Which is more important when setting prices?
I was having a conversation with a couple of domain investors the other day about a domain I just sold. They asked me how much I acquired it for, and I informed them that I acquired it in 2019 via NameJet for about $2,000.
The conversation immediately turned to how much that domain would go for in a NameJet auction in 2023. The consensus was it would have gone for $5,000 or perhaps more.
Which got me thinking…
When negotiating domain deals, I often look at what I acquired the domain for. I aim for a multiple of 10x on domains acquired in the $2k range. (I look for a much larger multiple for cheaper domains.)
But is the purchase price multiple as relevant as the replacement cost? If it will cost me $5,000 to acquire another domain to replace this inventory, should I focus on that multiple rather than what I paid for it?
At the end of the day, what matters is what the market will pay for the domain. But I think I’m going to reprice some of the domains that I acquired years ago upward.
I might be in the minority, but I don’t really care that much about initial cost. The money you spent is sunk cost.
Replacement cost matters far more IMO.
You could compare it to any other asset like real estate, gold, stocks, crypto, etc. The asset could go up or down in value.
What matters more is the (replacement) value in the current market.
Brad
How do the so called domain investors know the domain will sell at 5k$ in the auction?? Oh wait these are the experts that know everything.