How many of us have lamented the fact that we receive enquiries on individual domains while the great majority of our portfolio seems to just be a great big cost? Is there a way to swing this situation around? Yes, there is and it’s called bundled pricing.

Bundled pricing is taking a desired product and making it for sale with something else which you may have had trouble selling.  The average sales value is increased at little to no additional effort in the sales process. This is a strategy that many corporations use to sell us things we really don’t need so they can continue to move products.

A classic example of this is the sale of the “Big Mac Meal”. Do you really want fries? You don’t actually but it’s just so easy to add a few cents more and get an entire “meal” rather than buying a Big Mac and coke separately. In the process, McDonald’s has dived into our wallets and pulled out some of the loose change.

I’ve always wondered why McDonald’s sells a Big Mac, Coke and Fries together. I’m sure they’ve done a lot of research on the topic but I would have thought that a Big Mac, Fries and Apple Pie would be a much better combination……after all, everyone will buy the drink anyway.

This brings up an interesting point. If you wish to extract additional value, then bundling products together is not as easy as it first seems. Sometimes the obvious bundle is actually not obvious at all.

Let’s imagine you were after bingonight.net (one of my domains) and offered $8K for it. I could say yes and the deal would be done. Or I could tell you that the domain is part of a bundle of five bingo related domains that I’m selling for $12K.

All you were originally after was bingonight.net but now I’ve just told you a number of things:

1.       I have more bingo related domains.
2.       You can’t get bingonight.net by itself.
3.       I’m getting these other domains for half price!
4.       I'm also telling you that I'm the place to come to for domains in the future.

Suddenly we are having a much larger conversation than just purchasing a single domain. From my perspective, while I’ve now turned a $8K sale into one for $12K. This works for the both of us.

I could have bundled bingonight.net with an aviation domain a couple of Indian domains and a Spanish domain. This would allow me to move unsold inventory but rather than enhance the sale it would potentially turn off the buyer. Like McDonald’s and their meal deals, picking and choosing your bundle is critical for a successful outcome.

At the price levels of stock items, every enquiry should be viewed as an opportunity to sell not just one domain but a bundle of domains. Even if you have to discount a little the overall revenue line has increased.

When you look at your portfolio it’s often the traffic domains that bring the sales enquiries and the domains with no traffic that are of higher value. So bundling both sets of domains together brings potentially brandable domains and traffic together…..which can often sweeten the deal for the buyer.

The challenge here is that many of the marketplaces don’t allow a bundling strategy and deal with domains on an individual basis. More on this in another article….

Many people have no problem with saying sorry when they’ve done something wrong but refuse to apologize when they firmly believe they're right. They take the stance, that since they’ve done nothing wrong (in their eyes) then why should they say sorry. What this behavior clearly demonstrates is their lack of understanding of the purpose of apologizing.

Saying your sorry has less to do with right and wrong and more to do with hurt feelings. Being right doesn’t mean you haven’t hurt someone else’s feelings and standing on your dignity by not apologizing often just makes the situation worse.

This year I’m coming up to my thirtieth wedding anniversary with the most wonderful, patient and loving lady I could ever dream of spending my life with. Has it all been plain sailing? Heck no! Like any marriage, over the years we’ve had our ups and downs.

I remember one time when I knew that I knew that I was right and yet my wife was in tears in front of me. This was a bazaar situation for a young male who inadvertently poured buckets of gas on his wife's flaming misery by telling her to just “get over it”. It was after a number of these episodes that it dawned on me (with a lot of help from Roselyn) that because I did no wrong didn’t mean I was right.

Sure enough……it happened again. I took the superior position of being “right” and expected Roselyn to realize the error of her feelings. We males can be really dumb sometimes! It took a few minutes for me to work out that I was about to go on the merry-go-round again so this time I decided to step off.

I apologized. Not for anything I’d done wrong but for the fact that I’d hurt her feelings. Something magical happened in that moment…..peace was restored to our relationship.

So many of us are trying to win each and every battle with those that we “love” that we forget we’re actually not at war. A simple heart-felt apology is often all that it takes to restore the relationship and bring a little bit of heaven to your earth.

Like I said, I’m coming up to my thirtieth anniversary this year and when you’ve been around someone that long you learn a lot about them and yourself. It’s been an adventure that has led to a depth of love, respect and appreciation that has far surpassed my expectations when we first got married…..we thought we loved each other then. LOL! That was nothing compared to now.

Learning to say sorry when you’re not at fault is one of the many lessons that my wife and I have both learned over the years. As we look forward to the years ahead I sometimes wonder how we can love each other more than we already do……and then I look at both of our parents who have been married for 50+ years and smile.

If you want to build long last relationships with your loved ones then my advice is to humble yourself to say sorry even when you don’t think you should.

Have a great weekend!

This article continues directly on from How to Price Your Domains for any Market

One possible way to derive the mid-point number is to examine the average advertising spend by market vertical. We can then pin the mid-point for this data as being worth $2,000.

The below chart shows the “drink” category as being at the approximate mid-point in spend. This would suggest that domains above this category would have a higher mid-point value and domains less than this category a lower mid-point value.

Once again, with a little bit of Excel wizardry we can calculate the financial sector average domain spend being at $1543, which little less than the $2,000. Once again, we have a problem where the methodology being used is linear where in fact it may not be the case. Nevertheless, the financial services industry is a little above the mean point for the market verticals so our numbers shouldn’t be too far out.

We can now update our financial demand curve chart from the previous article so that now looks like the one below.

So where does this entire analysis go wrong? Domain investors are less concerned about the left-hand part of the demand curve but argue incessantly about the right side of the graph. They should rightly do so.

Since we know the mid-point we can plot a reasonable price for each domain. On a keyword by keyword basis we can allocate the level of demand divided by the total demand for all those keywords above the mid-point. We can then multiply this ratio by the $1543 we calculated earlier. And presto! This will mean that “homerefinance.com” is valued at $613,475!

We essentially then do the reverse process for those domains worth less than the mid-point. By using this method, we have the following valuations for the suite of “second mortgage” domains we looked at earlier.

Secondmortgagerates.com - $1,157
Secondmortgageloans.com - $1,548
Secondmortgage.com - $1,683
Refinancesecondmortgage.com - $3,669

The question needs to be asked, do these values look sensible? Yes and also no…..and here’s the double conundrum for the domain investor.

For a motivated buyer, these valuations can be out by a factor of ten. The pricing will be influenced by the what you glean from the conversation and this is the “art of the deal”. It’s one of the reasons why some domain investors work exclusively with select brokers.

The second issue, is how long do you want to hold your domain assets? If you’re prepared to hold your domains for ten years, then start dividing the prices by an increasing value of 10% per year. This means the first year the domains will be worth ten times the above and the second year 10% less etc.

BUT if you are wanting to sell the domains with some science behind the pricing then these don’t feel absurd. A component that I have not taken into account is the excess in supply for the volume of searches conducted on each keyword. This can potentially influence the pricing discussion.

Now before you jump up and down claiming your domains are worth far more than what I’m suggesting then ask yourself these simple questions.

Am I looking at a domain that is close to the right-hand asymptote? If you are then the methodology will likely be a little shaky.

How many offers have I received in the last 12 months for this domain? In other words, are you pricing your domain outside of the market's expectations.

What is the average offer size? If you have received offers, what are they?

Over the years ahead I plan on continuing to refine the model to dig into what else that can be influencing a domain sale’s price. What I don’t want to do is get into market comparables. In my opinion discussion comparables completely undermines the uniqueness of a domain and potentially pushes a buyer to look for other options.

I hope you have found these couple of articles an interesting read. Please leave any questions and comments below.....I'd love to receive some :-)

As I’ve stated in a previous article, pricing domains can be a difficult task. Many domain owners firmly believe that the price completely depends upon the buyer. The problem with this position is that it runs contrary to the fact that priced domains are more likely to sell. In this article, I’m going to attempt to put some mathematics behind pricing domains in ANY market vertical.

I made my first attempt at pricing domains in an article last year. At the end of the article I suggest that a lot more thinking needed to go into the model…..so here goes!

I’m a firm believer in economic theory and the rules of supply and demand. High prices are the result of a combination of high demand and low supply while low prices are a function of both large amount of supply and low demand. You can see the rules of supply and demand all over the business world; from oil and iron ore right through to dog food.

Supply and demand lead me to attempt to build a demand curve for a set of keywords in a market vertical. I entered mortgage, loans and finance into Google’s keyword tool and out popped 703 keywords with both the estimated volume of traffic, recommended price point and demand (ie. competition) for that keyword.

After a little bit of Excel magic I was able to produce the below demand chart for the financial category. I will be the first to indicate that you can actually get a more accurate curve with greater numbers of data points but the essence of the demand curve will remain intact. The interesting thing is you can also build the same sort of curve for any group of keywords.

So what are we looking at? This is a pretty good picture of a marketers view of the keyword landscape for their particular market. Remember, this does not provide a picture of what they are spending but how much they value a particular keyword.

The only reason marketers will consistently pay more for certain keywords is because the traffic from that keyword provides a return on their investment. This is the why each keyword has a different price point. This means the demand curve is a mirror of the conversion rate for each keyword.

We do know that the average keyword domain sells for around $AU2000 ($US1,500). It could be then said that keywords around the “weighted mean” (ie. the point at which the areas to the left and right of the chart are equal) of $21 will attract the $2K price tag. Domains down the curve will sell for less than $2K and those above this point will sell for more than $2K.

For example, “second mortgage rates” has a bid price of $12.60 which slides it about 25% down the curve from the weighted mean which would suggest this domain is worth around $1,500. On the other hand “second mortgage loans” (a more targeted keyword) is selling for $21.33 and places it right about the mean and a price tag of $2,000. “Second mortgage” is a shorter keyword and has a price tag of $22.86 which pushes up the demand curve by 5% which suggests the domain is worth around $2200.

These prices are guesstimate and I will attempt to do a more accurate pricing later in the article. What’s interesting is keywords such as “refinance second mortgage” is 45% higher on the demand curve than the mean and are deemed more valuable than the shorter keyword versions. So why is this the case?

Remember the demand curve will only keep in place if the underpinning metrics of a sale are met. It’s not just about traffic volume or “brandability”. Ultimately, it’s all about sales! This suggests that people that click on the keyword “refinance second mortgage” are more likely to purchase a second mortgage compared to individuals that click on “second mortgage”.  In fact, we can calculate the number as being nearly 40% more often.

This flies-in-the-face of the assumption that a short domain is a good domain. Sometimes shorter keyword domains provide more traffic but they bring a lot of tire kickers who don’t purchase products or services. The simple act of typing in more letters can be one of the more interesting qualifiers of whether a consumer will purchase or not.

For instance, everyone would assume that “best loans” is a great domain….and yet, the marketers don’t like that keyword and push it down the demand curve. What they love is “home refinance” and are prepared to pay top dollar for traffic from that keyword.

Here’s the problem with this analysis. The amount of $2,000 for the weighted mean is an assumption for this market vertical. I believe that every market vertical will have an average value that domains are sold for…..the majority of this type of information is held by the incumbent marketplaces.

What I’m saying is that for the finance sector rather than $2,000 it could actually be $10,000 or even less for the weighted mean. In my next article I’ll continue to dig and pull out more on the mid-point number.

There’s nothing worse than when you feel you’re thrashing. If you’ve never heard of “thrashing” then you’re likely to be one of the few lucky individuals that have never experienced it either. Thrashing happens when you have so much on your plate, you end up jumping from one activity to another and never completing anything.

Thrashing originated as a computer term to describe the hard drive head as it moved across a platter of disks. When users add and delete files, disk fragmentation occurs and the hard drive head has to jump like a jackrabbit all over its surface in order to access a single file. In a non-tech talk.…you hear what sounds like mice scurrying around in your PC.

The technical boffins solved this problem by constantly “defragmenting” the hard drive and rearranging all of the file parts so the hard drive head moved to one spot to pick up the file. We can learn a lot from this approach.

So the other day I found myself on three IM chats, a skype conference call, emails pouring in and a things to do list a mile long.

As an aside, I’ve used the far more sensible metric system all of my life and yet saying my things to do list is a kilometer long just doesn’t sound right. I tip my hat to all of you recalcitrant Americans who insist on still using miles, gallons and ounces rather than kilometers, liters and grams.

I’ve often wondered though how you express thousands of something? Is it kilogallons? Do you ask your local shop for a kilo-ounce of sugar? Then again, you’d probably end up filling up your entire kitchen with that much, so probably not.

So back to my thrashing around skype, IM and emails. After muting the mike on skype (I hope I did anyway) I let out a little scream, smiled and began to politely extricate myself from the myriad of noise that I really didn’t need to be a part of.

That’s the thing. Thrashing normally occurs when you stick your nose into places that it really doesn’t belong. After getting a whiff of what’s there you feel obligated to do something about the problem and clean up the mess. Note to self….other people are quite capable of cleaning up their own messes.

So I looked at my list, had a bit of a delirious chuckle and began removing all those things to do that I didn’t have to really be involved with. In the process I discovered a long last feature of skype…..the away button. It gave me the time to think rather than react.

At the end of my review process I had a more manageable list and I followed my mother’s instructions. For some reason, most mothers are absolute geniuses when it comes to getting stuff done. It’s probably the fact that they have vast amounts of experience ensuring that children are fed, clean and not sticking their little fingers in power sockets. My mother was brilliant at stopping me from doing the latter btw.

What did my mother say? She said, “Get your list together, start one task and don't stop until it’s finished.”

What a brilliant piece of advice! Before computers were invented and hard drive heads weren’t even a technician’s dream my mother solved the problem of thrashing. I sometimes wonder if the techies just sat down with a few mothers we could have had the world of the Jetson’s by now…..what a lost opportunity.

So I did what my mother told me and my MBA be damned. Who needs a master’s in business when you have an expert with a bachelor of common sense to look up to! It was amazingly liberating. Stuff got done, people stopped complaining because I was delayed in finishing a task and I had a smile on my face.

That’s when I realized, that I’d left skype on “away”…..no wonder I’d suddenly gained so much time.

Have a great weekend!

Michael