Morning Folks!!
A distinction has to be made between investment quality domains and those domains folks buy to flip as fast as possible. Those are 2 separate and distinct business models even tho they coexist together and benefit each other in many ways.
As I stated before 'First of all anything can be sold. Any extension has an aftermarket. So there is always money to be made. So let's be clear on that.'
I compare it to the waiter making $500/night at a top restaurant and a waiter making $50 a night at a restaurant that is 3X as busy but the prices are lower. The guy making $50 a night has to work 3x as hard as the guy making $500 at a top restaurant because the guy at the top restaurant has a bus boy and other help. It's the same job folks! Sure, you might get a job at the cheap place to get started but those with half a brain would want to work their way up to the best restaurant so he could make 10X the money by doing 1/3 the work. That works out to an effective rate of 30-1.
Imagine what you could accomplish with the new found time and energy. It does factor into the equation whether you want to believe it or not.
How much clearer can you make it? It is time to raise your game my friends. It takes just as much effort to sell a $500 domain as a $5000 domain. It takes the same effort whether you sell a $50,000 domain or a $500,000 domain. But while the effort may be the same or even less, the monetary result is oh so much more. So raise your game. There is always a sweet spot for business. A monetary number the average business would pay to improve something without a lot of decision making.
Most flippers want to flip their domains as fast as possible. That allows many investment quality domains to pass through their hands without even knowing it. That gives them a lower ROI and it does nothing in training them to look for certain elements when buying domains. Study them for at least a few days. It can be like exploring an entire world, not just a domain name. Not just something to flip and make $50. If you can flip and make $50, you can flip and make $500 or $5000. Just depends what restaurant you want to be a 'Domain Waiter' at.
Have a GREAT Day!
Rick Schwartz
'Success is just a matter of luck. Ask any failure.'
Kevin
There was a great sales mentor I worked with when I was in my 20’s who was a master at closing deals. I’ll never forget the first day I met him he put a $100 bill and a $1 bill on his desk and asked me to lift each one up.
Then he said”Now which one took more work and time to pick up?”
One of the best lessons of selling! :)
Ian
Anyone that is seriously looking at developing a domain for business use would expect to be able to pay $2k as it costs multiples of this to set up all the website and everything else connected. And any domainer buying a domain that isn’t worth 2k in the retail end market shouldn’t be buying it to start with.
Christopher
Rick Schwartz has some great advice and he says it concisely! Things are looking up! :)
Gene
This short post is in the lead for ‘Best Post in 2012.’
It’s about time that someone advocates that domain investors start raising their game.
Everyone recognizes that there’s still a need to pay your bills each month: But all the flipping harms overall asset values – and it’s the reason why the median price reported in industry reports is always about $500 instead of $5,000.
Flip baseball cards, used cars, or some other commodity to pay your bills if you don’t have (or want) a day job; but don’t flip a unique asset like domain names unless there’s REAL money in each sale.
steve
Well it isn’t helping the Bush and Obama and the Congress put our economy in the toilet.
Most domainers have blown their money and in this economy they can no longer afford investment grade domains.
Morgan
Great post Rick and completely agreed! I think one of the biggest problems is that people want the easy way out. What they don’t realize is that a few easy sales for $100-$1,000 can take up much more time than one somewhat harder deal at $10,000, but they want fast, not big.
On top of this you are spot on about taking the time to learn the market. So many people let something go for a few hundred or few thousand dollars that might have much more value to a real company in the space. Without doing the research they just shoot for making a sale, rather than the right sale to the right person.
This post is one of my favorite you’ve written all year, as always thanks for sharing your time and experience with all of us. As I’ve said before we are lucky to be in an industry with leaders like yourself willing to share and not afraid to tell it like it is!
Raymond Hackney
This was an excellent post imo Rick. I think that some flip as fast as they do is because they don’t believe in the value of the domain themselves.
I have spoken to guys who have bought a domain strictly on domainer metrics and just wanted to sell it fast. They bought or regged not on their own belief and wanted to sell fast not to get stuck with the domain.
Rick Schwartz
Thank you!
Domains are unique assets that can not be replaced like inventory but many don’t look at it like that and that means they are leaving large and unknown amounts of money on the table when they flip.
Selling diamonds before they even measure, weigh or grade them. Not a way to maximize their return and flying in the blind. imo
IMultiscreen
I’m in the back doing dishes! LOL. Pearson promotes one of its products, Side by Side TV. I already registered SidebySide.tv and the SidebySideTV.com for the purpose of dual sports streams on one screen . . . There is no conflict, but it shows what newbie domainers like me are up against: promotions companies and departments and ad agencies, being uneducated about domains, midlead their clients further to register long-tail slogans and Facebook pages . . . Not only do I have to learn this business, I have to educate the end user who has been mislead and exploited by the ignorant marketing firms in their employ. It is a nightmare.
Karen T.
Too often domain investors sell themselves short and price their inventory far too low. You’ve said it before, there are a finite number of premium .com domains. If you truly have a quality name … have patients and wait for a quality price.
L
IMO, the sentiment of this post is off the mark by a good bit. Sales has always been about margin. This post views domains as being agglomerated, when they really aren’t. Some domains are worth a lot of money, some aren’t.
Lets look at it like beachfront real estate.
You have a 95 year old man who was given 100 acres of oceanfront in 1937 by the county or nothing, because no one else wanted it back then.
You have a 70 year old man who bought 20 acres of oceanfront in 1955 for very little.
You have a 50 year old man who bought an acre of oceanfront, divided into four parcels, in 1985 for $150,000.
You have a 30 year old man who bought an oceanfront parcel for $500,000 in 2005.
Each of these people are operating with entirely different considerations. It’s easy for the old man to say”I LIKE MY OCEANFRONT FARM, I ONLY SELL ONE ACRE A YEAR FOR $5,000,000 ALL YOU SUCKERS DON’T GET IT!!!” because his business math is totally different from the guy who got in 55, 85 or 05.
Each entered the game at different price points.
As much as your posts can be absolute gold, this is one thing you really haven’t given it’s due weight, particularly as it relates to your own situation. You couldn’t buy Porno.com today for $50K, which means all that income stream wouldn’t be there, which would in turn effect how you played the game.
I completely agree that it’s much better to sell good domains for more money than it is to sell worse domains for less money, but ROI isn’t about how much you sell a domain for as much as it is how much you paid in the first place.
L
But just to be clear, I do agree with your larger sentiment in this post.
Even if you aren’t transacting in $100,000 domains, but say underpriced $200 domains that are resold for $3000, or underpriced $3000 domains that are resold for $20,000, that is a lot better than trading $50 domains on domainer forums.
BullS
“BullS” is priceless and cannot be sold because it is my NAME and I represent all the websites .
The name of the domain is the name of your business and is the name of YOU
Remember folks..dot com is king
When TSA sees my passport with my”BullS” name, I get whisked away like a VIP diplomat Sec of State
Ian
Sorry, but you’re wrong on this score. A domain is NOT worth what it was paid for. It is worth what a potential buyer will pay for it. With regards to using age profiles of the owners, that has nothing to do with a valuation at right here and now t=0. Potentially there is some variance in investors time preferences but the whole article is about domain owners not really understanding 1) The buyer 2) Not understanding the potential market and 3) invariably using your same logic that because they paid rego its worth $100 at most.
Jay
@L
99% of every domain I own was picked up for $7-$8 expired and 99% .com. I don’t make many sales but I don’t need to as they all fall in the 1-10k range. Last one was $8 into $6500, what you paid for something is part of the formula but analyzing your buyer/their plans/budget is more important and can turn $8 acquisitions into xxxx-xx,xxx sales. One reason I prefer not to use anonymous auction houses as information on a buyer is important IP/email/phone etc…
Joao
Hello. I respect the notion that many domainers have to what regards at who makes the price of a domain. I respect that, but i dont agree.
A domain price is allways determined by the seller and never by the buyer. The buyer has the opportunity to sugest a price, but what really matters is the domain owner final decision.
You see, if you have a domain with a bid, it is your decision to let it go…or not. Nobody is forcing you to sell it. Even if it is a 12 million dollar sale bid. You let it go because you have determined that it is a fair price for you as the seller, for various reasons, to make the sale at that moment, for that price.
I think that this article is all about that. Get a hold in your assets and put yourself in the final decision player side.
The thing that very few people tell you, because they have their own agenda, is the fact that it might take years to find the right buyer.
Just imagine what would aftermarket companies, brokers, forums, etc be if they tell you to keep your gems for a very long period of time…
Brad
Thanks for the post. While I agree with the general analogy of the story I think it is way to simplified. Like a waiter in a good restaurant (I have worked in both top and bottom ones) much more is required of you at the high end.
I agree with you post I think I just have to know which domains will sell at $50 and which will sell for $500 and that’s the difference between a waiter working at a burger joint and a waiter working at Spago.
Ian
The buyer does actually set the true value of a domain sale because to max it the seller must assess the true ability of the buyer to pay. It is precisely because buyers value their domains too low they leave money on the table. A domain is worth what a buyer can feasibly pay, and its just a time preference whether that is taken or deferred to a more suitable buyer. Domains have little intrinsic value, thats the whole basis why sellers don’t often understand what they are potentially worth.
Ian
nb: One of those uses of ‘buyer’ was supposed to be written as ‘seller’…
Joao
Hi.
There is only one type of sale that actually has the price decision on the buyers side.
This kind of sale happens when a seller recieves a bid, on Sedo for example, and decides to submit the domain for an auction, with the garantee that the 1st bid is there already, no matter what.
In that moment, the seller is giving auction bidders the power to decide the final price.
The seller has given away that power, only because he had it in the first place.
There is no other kind of sale (that i can remember) where the seller doesn’t have the last saying, that allows a sale to proceed for its payment and domain transfer.
I agree on the study of the market related to the domain. I would add to that, the use of common sense as well.
The problem starts when we begin thinking that all rejected offers made by us, sellers, were because we asked too much.
For saveme.com, the buyer started with a limit of limit on their budget of 1000$, but suddendly, if i am not mistaken the limit went up to 50.000$. 50x times more…
I really dont understand why the little intrinsic value of domains. 12M$ was the price of sex.com alone. As far as i remember, the pinterest clone wasn’t there before the buying. You never buy just a domain…you buy a whole lot more.
Cheers
Ian
Joao, you are far too literal in your perceptions. The big money on the net is for lateral thinking.
A buyer decides the selling price because a sale ONLY happens when the buyer decides to pay (If not buyer x then buyer y) everything else is negotiation, it could be argued that the sale price is a negotiated price that achieves both parties perceived value but a seller should not have a price in mind other than a desire to understand the buyers max ability and preparedness to pay (The sellers logic at that point is whether the max amount on a probalistic and time value preference meets their own criteria for sale – A seller uses a lateral ‘feels about right’ approach). A domain could be worth ‘billions’ or rego fee depending on the buyer’s motives and propensity to utilise the domain better than some other view of its basic intrinsic value. It is the task of the Seller to clearly understand the buyer to max their sale proceeds.
“For saveme.com, the buyer started with a limit of limit on their budget of 1000$, but suddenly, if I am not mistaken the limit went up to 50.000$. 50x times more…”
Some of the biggest players in the industry make offers on domains pretending they are worthless tire kickers and I’d say they are often quite successful with domain flippers that thrown them cheap domains. They need to be flushed out or sent packing as tire kickers are annoying and unproductive, I’d say more domains are undersold than oversold. Most of the offers for domains at low prices are just speculative players looking for a cheap undervalued sale; they never were proper buyers just ‘offer spammers’ really.
Most domains have little intrinsic value. Some outliers obviously have potential and it’s the potential that leads to deviation of value above the sum of its basic cash flows. The intrinsic value of Facebook is not much if you discount its cash flows, its potential is large hence its value.
MicroSourcing
There’s always an element of risk when flipping domains. In most cases, it should only be done in extreme cases that necessitate the decision.
Joao
Ok, not being literal, lateral, diagonal or whatever.
Go as a buyer to Sedo and try to set the price to a domain that has the”buy now” ->option<- active. Wish you good sales.
Anthony
Are you a $50 or a $500″Domain Waiter”? I am definitely a $500 domain waiter.
I have seen some of these $50 waiters working and it appears that they can turn a nice profit by the sheer volume that they turn over. But I have always imagined how many nice names that they will have practically given away. I would hate to look back and realize that I sold a domain for $50 when it ended up selling for a significantly higher price down the road.
Either way I think that both types of domainers are necessary and a good thing in the industry.
Linda Cole
Hello,
I am a female domain name trader from New Zealand and want to congratulate you on a superb blob. We are still on the brink of a domain landslide here in the Pacific but it is exciting as we all scramble to pick up as many great names as possible.
Thanks again for supplying this blog.
All the best
Linda Cole