generally, if I think the name is worth less than 2500$, I don't buy it. What is the point, if I can still find $2500+ names and the buying costs are similar?

This is a situation I have started trying to apply. Early on I was happy to acquire $299 domain names via handreg or auction but if they sell at the same 1-3% rate as my $900-$3000 domain names which can also be bought for under $50, then why add the overhead by grabbing those $299 names. I'll save those for other domainers to grab.
 
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