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Reserved/Premium Domains – How Much Is Too Much?

Posted on 23 July 2014 by Andrei

It’s been a while since I registered a new gTLD domain and it’s not because I didn’t like the extensions but rather because quite frankly, there was nothing much left for me to get.

Therefore, the following question arises: how much is too much?

As a domainer, I try to be rational and keep an open mind.

I’m not a “dot com only” guy, nor am I a new gTLD enthusiast.

However, for me to register a new gTLD, there has to be some potential on the table. With so many new gTLDs in existence and on the horizon, one has to be quite picky and that tends to be hard when the best domains are taken right from the beginning.

We’re not just talking about a handful of domains here.

In a lot of cases, pretty much all of the good ones were either reserved or carrying premium renewals.

This leaves domainers scratching their heads and wasting their time performing various searches, only to find out that they’re essentially fighting over leftovers.

I don’t like telling other people how to run their business, so I’ll just end this post with a simple observation: if registry operators want domainer support, they really should throw us a bone :)

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2 Comments For This Post

  1. Snoopy Says:

    Good question. I wouldn’t put 5 cents into any of this, but as far as reg fees go anything beyond $10 and you are getting to long odds.

    eg a decent .com might have a 1:100 chance of selling in a year to an enduser
    a decent new tld, I think the chance is much lower maybe 1:500 or worse

    If your costs are say $20 a year I think the chance of losing money is very high. It is basically saying, I need to get 10k for this name to make money, which is highly unlikely.

    For the people paying $200 a year etc, I think they’d need to sell in the first year to have any hope.This is a reverse of what domainers used to look for, e.g. a domain making $200 a year was a goldmine. Instead you’ve got $200 leaving your pocket each year, it is a goldmine for the registry, it is bankruptcy for you.

    Speculating on .com’s is hard enough without speculating in extensions that hardly anyone wants.

  2. Leonard Britt Says:

    While I believe some of the real estate and geo TLDs sound very brandable, one does need to be cautious about premium acquisition costs and renewals. To establish a baseline, let’s look at SEDO’s reports where the average .COM sells for around $600 before commissions; after commission the seller probably nets closer to $500. Average industry turnover is around 1% and parking income is negligible for hand regs and backordered domains unless they were former sites with many built-in backlinks. So if you handreg 100 .COM domains you have $1000 in renewal costs without promos and maybe $500 in annual revenue. One could argue that a newbie’s handregs probably aren’t going to yield average sales prices or even average industry turnover. So the newbie .COM portfolio is likely to lose money. Yes, getting better domains can improve the turnover ratio and average sales price but better domains will come at a cost – either buying investable aftermarket domains or backordering quality expiring names.

    With new TLDs one can probably obtain better keywords than they would find in .COM but the portfolio turnover ratio will be much lower and I suspect average sales prices will not be much different (most of my sales are under $1000 with an occasional low $XXXX sale). The only problem is the good keyword new TLDs are generally either reserved or have premium acquisition costs and/or renewals. What is the magic number? I don’t know. Perhaps in five to seven years you may see some traction amongst the new TLDs.

    But as an investor in .TV domains, keep this mind. Even if developers / small businesses start using your TLD, quite often they will find it easier to handreg a two-word or brandable alternative and skip the aftermarket. So even though you have this pretty decent portfolio and occasional inquiries, it is still difficult to sell domains at a price point that generates an acceptable return.

 
 
         
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