SedoMLS and AfternicDLS are changing the game.
Sedo released its first quarter domain name market study today (pdf). For the first time ever, fixed price “buy now” listings were the company’s most common type of sale. 39% of sales were buy now purchases and 34% were offer-counter offer purchases.
There’s a simple reason for this: end user buyers don’t want to negotiate. And they want their domain now.
I suspect a lot of these sales occurred through SedoMLS. I also bet Afternic’s “buy now” results are 90% or more.
You should take note.
I often hear people griping about all of these $2,000 end user sales. People say “If the person hadn’t put a fixed price, they would have negotiated more money.”
Hogwash. If they hadn’t put a fixed price with instant transfer, the buyer would have probably negotiated a lower price than the fixed price. Or they would have walked away. And it would have taken a heck of a lot more of your time to do the transaction.
Put yourself in the mind of the typical end user buyer. They want to buy a secondary market domain just like a hand registration.
Some people are worried about losing out on a lottery ticket. They’re afraid one of their domains will suddenly become worth more because a major company launches a new brand. The domain will be sold for less money than they could have gotten.
It’s possible, but don’t count on that ever happening.
It’s worth noting that, although fixed price sales accounted for 39% of Sedo’s sales in the first quarter, they accounted for only 16% of the sales value. This shows that the big ticket sales still involve negotiation.
That’s how I recommend looking at your portfolio. Price out the domains that small business end users will buy. Set the others as “make offer”.
Far from hogwash. Negotiation is a key element of successful domain investing. Flipping is for the newbies that are content by turning a $10 registration into a $100 sale.
Just because a large number of domains sold on Sedo are via BIN sales, does not mean that was intentional! Sedo skillfully sets the default option to be “Buy it now”, prompting sellers to enter a price.
I’ve posted before why a BIN listing does not work for me: http://acro.net/blog/domains/fixed-price-listings-at-sedo-it-doesnt-work-for-me/
Andrew Allemann says
@ Acro – for most people what you’re describing is the lottery ticket. Some term suddenly becomes hot and you haven’t updated the price. Like that drawsomething.com domain.
For most domain investors, this isn’t going to happen to them. And even if it does, they still got for the domain what they hoped for in the first place.
rob sequin says
Having been a buyer, seller, buyer broker and seller broker of MANY domains, MOST purchases are impulsive based on an idea where the buyer has time limited interest and/or budget.
Most buyers can find a second choice. It may or may not be a good second choice but there is a second choice for 95% of the domains out there.
If you have a valuable and desirable domain and I mean one that you can sell for five figures to many people without trying, then don’t put a fixed price on it unless you need to sell it.
However, if you have a domain that only has value to a few… or even one person in the world, set a fixed price and list it on Sedo and Afternic.
If it doesn’t sell in one year, cut the price in half. If it doesn’t sell after two years, it’s not worth what you think it is.
Of course there is always the “scratch ticket” winner where someone comes along willing to pay five figures for a low to medium quality domain but those buyers are few and far between.
If you don’t care about sales, don’t put fixed prices.
If you care about sales, price your domains around $2500 down to $495 and sell them.
Just some thoughts.
I will say that although I occasionally offer names on GoDaddy’s premium service (which, by default, is a BIN service), it’s quite dangerous for uninformed sellers.
Case-in-point: The scenario that Andrew reiterated, i.e., “some term suddenly becomes hot and you haven’t updated the price” was EXACTLY what happened to me this week — EXCEPT that in this situation I was the buyer.
The scenario that I benefitted from was analogous to one where an investor puts in a sell-limit order on a sleepy stock: And suddenly that stock hit the news in a huge way one morning, yet the seller (who obviously didn’t follow the news closely enough) forgot to update his BIN price.
After that news, the name (which I won’t mention right now) suddenly became worth a not-so-small fortune. It was obvious from the facts that the seller was just looking for a quick flip to probably brag about to his friends. Those same friends will be mocking him in the very near future.
Moral of the story is to invest in keeping up-to-date on news, no different that you should do with your other investments. Setting up a Google News Alert is cheap enough to do!
Private Signature says
To those with no sales/negotiation skills, BIN pricing is probably the way to go.
If you are a domainer, and in the fixed price game, sales are based on quality, and numbers of a portfolio, you need a high quality portfolio, with low fixed price amounts.
You will burn out very quickly, as you need to replenish this portfolio, you are selling the cream of the portfolio, and using the the profits to subsidize those roll the dice names, and weaker personal use names. Eventually you are just going to fizzle out.
Of course we are not talking about one word generics, this is strictly 2 keyword, or brandable names. More profit to be had on the make an offer side, the brokerage houses would like to see fixed pricing, as you are essentially working for them short term, keep churning out lower margin sales, keep buying, and selling, until you eventually fizzle out. We can all admit, the cost of purchasing quality names has increased in past 18 months.
The few grand slams, I have hit have been with domains, I would have fixed priced very low, these domains grew in time to find buyers, most being less than 3 years old.
Just thought it was worth mentioning that on Rick’s blog today he points out that he got SmartGlasses.com because it was on Buy It Now. Add-To-Cart, click purchase, done.
Buy it now requires close monitoring to say the least.
Andrew Allemann says
@ jp – great for him. Great for the seller, too.
Andrew – I pointed out several issues with fixed price selling in my post. Lack of updating prices, as the world and domaining fluctuates, is just one such problem.
Since you like crunching numbers, what is the total of the BIN priced domain sames on Sedo, as compared to those that ended via negotiation? You will see that many low sales via a fixed price don’t come close to the total of fewer sales via negotiation.
Furthermore, a skilled domainer can negotiate, up or down; fixed prices don’t exist on cars even.
Since there are no hard set rules on what an “end user” and an “end user price” is, that topic can be argued endlessly.
I highly suspect that many of these fixed price BIN sales are domainer to domainer sales.
That’s fine …IF that is the business model you want to pursue.
Most brick and mortar businesses make the choice as to whether they want to operate using a Discount model or a Premium model.
If you choose to be a discounter, lower profit margins will demand that you sell in high quantity (the McDonalds of whatever you niche is).
If you choose to go premium or high end, your prices and profit margins will be higher. So, you will sell at lower volumes.
I hope the domain industry finds room for a “premium market” that is not strictly limited to one word category killers.
The Push by the auction houses for Every Domainer to become a BIN seller seems like a race to the bottom in pricing.
While that may mean a higher volume of sales and commissions for the auction houses, it pushes the entire industry to the “discount” mentality.
Afternic really attempts to corner sellers into the BIN market. At least Sedo gives the seller the option to make their own decision (at least for now).
Domaining is highly speculative. A domain that is worth shit today might be worth a lot in the future. If you Think you have chosen Good Domains and you view them as long term investments, you take your chances and price them accordingly.
If you prefer to be a high volume discounter, go for it. Both options should be available to you. I may be wrong, but I just don’t think it would be beneficial for the market to become predominately BIN.
Andrew Allemann says
@ Acro – I only see the issue I described and the chance that you make an error in your pricing.
You’re right. A skilled negotiator may be able to negotiate up. If they get the chance.
In regards to smartglasses had the seller had it on make an offer, upon offer he would have researched the term, and the buzz in the past 30 days on it. 1-2 years down the road the term could be worth $25-50K, I think if you offered Rick $25k today for it, he would not sell, what does that tell you. Whereas the buyer now maybe pocketed $2800, in all of the names you own, only a few will be the one that can be a status changer, maybe he can get a vacation out of this sale, had he waited, he could have got a new car, and a vacation, with some spending cash… Lost opportunity, the small domainer will lose flipping names in fixed marketplace majority of the time, he is simply allowed to live, to keep feeding the larger mass… eventually his inventory dries up, and sales go bye bye…
If that was me who let smartglasses sell for $3,xxx minus auction commissions, I would be kicking myself. End users are being bombarded with similar terms by these spammers on a daily basis, offering up names for $199, some are biting, taking about those xxx-xxxx sales from domainers.
You need those scratch and win domains to stay in the game. If you do your homework, they do pay off.
That situation you described is precisely why i didn’t start negotiating the price to potentially save a few hundred bucks. I knew if i didn’t ‘lift the offer’ (BIN) the seller would have instinctively done some fresh research and taken the auction down, entirely.
When you see real value you shouldn’t be afraid to pay-up for something. My worst trades were always the ones that never went off.
PAUL DRAKE says
I dont know who mentioned it above but I too had the domain Dailywines.com listed at godaddy premium auctions I never would have sold it for $400 but the sale was instant and transferred instantly after the buyer paid ,there really should be an option for the buyer to finally approve the sale.