@rlm great response and yes you are right but sticking to the op's question there is merit to the fact that most hand registrations at this point in time are ok registrations at best.
The ones I buy from GoDaddy auction are purpose bought and will be priced higher.
If I buy a domain from another domainer it usually means I paid a fair bit and I really wanted the domain so it will command a higher resale for me.
You cannot buy a quality domain like the ones we had in the past unless you part with a fair piece of change so the retail price will be reflective of that.
Well, that is true in general, you're not going to get great hand regs unless its a new trendy term. However, anyone collecting domains for a long time has hand-registrations from 10 or 20 years ago. And they're still hand regs - just not
new hand regs. If you want to compare your investment to your return, you'll need to properly account for all your carrying costs over the years too.
The reality of it is, if you paid $10K for a great domain, its WAY harder to get 100x return on it than it is to get 100x return on a $20 or $50 TBR domain. So when pricing domains, I don't really think about what the % return is. My investment is my investment, the selling price is the selling price, they shouldn't be linked. You're making a generalization, which is fine, but I wouldn't use that as a rule to price anything.
If anything, if you really want to use rate of return as a factor to influence your business decisions, then before you ever buy any particular domain, you should consider what your asking price will be first, then apply your desired rate of return, and then calculate your maximum permissible purchase price - and then not go over it.
I consider return data like 10x or 100x or 1000x and I think cool, that's an interesting fact AFTER you've sold it. But I don't think it should really have much to do with your selling price... Sometimes you've got a dud and have to come to terms with that and just sell it. Sometimes you've got a gem and you need to shoot for maximum value, not a rate of return.
And on the valuations topic, I just reviewed my last year of sales data. Here are some interesting numbers to ponder:
- GoDaddy valuations came in at less than 24% of my actual sales prices.
- Average return for all sold domains (including purchase + renewals) was 93x.
- Had I sold at GoDaddy prices it would have only been a return of 22x.
- My highest return was 633x on a hand reg that I held for only 8 months, lol. So much for the no good hand regs left theory!
- The max hold time for a sold domain was 18 years.
- 20% of sales had a hold time of less than 1 year.
- Sales were fairly equally split between 4 general categories of domains.
Now, keep in mind that when I say average return on investment, that was for a single domain transaction. Its kind of a useless number. You really need to account for the expense of renewing the entire portfolio every year to give it any real meaning.
The big takeaway is that if I had I sold at Godaddy valuations, it would have lopped off all of my profits once I add in portfolio carrying costs. So consider Godaddy valuations as liquidation prices. Those prices aren't really high enough to sustain a business, IMO.
For me, a big factor is that with having a large portfolio, I can price relatively high, stubbornly negotiate very little, and still make plenty of money despite a very low sell-through rate compared to the so called industry average numbers people throw around. And even at a sell through rate of 1.5%, I'd still have 2/3 of my portfolio when I'm 80. If I was smarter, I'd quit buying altogether, focus on selling only, and be more willing to negotiate to increase sell through rate significantly, diversify my investments with excess profits, and then die with a lot fewer domains and instead have more liquid assets to pass on. To be honest, I'm getting to that age where I think it may be smart to start doing that. The lack of liquidity means time isn't really on our side for us older guys... And assuming our heirs will appreciate a portfolio of domains as much as we do is probably more wishful thinking than reality.
