Categorized | Domaining Tips

Wonderful Domain at Fair Price vs. Fair Domain at Wonderful Price?

Posted on 07 April 2019 by Andrei

Some of you probably recognized rather quickly that this title is a play on a Warren Buffet quote, who believes that “it’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price” 🙂

What about domains?

Would you rather:

A) Buy a wonderful domain such as a stellar one-word dot com at a fair/decent price but definitely not a “screaming bargain” one

or

B) Buy a fair domain at a wonderful price, for example buying an average LLLL dot com at 25% below the current reseller market value

While there’s more than one way to skin a cat and I’m sure there are people doing well with business models across both dimensions, I think it’s an interesting exercise to analyze the pros and cons associated with each approach… when it comes to domaining, of course.

Here are what I consider to be the pros associated with buying a wonderful domain at a fair price:

  • such domains are more likely to go up in value in the long run, or at least enable you to preserve your purchasing power… let’s face it, there are definitely “hot” domain categories which ended up cooling off quite a bit as time passed, whereas wonderful domains such as solid one-worders have always been considered to be the “best of the best”
  • the piece of mind which comes with knowing that you bought quality, that you didn’t take a chance with unproven or at least less proven sectors of the domain world

The cons, however, are:

  • you didn’t secure a screaming bargain and the instant gratification of knowing you got something for less than that asset is actually worth
  • not everyone can afford wonderful domains and even if you can, you probably can’t afford many of them… as such, you’re kind of putting your eggs in the same basket, unless of course you have a huge budget at your disposal, in which case this con doesn’t apply to you

What about buying a fair domain at a wonderful price?

Well, here are the pros:

  • you don’t necessarily have to keep those assets for a huge amount of time, you can flip them and use those profits to climb up the proverbial domain latter, maybe even all the way to the “wonderful domain” zone 🙂
  • you probably afford quite a bit more “fair domains” than “wonderful domains” and, as such, will be reasonably diversified

… but here are the cons:

  • yes, you can afford more domains but the lower you go on the domain ladder, the closer you get to buying assets which aren’t actually investment grade… don’t know about other domainers but I for one don’t consider owning a portfolio of 1,000 hand reg territory domains proper/sustainable diversification
  • fair domains most likely have less end user potential, whereas some domain categories (domains that currently do have some domainer to domainer value) have pretty much no end user potential… so while you might have just under-paid when it comes to reseller market value metrics, you might have just bought a domain end users will probably never ever care about
  • perhaps a more specific manifestation of the previous con would be that those who have exposure primarily to fair domains are more susceptible to losses caused by exogenous shocks such as a deflationary economic crisis… should such scenarios occur, the less valuable your domain category is, the more you’re at risk of not just losing a high % of your net worth but even of finding yourself in a situation where you realize there’s no longer *any* liquidity for your domain type

… so, what’s the verdict?

Again, while I don’t believe in “one size fits all” approaches when it comes to domaining, I do think your long-term goals should revolve around trying to climb your way to “wonderful” domains.

To get there, however, you might need to hustle with “fair” domains a little bit by (for example) flipping your way to better and better assets!

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