OK! The Price is Right

The price of a domain depends on numerous factors including the objective quality of the domain (whether it is a single word in the dictionary rather than a domain consisting of a few letters such as popular 3L or 4L .com), market trends (such as the advent of new technologies or products that make some keywords more desirable than others), past sales (if a similar domain has been sold, with the same or similar keywords, you can use the sale price as a base for pricing your domain, of course with due distinctions), your sales strategy (if you want to sell more domains at lower prices or fewer domains at higher prices), etc. Pricing a domain is certainly not an exact science and a lot will depend on your sensitivity and the circumstances in which you find yourself at a certain time or during a certain negotiation.

As a side note, you can check past sales on websites like namebio.com or dnpric.es, which store well-organized historical records of publicly disclosed sales.

In this article, I want to focus more than anything else on the minimum price at which you should sell your domains on inamy.com so that at the end of the year you can at least reach a breakeven between sales and purchases.

To this end, I would start with a generally accepted figure by the industry experts, that is the average of aftermarket sales for a portfolio that includes domains of varying quality and covering various sectors. This figure is around 1/2%, which means that for a portfolio of 100 domains, on average, you can expect to sell one or two to an end-user in a year. If you have entered the market recently I would expect more of the former than the latter. Based on this value, we try to understand what the minimum sales value of the domains in your portfolio should be.

Let’s assume all domains in your portfolio are .com. Clearly, each extension has a different price and you will have to adjust the calculations accordingly depending on the weight that each extension has within your portfolio.

First, let’s see how much it costs you to maintain a portfolio of 100 domains. At the time of writing the renewal of a .com domain on GoDaddy, which is by far the most popular registrar with 76.6 million domains registered as of 2022 and 20 million customers, costs $ 17.99 plus VAT. So the cost to renew 100 domains is $ 1799 plus VAT. If you cannot discharge VAT and according to your country, VAT could amount to around 20%. Another 20% goes as a commission to us (inamy.com). If you are a registered company another 20% could go away as tax at the end of the fiscal year. To all of this, you must add the various banking fees if your bank charge for incoming (international) payments, and exchange rate fees if you are paid in dollars but you must receive your payment in a different currency. It could add up to another 5%.

To recap, the minimum price (X) at which you should set your domain for sale on inamy is:

X – 0.2X = 0.8X -> our commission
0.8X * (1 – 0.05) = 0.76X -> exchange rate
* (1 – 0.2) = 0.608X -> end-year tax, in reality in the case of a breakeven this value goes to zero since in your income statement the income generated by the sale is balanced by the cost of sales i.e. your domain portfolio management costs. You must pay tax only on the income above the breakeven point. But you should verify with your accountant if this holds true in your country as well.

This must be equal to:

1799 * (1 + 0.2) = 2158.8 -> your portfolio cost

That is:

X = 2158.8 / 0.76 = 2840

That’s it, domain investors should consider $ 2840 as a base reference point for their domain evaluations and pricing. If you sell your domain on inamy for a higher price you will have statistically a profit at the end of the year, otherwise a loss. This is obviously an example calculation for a typical portfolio and you should adjust it according to your own situation (your domain management cost and your banking expenditure may be greater or less, you may be forced to account for tax liability too, etc.).

Leave a Reply

Your email address will not be published. Required fields are marked *