I sold a New gTLD domain after a long dry spell. We agreed on the price after the buyer got back to me after a month and made a new offer. He offered 3 times his initial offer.
The final sales price was $3,000. After we agreed and I started the escrow.com transaction I got an email from him saying that he forgot to ask me what the renewal price for the domain name was.
Luckily the renewal is a modest $23,90 per year at Uniregistry. I told my buyer the price, he thanked me and we continued with the transaction.
So that got me thinking. What would have happened if the renewal price was higher than $23,90? Would the buyer have bailed out?
What renewal price would be a deal breaker? Maybe 5% of more of the asking price: $150.
I think that up to $50 he would be happy. $50-100 he would be bumped but not have said anything. Above $100 and up to $150 he would start thinking about the deal.
If the renewal was more than $150 then I think that he would probably not pay for the domain.
At $150 he would have paid another $3,000 (the acquisition price) in 20 years, at $100 in 30 years, at $23,90 in 125 years and at $10 in 300 years.
I have heard more than a handful of domainers that have said that they have lost sales because of $200 or $400 renewals on New gTLDs.
What do you think? Do you have end-user buyers asking about renewal prices on New gTLDs? What happens if the domain is above $100 or above $200 per year? Does it have a correlation to the sales price?
I’ve backed out of deals as a buyer because the renewal fee was too steep. The threshold for domain investors is even lower than it is for end users.
So high renewal fees are a triple whammy:
(1) It sucks for the domainer to pay them.
(2) It sucks that the domainer gets told “NO” from other domainers. Less liquidity.
(3) It sucks that many end users will back out of deals.
I have almost stop buying new gtlds so I forgot how I think as a domainer buyer… 🙂
This is all a really fluid time. Registries are changing prices; dropping some, raising others. Lots of good names are available but they are getting registered each day by a new class of domainer. There’s a growing market in the secondary market for names while lots of good names remain unregistered in the primary ..
Buyers sellers end-users and domainers need to be prepared to roll with whatever comes. The best answer is to invest where there seems to be the least volatility and risk but to expect plenty of both – then roll with it
What is this new class of domainers? I see only one class. The buy low sell high one…
The “domainers” buying at $0 selling at $5 or front running are not really domainers.
@Konstantinos Z. This is not nineteen forgotten year; the 25+years ago class of this and that are long fade and dead. The now ERA and counting are now in CONTROL. There will be more all kinds of “CLASS” in domain industry. The world businesses does not sit around and collect dust. Feels good, looks good and sounds goods domains will moves fast; and will get the attention first. Renewal fees $100-500 can be a berrier or deal breaker to those buyers that doesn’t have enough funds for a great name. Yes, there is still lots of great name are yet to be discovered. Remember in math, there is a lots of ways to get an answers. ?
Problem solve ?
I think $200-$400 renewals make sense only for domains that can be sold for $10k or more.
Otherwise, the relation between the sales price and the renewal fee can certainly cause the buyer to cancel negotiations.
But how many new gtlds can be sold for $10k or more?
Lots are being sold for 10k lots are being sold for mid xx,xxx and several at over 100k
Lots is subjective… Do you have any sales to report for sold.domains? 🙂
Lol several at over $100k, oh my the odd few the registry sells direct maybe, let’s hear them
I doubt reseller to end user are getting 6 figures, those ones would need crazy renewals factored in
Depends on end user. I think 150$ is still ok if they are real end user , but $200-400 is where it gets tricky. I agree, under 50$ there is no need to think. Even under 100, i think its more of a nuisance. The issue is when it gets into sizable amount. I think most buyers will get lost when it $500 or more, then it is real sticker shock. It just highly uncomfortable amount. This is where i would expect to see most deal breakers even for some amazing domains. Even as end user.
Congratulations Konstantinos !
Are you going to share the domain name with us ?
Thanks. Not sure yet but it is in the sold.domains database.
People tend to think billion dollar end user, they will pay any renewal, WRONG, the IT guys veto is, as it is a matter of principal for them.
They do not understand why they should pay hundreds of dollars per year, to manage a non physical asset.
This is a very good article, if that domain was $250 per year, that deal would be dead in the water.
The 2016 releases are all expensive, they have created a master keyword list, and they get 99% of it right.
You only need to look at .store, .shop etc.. the new class of domainers are registering as stated above penny domains, and attempting to sell for $2-10.
TheCigar.Store is registry premium and carries a $3,000 annual premium, WTF kind of world are we living in.
The GTLD’s do not have fluid demand, like .com.
I just sold a two keyword .com for $5K, the GTLD which is the same except it has a dot in the middle, but has a $118 annual premium, and they passed it up for the one time $5K .com.
I don’t even care when they say we are going with a GTLD if they think the .com price is to much, I just laugh, and tell them it will be twice the price in a few years when you come back for it.
Some domains no matter how good never get passed the IT guys for various reasons.
The truth is that renewals were the water bill to the registry but have now become a mortgage to the registry. Many people don’t understand it.
Indeed the first launches had more opportunities. Then the registries started learning by their mistakes and reading the zone files.
For the most part Donuts domains seem to have the most reasonable prices on premium renewals. Several hundred dollars is nothing that an end user should be concerned about if the domain is quality. I just grabbed Soccer.Academy on the drop and feel an end user will have no problem paying $250 renewals, considering the benefits of owning such a domain…The issues start when the premiums are $500 +…
Big mistake, there is no fixed Soccer Academy online, they are geo specific, SeattleSoccerAcademy.com, JuniorSoccerAcademy.com, they don’t need to pay your fixed price, plus $250 annual renewal, there is a reason it dropped.
This one is a dude
Rich – If the domain drops again, you were right. If it doesn’t drop, I was right…With no risk comes no reward.
I think that anything above $100 is seen as at least something suspicious that needs some thinking if not an outright deal breaker.
So who’s gonna buy and re-sell ……Beer.Blog ……ummmm
Ten bucks a year adds up after 300 years! Glad to hear they didn’t cancel on this small detail. 😛
On a serious note, a long time ago a guy canceled Escrow when they were told they still have to pay $8.75 (at the time) every year, beyond the sales price. I frantically pushed the domain back from the target account while the password was still unchanged. Buyer was from Central America.
If the deal was big enough you can buy them 10 years for $80.
Those Faboulous create an account under new name pushes escrow does not like.
I had a couple of guys that I needed to explain how domain renewals work but nothing like this.
A year ago a buyer agreed to purchase my name bet,money for $3K, but he backed out as the name had $108/yr renewal. The renewal was not that high, but still he did not want to pursue. I eventually dropped that name and it was picked up by another domainer.
Rinse and repeat is great for the registries
Don’t count other people’s money! 🙂
I know who bought “send.money” at day 4 of early registration on March 2015 – about $2500 renewal. …and it was renewed for one more year on March 2016. A little bit too much, but anyway It’s – OK! )
“Transfer.Money” was sold for $ 90 000 USD
My Sex.Life – just $108 renewal price, and I already have $ 30 000 offer.
Sex.Live was sold for – $ 160 000 USD ($2900 Renewal Price) …and it’s – OK! )
Are you holding out for $20M? Like seriously
http://www.sex.life is NOT for sale. I’ll going to build good website in the future. NOT porno. ))
So your the guy who bought sex.life for $160K, with a $2.9K renewal?
You should have paid $1K, and got a decent homepage template, not sure who you paid to do that, but it looks homemade.
Sex.liVe sold for $160K. Not sex.liFe.
It’s a simple web pages which I built for 10 minutes using website builder one year ago, just for presence in the internet.
Don’t judge “Website coming soon” pages. 🙂
Even $1 renewals can be problematic if you have thousands of domains and NO sales.
While the industry touts the rare five-figure sale, most buyers are reluctant to pay more than low $XXX for a domain name.
Consequently, given low portfolio turn in the industry, any renewal price above $10 tends to be a losing scenario.
It depends on the price of thr sold domain name. If it is for 3000 dollars, I would seriously consider the renewal price. But, if the domain is sold for 50,000 dollars, I wudnt care much about 300 dollar renewal cost. And I think there will be meaningful numbers of new gtlds selling for the price above 50,000 in 10 years.Just my ho.
But we are not talking about sales in 10 years.
What about now? How many $50k sales are happening each year? There are maybe 2 or 3 reported sales. That is nothing compared to the thousands of domains with $200+ renewals.
Yes, I agree. There are not so many at the present time.But we shud look at the future, shudnt we?
We should look at the future but if you have 15 domains at $300/year and you make a $50,000 sales in 10 years then you will just break even. And the registries want their $300 today, not $3000 in 10 years.
I can not predict with certainty what buyers will think about $300 per year renewals. They certainly don’t like them today so chances are they won’t like them in 10 years. So you might end up loosing that $50k sale.
Bad policy for investors but not registrars ?
” in excess of out of pocket registration expenses ”
approx 2.5 billion/yr to manage the current data base of 230 million names not more than enough?
A data base?
Agree with Rich on this,
“People tend to think billion dollar end user, they will pay any renewal, WRONG, the IT guys veto is, as it is a matter of principal for them.”
“They do not understand why they should pay hundreds of dollars per year, to manage a non physical asset.”
No one should have to pay excessive perpetual reg fees simply because of the industry or the domain is desirable, short or otherwise useful. The cost to manage the data base is the same.
The whole point of adding domains was to provide more relevant choice to all, equal access in use and access cost not excessive perpetual profits for a few.
I don’t believe ICANN, or any OTHER entity has the “authority” to authorize independent access pricing on what is a creative commons platform.
Excessive variable reg fees give the power to limit relevant access to what was intended to be an open, neutral internet.
ICANN is all over the word INTENT. What is the INTENT of the excessive fees? For the common good, the open, neutral net ? NOT.
The concept of the neutrality of the net in use and cost access must be respected by governments and corporations to ensure that the web is accessible to all and not, Quote: Tim Berners-Lee, “balkanised by countries or organisations carving up the digital space to work under their own rules, whether for censorship, regulation or commerce”.
Yes, Konstantinos I hope end users will agree with you and the IT guys on this one,
“I think that anything above $100 is seen as at least something suspicious that needs some thinking if not an outright deal breaker.”
“I can not predict with certainty what buyers will think about $300 per year renewals. They certainly don’t like them today so chances are they won’t like them in 10 years.”
A matter of principal.
i just registred an .id domain for $5
the renewal price is $50
i will create a good website and try to get more than renewal price from ads. if i can not get it, i will drop the domain for sure.
Then you will definitely will be dropping it, making money from ads is hardest…. Maybe get 5$ refund.
yeah. it is definitely hard.