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Not All Category Killer Domains Can Fetch Huge Prices

Posted on 25 April 2014 by Andrei

A lot of people make the mistake of thinking that *all* category killers can fetch huge prices because they fail to understand that not all end users have the same type of financial strength. Simply put, there are several “categories” with end users who simply cannot afford to pay huge prices, not even for the very best domain.

On the one hand sure, if we’re talking about the insurance industry, about the auto industry and so on, there’s definitely a lot of money on the table.

On the other hand though, let’s assume you own the domain LemonadeStand.com (this can actually be used as a brandable by large companies in industries not related to lemonade but let’s leave that aspect aside and assume that’s not the case). For kids who make money through a lemonade stand, it’s the best possible domain.

Are there lots of end users for LemonadeStand.com?

There sure are, several in pretty much any large city.

Is LemonadeStand.com the best choice for those end users?

Yep.

Can the end users in question afford to pay a huge price?

Unfortunately, they cannot.

You see, despite the fact that there are lots of end users for the domain, we’re talking about kids who can in no way afford to pay a *lot* of money. Being the best possible domain is not enough, you also have to analyze the financial capabilities of the end user base.

Now as mentioned previously, LemonadeStand.com could be a great brand for a large business that might not have anything to do with lemonade but I’m sure you understood the point I tried to get across: some category killers can simply not fetch huge prices.

Not because end users don’t want them, not at all.

A lot of end users want LemonadeStand.com but unfortunately, they cannot afford to pay a price that would make the owner extremely happy.

Don’t make the mistake of assuming that just because a domain has a lot of potential end users, it will without a doubt sell for a huge amount. Always see things from the perspective of the end users in question as well, the financial capabilities of the end user base is a variable you can’t afford to ignore.

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4 Comments For This Post

  1. Come on... Says:

    Words that don’t make any sense.
    Why Sedo or DNS don’t offer FINANCING SERIOUSLY?
    Write about this, not about issues that exist only due to lacks of services in the domain market (of course those are lacks that few people, a small club, want…).

    P.S. Remember you recently wrote about not doing censorship…

  2. Kassey Says:

    In the same way, don’t equal number with price. .anything may have the largest number of domain registrations, but it does not mean they can be sold at the highest prices. In other words, the day may come when .com will become number 10 or 20 in terms of registration numbers, but it can still remain the extension with the highest prices.

  3. Eric Borgos Says:

    I have a site I started over 10 years ago at http://www.lemonadegame.com so I would buy LemonadeStand.com, but only for $200, since I am not sure having a better domain would make any difference in my traffic. So, that helps prove your point, which is that only small buyers like me would be interested in such a domain. Also, LemonadeStand.info is available for registration, so a potential buyer might decide to get that version instead.

  4. Andrei Says:

    @Come on…: unfortunately, for some end users, a huge domain acquisition cost is out of the question. Even with financing. Let’s assume someone were to offer a huge mansion to an electrician from a small town.

    Would the electrician in question want the mansion?

    Sure.

    Can he afford it?

    Nope.

    Even if you were to offer long-term financing packages, the numbers still wouldn’t add up.

    The same principle is valid when it comes to domains as well. To a huge insurance company for example, even a seven figure acquisition cost is pocket change. Unfortunately, as far as a lot of other industries are concerned, you’d end up realizing that most if not all potential end users are companies which can simply not afford to pay a huge price. Not even if a lot of financing options were to exist.

 
 
         
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