Why Cutting Prices Won't Double Your Domain Sales (1.Viewing)

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It depends largely on where your current pricing is at. If you already have a majority of names priced around $2,500 or less, cutting your prices in half will have almost zero impact on the number of sales. You'll just make half as much money for what would have sold anyway.

I can 100% guarantee you it won't double your sales. Even if it did, that wouldn't be your break-even point because you'd need to replace twice as much inventory. Actually, if you're pricing most of your names around $1,500 you should raise your prices 50% not slash them, and use the extra money to scale up your portfolio to achieve more sales.

For consistently selling 20+ domains per month retail, I would rank the factors in this order:

1. Quantity
2. Pricing
3. Outbound
4. Quality
5. Luck

STR is like a bell curve when compared to quality, it's not linear. Garbage names will have a very low STR, but so will very high quality names. The STR on LLL․coms is around 0.3% which is pretty abysmal, at my old job the company owned about 10% of them. But when one hits you might be making six figures profit, possibly even seven.

If you already have average quality names that are reasonably priced, improving quality even more is not your path to doubling your number of sales, you'd either need to double the size of your portfolio or do outbound sales as a full-time job. Quality is your path to doubling your average selling price though, which is an equally good goal to have, maybe even better given VeriSign price increases.

To hit 20 retail sales per month you need a large portfolio of names priced in the sweet spot if you want to do it passively, or with a smaller portfolio you'd need aggressive outbound sales. For passive we're talking 15,000+ average names, or 30,000+ decent names, or 60,000+ crap names. That last one wouldn't cover renewals though.

I think more people in this industry need to get comfortable with outbound sales and putting in long hours. Buy a handful of names after researching who you could outbound them to, and don't buy any more until you've reached out to everyone multiple times. Rinse and repeat until you find what sells, and then start scaling.

Too many rely on #5 above. They don't have the quantity or quality to see a sale within a few years, and are too lazy to outbound, so even with fair pricing they're missing too many factors and don't have a shot.

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lotsofcoffee said:

I do have some top quality domains and the lack of interest in them has been somewhat surprising to me. My mediocre domains get lots more interest and sales.

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DomainRecap said:

It's the same with me. All my "good stuff" just sits while I continually get nice offers on what I view as junk and it's usually crap I picked up on a Rebel sale or one of my ever-popular CatchDrop $8.88 TBR pickups. And it's not a numbers game as I have more quality domains than these $1.99/$2.99 sale priced domains or $8.88 TBR ones.

With domains, beauty is truly in the eye of the beholder.

I am beginning to think that taking part in expensive post-TBR auctions, and fighting over 'quality' domains with the unwashed masses, is pure sucker bait and I should just be happy with what I won and move on to the next week. After all, there are potential domain values every 7 days, so there is a ready supply and why waste money on high-priced, auction-inflated domains when you really don't have to?

I've said it before, but with domains you make money on the buy, and I bet my profit margin would go way up if I stuck to my guns.

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lotsofcoffee said:

This is really interesting to me:

"STR is like a bell curve when compared to quality"

I do have some top quality domains and the lack of interest in them has been somewhat surprising to me. My mediocre domains get lots more interest and sales.

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DataCube said:

What NameBio says is accurate.

If you have some decent .COM priced at say $2,500, lowering the price to $1,250 is not going to double total sales.
In fact, they might not even double if you lower the price to $500 or $250.

You might sell some extra domains, but likely for a lot less total revenue.

Brad

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rlm said:

If you want to run a business and won't spend $5K+ for your forever brand & domain, then lets call it like it is, you've got a hobby, not a business.

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DomainRecap said:

I totally agree, but there also seems to be a LOT of people running hobbies in Canada.

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If you're a domain investor you're definitely leaving money on the table. A story about price sensitivity... 1/7

For those of you who don't know, NameBio's sister company owns more than 70k domains. We BIN price all of them, and to do this initially we grouped them into seven price buckets based on GoValue, DotDB, and other metrics. 2/7

The bottom 30% of the portfolio was priced into three buckets: $1795 (20%), $1295 (5%), and $995 (5%). After three months of testing, this group of names was contributing 14% to our total sales by quantity. 3/7

As an experiment, for the next three months we combined those buckets into a single price point: $2195. Logically we were expecting fewer sales, but we wanted to see if the higher price could more than offset the decrease in STR. 4/7

But something shocking happened... the number of sales didn't decrease. The bucket was still contributing 14% to our total sales by quantity, except now it was contributing 38% more to our gross revenue. 5/7

Darpan noticed the same thing a few months later, that there is almost zero price elasticity at <$2k:

https://twitter.com/i/web/status/1288267010867175424

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(Every domain investor should be following @darpanmunjal by the way, he regularly provides brilliant and actionable insights.)6/7

That means a name priced at $500 has basically the same chance of selling if priced at $2,000. If you're pricing names below $2k - $2.5k, raise your prices up to that level. You shouldn't experience a meaningful drop in STR and you'll make more money. 7/7

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