Would you pay $3,500 for a domain that could sell for $10,000?

Yesterday I was listening to the 100th episode of the Josh.co podcast, and Braden and Josh talked about the sale of Notch.io for $3,574 this weekend on Park.io. Both agreed this was a steep price to pay for the name – Braden estimated the likely resale price in the $10k range, Josh thought it could be closer to $15k or a bit higher.

The point they both made is that the price had gone too high to make it a good buy as an investor. I agree, as many of you know, I started buying one-word .IO domains back in 2015 and most of the names of similar caliber to Notch sold for under $500 with a lot at $99 flat.

As Braden and Josh discussed the sale a bit more they brought up a question that I think everyone has to ask themselves when they buy a domain – what multiple are they looking to get on a sale? Based on both of their estimates, an investor could see ~3x – 7x on their money.

For me personally, I’m okay getting a lower ROI on a sale in .COM, but with a TLD like .IO or .CO I usually aim for a higher ROI given the increased risk that comes with moving out of the .COM space. While me and many others have seen solid liquidity with .IO, it’s still incomparable to .COM which means that yes, while you could sell a name like Notch.io for $10k or even $15k, the question is, will that happen in one year or ten years?

With a .COM, if three years if I decide, okay – I want to sell this and lock in a profit, I think you have a much better chance of doing this, on your own timescale, than with a .IO. If three years in, the owner of Notch.io hasn’t found a buyer and they start reaching out to people, getting north of the $3,500 price tag might be tough, on an inbound sure, but doing outbound on .IO names and expecting a $10k+ price tag isn’t very realistic.

So to go back to the question I posed in my post. I personally would pay $3,500 for a name I think is worth around $10k in .COM, but not in .IO. At the same time, I normally buy in the sub $1k range so I’d have to really like the name to do it since my typical metric is buying .COM, sub-$1k that I can see a 10x or higher ROI on.

We all have our own metrics for success and KPIs we review when buying names. When it comes to Notch.io specifically, I think the best liquidity for the name is around $5k, so I’d probably buy it for $500. While, yes, it could sell for $10k, $15k, or even $20k, I’d feel the most comfortable about getting liquidity around $5k without having to wait for years or a decade for the right buyer to come around.

But that’s me. What about you?

{ 7 comments… add one }

  • Brad Mugford September 1, 2020, 10:59 am

    Would you pay $3,500 for a domain that could sell for $10,000? Sure, for a domain with high liquidity like a solid CVCV.com. For the domain in question, an easy no.

    The liquidity and likelihood of a sale is far too low to spend $3,500+ on that type of name.

    Brad

    Reply
    • Morgan September 1, 2020, 4:56 pm

      Well said Brad and that’s the point I was trying to emphasize, while I love .IO it can’t be compared to .COM when it comes to liquidity. The chance you’d get stuck holding this name for ten years until you find a buyer that would pay the $10k is relatively high IMO.

      Reply
  • RaTHeaD September 1, 2020, 4:33 pm

    i always pay close to six dollars at the movies for a four dollar popcorn. i’m sorry… i wandered off topic. what was the question again?

    Reply
    • Morgan September 1, 2020, 4:56 pm

      You need to move to a BYOP model, that’s “Bring your own popcorn” 🍿

      Reply
  • Emeka September 1, 2020, 9:45 pm

    No I won’t pay that for Notch. io,even if it sells for $49,995 tomorrow 🙂.I can lock that $3,500 negotiating a good LLLL.com and make more with a peace of mind.

    Recently did that and about doing that for another. Hope it works OK for the buyer as we sometimes get carried away when bidding and forget when to stop.

    Reply
  • Varun Sharma September 2, 2020, 3:14 am

    Wonderful post, please share more blogs like this.

    Reply
  • Manmeet September 2, 2020, 5:23 am

    The likelihood of notch.io selling for 200% returns today or maybe tomorrow still seems very low and buyer definitely overpaid for that one.

    But why are we forgetting the part that we normally do go overboard in auctions and overpay for most acquisitions.

    Fingers crossed for the buyer!

    Reply

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