Why do domain prices float?
The domain industry is perhaps one of the last bastions of bargaining. Or rather, the last where it is still the customer who is empowered to routinely affect the purchase price they pay.
While some level of negotiation is the industry standard across the board, it’s true that many of us are a little uncomfortable with the idea of negotiating. Often simply because we’re not used to doing it each day, like our ancestors would have done.
popX Pricing Policy
If that’s also true in your paticular case, you can rest assured that popX offers prime digital assets at competitive price points for this asset class. We also believe in the long-term buoyancy of the domain market, and our curated little slices of it presented to you as the popX portfolio.
While this is not a guarantee of future value and the prospective buyer is encouraged to undertake their own due diligence, it is true that the domain market has consistently posted year-on-year price growth. For each year since the birth of the industry.
But if negotiating is just not your thing, you will not ‘lose out’ because you don’t want to spend your time haggling on price. Each popX domain has been assigned an indicative price range and a fair price will be quoted to you upon inquiry.
The exact figure will naturally reflect the intrinsic potential of the domain as a branding tool and asset, but it will also reflect multiple other factors — such as trends within a given extension/style of domain, micro conditions within the domain industry, and the broader macro outlook.
Why negotiating domain prices is a thing
However, popX is all about helping to bridge the knowledge gap between the domain experts and those looking to gain exposure to these digital assets. It also strikes us that this negotiation as standard practice is an aspect of the domain industry that in many cases doesn’t get (comprehensively) explained to customers. Instead, they are often just forced to realize that this is how this particular industry works.
So, in line with the popX ethos of bringing insider domain knowledge to those outside of the industry, it behoves us to explain why negotiating the final price is a thing in the domain industry..
Multiple internal asset classes
This trading dynamic is somewhat unique to the domain industry and stems from the nature of the assets being traded. In essence, domains are an asset class that spans multiple assets classes.
A well-aged 4-letter single-word dot com can act like a sturdy government bond, gradually and constantly growing in value — still true for domains, less so for bond (in 10 years will we say gov. bonds should act more like these domains?).
Meanwhile a 4-number dot com may trade like a commodity. One month it’s hot and changes hands several times for increasing amounts. The next month, market tastes have changed and that type of domain is no longer where it’s at.
Trends change and the market decide what’s of value.
The purest form of capitalism
The domain industry is arguable the purest form of capitalism on the planet. That is, capitalism as laid out by Adam Smith 250 years, not the trademark infringers that have followed since then. A person from any part of the world can be the purchase or seller of this class of digital asset.
A given domain will also command a price that reflects the willingness/ability of a market participant (The Buyer) to pay for it, and so will reflect the value attributed to that asset by that participant. If the same kind of domains are consistently sold within a certain price range, one may be able to speak of a ‘market value’ for that type of domain.
But that broader conceptualization of value is still based on each and every sale. If people start to recognize the value of a given kind of domain, prices will rise, one unique sale at a time.
Establishing price ranges
(Generalized) price ranges will thus naturally be determined, on the macro level, by market conditions — dictated by current asking prices, perceived current value and perceived future value/price. With scarcity, or perceived scarcity, the potion that keeps the whole elixir bubbling over from one pot to the next — each domain is unique, so it is up to market forces to decide which ones are ‘rare’.
But there is an important caveat to note here: Precisely because of the uniqueness of each domain, there can only ever be a direct one-to-one correlation between price and (perceived) value for that one particular domain — based on what someone pays for it at a given point in time.
So, when we speak of general market prices, this is based on analysis of the larger trends and of course the current demand and supply of the type of domain in question.
How Domain Investors Operate
Unlike stocks or bonds, there is no set venue or market price for trading domains. Instead, the investor laying down the capital for premium domain assets must make a call on every single purchase. Analyzing the specific merits of each individual domain, and its place within the macro and micro picture (in a world where over 1 billion domains have been registered!).
This is where domaining is more of a craft than comparative trading professions. With the right mix of art, vision and commercial acumen the requisite tools for success.
There is also a high level of risk involved, as the domain investor does not have any specific market assurance on price, or indeed whether they can ever liquidate their asset. If they make an unwise investment, they suffer the loss in its entirety. If they are savvier, and sometimes luckier, they manage to read the market well and their portfolio grows in value over the long haul.
Like a Wall St. trader, the winners pay for the losers and onward the trader continues onward.
..in theory, that is!
Like stocktraders, a very high proportion of domain investors will jump in head first, blow out their account by putting on too much risk too soon. Then, within a couple of years, decide that the domain industry is just not for them.
The concept of intangible valuables
On a more conceptual level, the potential for variability of in the price of domains is also woven into their construction. Domains are singular, intangible items: The original NFTs. And the base layer of the internet. Their form existing to the extent that that form has been attributed content (e.g. it is actively registered as property or currently hosts a site).
Adding to this abstract nature of domains is also the fact that they are items which have been crafted from the most intangible (and powerful) assets we have as humans — words!
The price/value of a given domain will therefore always tend to be floating, at least to some extent. And the actual purchase price shaped by market conditions and input between the participating parties — the Buyer and the Seller. The main difference with other asset classes being that, due to their intangible and entirely non-fungible nature, an automated market mechanism cannot be put in place.
So it is that, old school as it may be, this class of digital assets gets traded by different means.
Their sale prices settled through human-to-human interface instead of an order book on an exchange.