As we all know economics of the domain industry have changed.
Parking revenues are down 50% or more from 2007.
This week we reported according to VeriSign that domain new registration are down, due largely to less registrations by domainers.
In public reports by Fabulous.com, their parking revenue have fallen by more than 50%, and continue to fall each quarter.
It’s time for the drop services to recognize the changed economic conditions and drop there minimum bid prices on back orders.
Currently NameJet.com charge $69 as a minimum price on any domain.
NameJet.com is the outgrowth of the old Enom’s in-house bidding system, for their own dropped domains.
When the old Enom auction was running, the minimum bid was $5.
SnapNames.com minimum bid for back orders ranges between $59-$79 depending on which registrar is dropping the domain.
Pool.com charges $60 minimum for back orders.
On the other hand, TDNAM.com. GoDaddy’s in house drop system starts the bidding for most of their drop domains at $10. (however for high traffic domains they set an opening price based on their projected PPC earnings for one year).
I suggest that NameJet and SnapNames follow the current economic trend which finds domainers losing 1/2 of their revenue and slash the minimum back order prices to $29 and certainly no more than $39 per.
To be clear we are talking about domains that wind up only having one backorder placed on it.
Any domain that has multiple back orders go into auction and those participant determine the price the domain will sell for.
However where the domain is such, that it draws interest from only one person in the domaining community, charging almost 10X more that the cost of a new registration, is just way too much.
If someone, instead of being the only one to back order a domain, waits for it to drop, they can pick it up for $8.
Do this with 100 domains and you just saved $5,200, do it with 1,000 domains and you save $52,000.
Yes when times were good and everyone was making money, costs of acquisitions went up.
Now that the economy has turned south its time for the market to recognize it, and reduce prices.
Funny that you write this article.
First, congrats on making the call to get drop prices lower.
Second, I have been putting in less backorders since I have plenty of domains and hate dealing with crappy registrars although this has gotten better for the most part.
Third, I have been noticing that maybe 25% of my the domains on my backorder list have simply dropped for two reasons I suppose, one because the $69 and the pain in the ass factor of chasing your drop and transferring out after 60 days and two, because there are less domain tasters out there.
There were many months there where EVERYTHING was tasted only to be dropped after three days.
So, one good thing to the downturn in PPC rates… less tasting which means more dropped domains that can be picked up for a hand reg.
If/when drop catchers see their backorder rate drop then they will probably lower prices unless their cost of acquisition, management, customer service etc is too close to the $69 price point.
Great Post Mike!
I totally agree there are is no reason for these prices to be as high when the industry is at one of lowest point in regards to revenue and profits being drawn from sales etc.
There are plenty of free available lists that people can scan through but namejet, snapnames etc have already got the code and programs written to snap the good names so its tough for the average domainer but I would say visiting FREE sites such as RegFeeNames.com where there are daily text drop lists and thousands of available keyword domains are good for other domainers to find names without paying the premium price.
Regards,
Robbie
Founder
RegFeeNames.com
Thanks for your post, Mike!
I’ve thought the same thing lately. I can only imagine that the number of purchases on websites like SnapNames.com and NameJet.com has decreased, so lowering the minimum price should get the market back into its equilibrium. On the other hand, one should think the drop services know what they’re doing.
Personally, I’ve been buying less domains in drop auctions. I’ve also observed the same thing as Rob: Many domains simply drop nowadays and can then be bought for less than $10 each.
So why pay $60 at SnapNames et al.?
There’s pros and cons with the high fees as others have mentioned. I was able to pick up for reg fee today dropped names that should never be dropped – marchex level names.
There are $1000 names that can be had for $59-99 on the catch each day. I would have to believe that lowering the price will heighten the competition for those names.
While my expenses would decrease with lower fees, I think the quality of names I could get would decrease as well with increased competition.
We can’t make the rules or change them. Sometimes the best thing to do is make the most of what we’re given.
Dominik
If the wall street meltdown has taught us anything is that the “big” guys sometime lose there way or understanding of what the consumer will consume.
I’m just trying to remind them.
I would love for things to be cheaper and if it happens, I am all for it.
However, If they reduced prices by 50%, do you think revenue will remain the same as it is today for these companies? I certainly do not think so. I think their bottom line will decline further and faster if they reduce prices.
Why would these companies do that? I agree the market is slowing and so are prices. Year over year revenue will be down but dropping the price would only further reduce their income.
Are you lowering prices 30-50% on mostwantednames?
If they really wanted to make changes, they could move all names that do not receive bids to a public declining price model until someone buys it like Pool used to have and domaining is trying to do with expired names.
From a business perspective, I think these companies would be silly to do such a thing and would not hold my breath waiting for them to make changes.
Steven
If they reduced prices by 1/2 and sold 3x more the number of domains, I think they make more money.
I do not believe that either NameJet or Snapnames will hold on to domains that receive no bids.
They are not the registrar and have to right to do so.
The individuals registrars can layout the $6.86 but that would be a real risk because they could get stuck with a bunch of crappy names no one wants at any price.
MostWantedDomains.com is in a completely different business than SnapName or NameJet so your comparison to us is not valid.
I wonder how much the price has gone down on high dollar domains like invest.com? That name sold for $1 mil last year and now is sedo parked. What was going through buyers head when they spent so much on a domain that they are not using?
I would advocate dropping the price 10% every day (an arbitrary example) until it sells. Some downward sliding scale could maximize revenue if someone did the math.
Great post, Totally agree.
Amen !
Pool.com just sent out an email to customers about exclusive domain auctions atarting at $20. Some actually close today (you can download the list from the email and there are 46 closing today) with a bunch closing every day through Dec 12 it seems.