We are coming upon a series of important domain auctions.
Snapnames.com will be holding their first live auction in January at Domain Fest and Moniker.com will be holding its next auction at TRAFFIC Vegas in February.
To prepare as a seller for these auctions I looked backed and analyzed the results for the last live TRAFFIC auction which was held in Miami in October and have come to the following conclusion:
The most important factor in determining whether a domain will sell at the live auction is the reserve price.
Well maybe you knew that already, but maybe not in the way you thought.
It’s our opinion that to sell in these auctions the domains reserve price must be set, not at the highest amount you hope the domain will get, or even the price you believe the domain is worth, but at a level that will attract interest and bidding.
Look at the numbers:
106 names were priced 10K or below, of these, 87 sold or 82%.
The total sales of these 87 of the ones that did sell were $1.3 M.
The total reserve prices of these domains were 375K, so these domains sold as a group 350% more than reserve.
52 names were priced 10,001-25,000, of these 31 sold or 60%.
The total reserve prices of these 31 domains were $550K, so these domains sold as a group 200% more than reserve.
35 names were priced 26K-50K of these only 10 sold, or 35%.
The total sales of these 10 names were $760K.
The total reserve prices of these 31 domains were $425K, so these domains sold as a group 55% more than reserve.
17 names were priced from 51K-99K, of these 6 sold or 35%.
The total sales of these 6 domains were $785,000.
The total reserve prices of these 6 domains were $430K, so these domains sold as a group 55% more than reserve.
36 names were priced over 100K and less than 1 M, of these only 5 sold or 14%.
The total sales of these 5 names were $1,960,000.
The total reserve prices of these 5 domains were $1,650,000, so these domains sold as a group 12% more than reserve.
(For purposes of this study we included the cowboys.com sale in at $375K even though it sold at silent for that amount, as it sold for $275K in the live but the bid was retracted. Also computer.com was counted at 2.1 million)
Combining the above, domains priced under 25k
158 names were at auction, 118 sold or 75%
Combining the above domains priced over 25k and under 1M
88 domains were at auction only 21 sold or 23%
These are the only 6 names to sell for more than 100K:
So here are our conclusions
Only extremely rare and special names, category killers are going to sell if the initial reserve is more than 100K.
Even to be priced at over 25K the domain has to be extremely good, once again names priced over 25k are three times more UNLIGHTLY to sell as one’s priced 25K or under.
Here’s the ultimate question, If you get the 500 smartest, most experienced and well financed domainers, in the same room are they going to let a name sell for 20K that is worth 50k or 100K, or more. Are they going to let a name sell for 5K that worth 25K?
I don’t think so
Here are some examples
Domain reserve sold
tuxedorental.com 25K 65K
europeanvacations.com 20K 85K
promotion.com 50K 170K
caribbeanvacations.com 35K 130K
amusement.com 25K 60K
helicoptercharter.com 8k 21k
criminallawyers.com 20K 195K
christmasgiftbaskets.com 6K 25K
Poker.mobi 5K 150k
There are numerous other examples at all price levels.
There is a psychology in auctions. It is very important. If a bidder see’s a name they think it priced reasonable or below what they think the domain is worth they are going to bid.
Once they starting bidding anything can happen.
If bidders perceive a name as having a reserve too high, they dismiss it in their minds, they don’t bid, nothing happens, dead name.
For example, bulldozers.com, a great name, did not sell with a reserve of 75K, Our opinion is that is the reserve was 25K , there would have been bidding and the domain would have sold probably in the 60-80K range, based on the bidding that took place in the room.
If criminal lawyers.com had a reserve of $175K would anyone have bid?? I don’t think so.
Let’s say you have a name you think is worth 50K but for bidding purposes you place a $20K reserve on it and it only sells for 30K, maybe that’s all it was worth. After all the market sets the price and if the market will only pay 30K maybe the 50K was unrealistic.
Finally you need to take into account the commission rate and structure when pricing your domains. Moniker.com, talks in terms of minimum take home. So if you place 75K as you minimum take home the reserve price will actually be $86,250 ($75,000 x 15%). If you want to have the reserve price (selling price) at $75k, then you minimum take home needs to be stated as $65,200. Snapnames.com will take off the 15% from the reserve price, so if you want the selling price to be $75K you would price it at $75K knowing you will receive only $63,750.
Yes I know the figures don’t match, but do the math, it’s correct.
The above analysis only works with a proven live domain auctions that are well attended by hundreds of domainers and major players.