Lets say you hand register a domain name for $10.99 and you list this asset for sale. With-in 8 months from your initial investment, you receive an offer to purchase with a 18,098.36% return on investment.
No! you say…
You want 43,576.07% ROI?
No Thank You says the buyer!
You end up with 0% in the end on this deal.
I guess it’s a different way to look at it other than dollars and cents. 18,000 percent isn’t good enough ROI in 8 months and you are “selling” this domain name?
Domain names present these ROI’s all the time, but they happen because most domain name sellers know when to pull the trigger and SELL when the time is right. That “right” buyer comes along and has interest and the deal takes place. On to the next…
On the flip side, some people are nuts and think every domain they own is worth way more than somebody is willing to pay for it and when it comes to domain names… it’s only worth what somebody is willing to pay you for it. Real money! As a seller, you have to know when that time is and when to accept.
I think in general, if this was a “.com” domain (the example above was not) the 18K percent ROI is not all that uncommon but consider the amount of gTLD’s available and domain sellers need to know when to pull the trigger. There are a lot more options for users now!
In the above, real world example I was well aware that the owner of the domain name had hand registered it. That doesn’t necessarily decrease the domains value but ROI should come into play IMO for the seller. The budget range was up to 27,197.54% ROI but the actual offered amount was the 18,098.36% ROI with little budge from the seller, so buyer walks and moves on to other options.
Maybe the seller will get his requested ROI, maybe not? It may be another year or five or ten.. hard to say but in the end, the seller turned down a 18,098.36% ROI and even potentially (max budget never revealed) 27,197.54% ROI because they played hard ball and wouldn’t budge. Buyer walked and IMO was “the” buyer seller was looking for!
Que in Kenny Rogers…. every gambler knows…
It’s not about ROI, but about the value you believe in. Rick (Domain King) said NO to way higher ROI offers.
Nobody in their right mind would turn down an 18,000%+ return on an investment at scale, the problem with domain names is two-fold:
1) They’re still relatively illiquid. You can’t typically cash-in for liquidity at those rates of return on demand.
2) You can’t get that 18,000%+ at scale. Sure, you might find one name or two, or 100 you can get that on, but you can’t put millions to work and maintain the 18,000% return on demand
Those 5 figure percentage returns look intoxicatingly large but are based on a very low cost-basis. Even a staggering “1 MILLION PERCENT” return looks pretty flimsy if you can’t scale it on demand and if all you’ve done is turn a shiny penny into a crisp hundred dollar bill.
Using our DomainNameSales.com machine as a foundation, Uniregistry has been working very hard this year to create a machine that will let domain name registrants spin straw into gold more regularly, on-demand and to effectively solve the “scale problem” we all suffer from. I would be remiss if I didn’t take this opportunity to invite you to transfer your names to Uniregistry.com, so you can enjoy the fruits of our collective labor when we roll back the canvass on our innovations this fall.
@Frank Schilling,
Thanks for stopping in and providing your always very interesting insight! The domain in question was actually transferred into Uniregistry recently 😉
If my math serves me correctly, the offer was $2000 they wanted about $4800 and you would have been willing to go to 3k?
Was the domain on the market? If so, the seller may have some internal rules in place that they are following. For instance, any offer that comes in at under 50% of ask will receive a counter at full price, etc…
@Ian,
Your math is spot on. Yes, the domain was listed for sale with DNS.
@Frank,
The “DomainNameSales.com machine” does a wonderful job … grinding up domainers in its gears! Your VP of sales has been busy meddling in negotiations where he doesn’t belong and banning long-time customers for the mere act of disagreeing with him.
Domainers will get better treatment at other registrars (such as GoDaddy) and sales venues (such as Sedo and Afternic), in my opinion – not to mention higher sell-through rates.
Comment *
The ROI percentage numbers look less impressive when the actual asking price is quoted.
When you register a domain for $10 and seek a selling price of $5,000 that’s hardly an average price, if you’re holding a domain that for some reason – news, technology, inventions, trends – acquired a value in less than a year.
While domain value does not scale evenly, you can only sell it once. The moment you agree to the first offer that arrives, you have left money on the table.
Every domainer has a target for every domain in his or her portfolio and it is the one that gets lucky to be sold that compensate the owner for the other domains sleeping in his/her portfolio.