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  1. #1

    eNom resellers & low prices - Have we screwed ourselves?

    OK.. I'm just going to rant here for a bit about a pet peeve..

    Why in the heck are people selling $6.95 (or slightly higher) accounts for nothing but a low setup fee of maybe $6 - $40?

    It doesn't make sense. Do these people not realize that they are creating direct competition for themselves? when I first started out here offering low reseller prices, I never gave $6.95 accounts even if someone wanted to pay $100 for the setup!

    It would be plain stupid. Bad business sense.

    1. I make no recurring income. Just the one-off setup fee. Impossible to sustain my business with this.. because:

    2. The resellers I create soon realize THEY can make a "quick buck" by offering the exact same domain prices, but with a slightly lower setup fee. And then THEIR resellers do the same, and on and on..

    And now we have eNom resellers here that are routinely offering $6.95 (or $6.99) domain pricing for nothing more than $7 setup fee!

    It is just amazing to me that people were and are so shortsighted that they have completely destroyed the market for having a sustainable business. Instead, it is now a game of who has he cheapest setup fee. pretty soon people will offer $6.95 domains for $2 setup.

    What a joke.
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  2. #2
    No one selling domains for $1 over cost is making any money. They will eventually go on to do something else once the novelty wears off.

    Just my opinion of course...

    -t
    myOstrich Internet - OpenSRS Domain Names & Digital Certificates
    http://www.myostrich.net

  3. #3
    It makes me mad because there will always be a supply of moronic people offering $6.95 domains/reseller accounts for a small setup fee. Even when the novelty wears off, there will always be another group to replace them.. ie: the people who just purchased from the group that is "dying"..

    It's a never ending cycle of low-cost domains.. great for the consumer, but not good for those of us who are trying to build a sustainable business not dependent on one-time cheap setup fees.
    Want to sell domain names? Sign up today for an eNom.com reseller account from a trusted eNom ETP provider.
    * We provide support and service to over 3245 happy eNom domain name and SSL certificate resellers!

  4. #4
    It is called cheap greed. It makes no sense at all. I think we should all band together and never sell below $12. THINK longterm...

    Swede

  5. #5
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    Well I don't think everyone will band together, but you just have to realise that these companies won't be around in the long term.
    Chinthaka Wickramaratna
    http://www.M6.net
    multi-account windows hosting packages

  6. #6
    Originally posted by chin
    Well I don't think everyone will band together, but you just have to realise that these companies won't be around in the long term.
    Exactly! These companies will not be around, but the many reseller accounts they create will be around.. and each of THEM will likely offer low cost domains for very little setup price.. and the cycle goes on.

    The end result/effect is that there will always be a lot of eNom resellers willing to create $6.95 accounts for $2 setup fee.

    I guess the root of my own question is:

    If I can't beat them, should I join them?
    Want to sell domain names? Sign up today for an eNom.com reseller account from a trusted eNom ETP provider.
    * We provide support and service to over 3245 happy eNom domain name and SSL certificate resellers!

  7. #7
    I don' t believe that eNom will continue to support this model over time anyway. They are not making enough money on these domain sales to make it interesting. It's a great tactic to generate a large number of clients, but it does not pay the overhead.

    -t
    myOstrich Internet - OpenSRS Domain Names & Digital Certificates
    http://www.myostrich.net

  8. #8
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    Originally posted by swede
    It is called cheap greed. It makes no sense at all. I think we should all band together and never sell below $12. THINK longterm...

    Swede
    I THINK I've heard of that kind of thing before...isn't it called "Price fixing" ?

    I know (at least in the US) It's illegal...and anyways, it's not workable in the least.

    You can price fix if you have a relatively closed set of people in an industry (car manufacturers, etc) but it doesn't work when anyone with a book on "How to run Linux" or "Learn webhosting in 12 days" and a spare PC with a cable modem can TRY and get into the business, at least for the short term.

  9. #9
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    Originally posted by thewitt
    I don' t believe that eNom will continue to support this model over time anyway. They are not making enough money on these domain sales to make it interesting. It's a great tactic to generate a large number of clients, but it does not pay the overhead.

    -t
    eNom still make $0.95 per domain (about 15% markup).
    It is a good profit margin.
    Last edited by iWebbers.com; 09-26-2002 at 10:54 PM.

  10. #10
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    MrZippy, you are completely right.... I just don't think that we can do something. That's the sad reality.
    Founder of TradeHolding.com B2B Network and OneLoveNet.com Singles & Dating
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  11. #11
    Originally posted by iWebbers.com
    eNom still make $0.95 per domain (about 15% markup).
    It is a good profit margin.
    Actually, it's a terrible gross profit margin. 30% is considered minimum in all the Harvard Business School studies, and 40% is considered sustainable.

    If you look at the SOTD report and simply to the math, you have to conclude that these $1 domains are NOT where eNom is making their money, as they cannot even pay their overhead with an income this low.

    -t
    myOstrich Internet - OpenSRS Domain Names & Digital Certificates
    http://www.myostrich.net

  12. #12
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    Originally posted by iWebbers.com


    eNom still make $0.95 per domain (about 15% markup).
    It is a good profit margin.
    $0.95 x 1,328,791 (current registered domains of enom) = $1,262,351.45 /year at least. This is more than enough to support the operation of domain name business.

    Some reseller offers from 6.95 to 8.99 sub-reseller account and sell it for 7.95 to 10.99 to get at least $0.50 each registration.

    If you're counting hundred thousand of domain name registration, this is enough to make your business running.

    Note:This type of business case is long term approach. It will take years to have thousand registered users to your sub-account and maintained them on your side.

    We offer a domain name registration of $10.99 and resellers of $8.99. We can't beat the $8.88 pricing as of this time. Though we have some resellers active to our account and still hanging around because we provide them good support. This is the way we keep them. Of course, we have no rights to prevent them going to new business that offers $6.95 sub-domains. Still we're here and doing business but not to beat other price scheme.

    Just a thought.

    Good luck to everyone.
    em.
    WirelessCon.Com BlackHat.INFO Business.NU

  13. #13
    The thing that many people are missing is that people offering these reseller accounts at $7 have no intention at all of making a living off of selling reseller accounts. It's simply quick money for very little effort.

    For anyone who did intend to make reselling of domain reseller accounts their job...you're basically SOL.

    I say go with the flow, but atleast keep your 'setup' fees a little more expensive and give someone a reason to order yours over the $7 guy.

  14. #14
    You know any sort of price fixing is wholely illegal, right?

  15. #15
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    Originally posted by thewitt
    If you look at the SOTD report and simply to the math, you have to conclude that these $1 domains are NOT where eNom is making their money, as they cannot even pay their overhead with an income this low.
    What overhead is their for eNom if a reseller sells a domain? The reseller should be doing all the marketing, support etc. eNom should just be making thier $0.95/domain year. They are also prob. making a small % on the CC processing (if that is used).

    What am I missing?

    Frank
    Umbra Hosting
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  16. #16
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    Frank,

    You are correct about that.

    Enom earned from this business case:
    ---------------
    1st level reseller - 8.95, enom get $2.95 /domain registration.
    2nd level reseller - 7.95, enom get $1.95 /domain registration.
    3rd level reseller - 6.95, enom get $0.95 /domain registration.
    Merchant account - enom get something here, (domain price * percent) + .95 per transaction. Revenue varies depends on price posted by resellers.
    And new service is POP3/webmail which will be added here.

    This is not a bad business process.

    Well, good luck to everyone.
    em.
    WirelessCon.Com BlackHat.INFO Business.NU

  17. #17
    Greetings:

    "by offering the exact same domain prices, but with a slightly lower setup fee. And then THEIR resellers do the same, and on and on.."

    Read the Shlitz beer story.

    When you compete on price you end up destroying your brand(s), and your company.

    Thank you.
    ---
    Peter M. Abraham
    LinkedIn Profile

  18. #18
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    enom are the only ones doing ok out of it.. they leave themselves a constant margin and dont have to do any work themselves.

    Its enom resellers who over 6.95 accounts who are simply damaging themselves, unless they are purely in the business to gain setup fees ?

    I have an enom account @ 7.10 which i got free and simply use it for hosting customer domain registrations.. the market for gaining resellers below you is flooded and pointless

    IMHO of course
    Matt Wallis
    United Communications Limited
    High Performance Shared & Reseller | Managed VPS Cloud | Managed Dedicated
    UK www.unitedhosting.co.uk | US www.unitedhosting.com | Since 1998.

  19. #19
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    Isn't the wholesale price of a .com/.net domain name $4? so surely eNom is making $2.95 (from which of course they have to take off their own costs)

    I think eNom believe the more domains they can get registered the more it will make them... domain registration isn't an intensive business, especially if you've got all your resellers doing the hard work in supporting end users.

    I think eNoms model is viable, but that it will impose restrictions to weed out resellers who have unsustainable pricing. It may well do this by simply requiring a minimum deposit for every sub-reseller; make this deposit high enough and suddenly you don't get silly people selling at a loss.
    hosting53.com - the hosting solutions company

  20. #20
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    The last time I've checked wholesale price is $6.
    WirelessCon.Com BlackHat.INFO Business.NU

  21. #21
    I'm not going to argue this case again, I'm on record many times and with plenty of data to support my position. I've done the business case analysis to become and maintain ICANN accreditation. You can believe me or not - but unless eNom is running the show with less than 5 employees, they are losing money at these levels.

    ice, the wholesale cost of a domain is $6, plus ICANN variable fees that amount to about $0.30 at these registration levels.

    -t
    myOstrich Internet - OpenSRS Domain Names & Digital Certificates
    http://www.myostrich.net

  22. #22
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    ah ok, I stand corrected then.
    hosting53.com - the hosting solutions company

  23. #23
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    Originally posted by thewitt
    I'm not going to argue this case again, I'm on record many times and with plenty of data to support my position. I've done the business case analysis to become and maintain ICANN accreditation. You can believe me or not - but unless eNom is running the show with less than 5 employees, they are losing money at these levels.
    But this is just your analysis. The fact is that a company could be viable and profitable based on a variation of your assessment. For example, if I ran a hosting company, my company could be profitable even if I sold domains at cost. This is an extreme, however valid, example of how domains could be sold by a company and that company could still be profitable. Long term goals, value added services, etc., all must be factored in before you can dismiss a company's viability. From all reports I've seen, they ain't losing money...
    HostHideout.com - Where professionals discuss web hosting.

    Chicken

  24. #24
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    * Agreed!

    Originally posted by swede
    It is called cheap greed. It makes no sense at all. I think we should all band together and never sell below $12. THINK longterm...

    Swede
    I have got someone email me to set up a reseller account for him. When I told him, I can set up retail account of $14. He say he has already got reseller of US$7.25 (for free). I am sure that he is looking for more cheaper US$6.95 (for free).

    I was quite worry for this case.

    Because everyone become reseller. Who is the end user?



    Regards

    PrimeDNR

  25. #25
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    Enom get 0.95 + transaction fee

    Originally posted by thewitt
    I don' t believe that eNom will continue to support this model over time anyway. They are not making enough money on these domain sales to make it interesting. It's a great tactic to generate a large number of clients, but it does not pay the overhead.

    -t
    eNom.com get 0.95 + Transaction fee of 0.95 +3% credit card (it should have a cost of less than 3% because of large volume).

    It gain anyway. It don't need to spend money for advertising. Its reseller will do.

    Right




    Regards
    PrimeDNR

  26. #26
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    People on this forum will always want to be resellers.. its the CUSTOMERS you gain at your websites that you dont wanna go throwing $7 domains at... I would set anyone on here up at $7.20 or something.. but if a hosting customer wants a domain i charge 10... about $13 ?
    Matt Wallis
    United Communications Limited
    High Performance Shared & Reseller | Managed VPS Cloud | Managed Dedicated
    UK www.unitedhosting.co.uk | US www.unitedhosting.com | Since 1998.

  27. #27
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    The point is just wait until some not-so-smart reseller starts offering their customers domains at $7.30 or something... then who'll buy your 10 domains?

    The reason such good pricing is generally not given to everyone is that some companies understand what irresponsible pricing will do.

    Take a look at the big UK supermarkets, they're all competing in price but they do it in such a way that they make sure they make enough money to sustain themselves, that's because the barriers to entry are reasonably high and to setup your own chain like Tescos, Asda or Sainsbury's will take lots of investment.

    eNom resellers don't have high barriers to entry, from what I see, a $7 setup charge will get them the ability to register domains for $7.10... they have no incentive to recoup their setup fee because its just so low.

    I think eNom should stop allowing the chain of reseller accounts to grow, that is, prevent someone with a reseller sub-account creating a reseller account below themselves. It wouldn't be illegal at all, it would be common sense.
    hosting53.com - the hosting solutions company

  28. #28
    Hello
    Resellers may be looking for cheap prices but end users arent.

    Real life example:
    We increased our price for .uk from 9.95 to 14.
    Sales went down 20% but profits went up by a lot more.

    We sell .com at $13-$15 and don't seem to have any shortage of customers willing to pay that price.

    I agree that 30% is about the minimum margin thats workable.
    However, its possible that they make more on some customers and not on others.

    I was at a Nominet meeting last week where a representative of Enim was present because they are about to start offering .co.uk.
    I wonder what their wholesale price will be?

    Gordon
    Formerly: Managing Director, Hostroute.com Ltd & Marketing Director, Ultraspeed UK Ltd
    View my Professional Profile: www.gordonhudson.com

  29. #29
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    I cant wait for enom to start doing .uk domains,

    I hope they do free transfers for .uk so i can finally get ALL my customer domains to one central control location
    Matt Wallis
    United Communications Limited
    High Performance Shared & Reseller | Managed VPS Cloud | Managed Dedicated
    UK www.unitedhosting.co.uk | US www.unitedhosting.com | Since 1998.

  30. #30
    Originally posted by Chicken
    But this is just your analysis.[clip]
    I've never said otherwise. I have however, done the analysis on becoming a vialble, ICANN accredited registrar - unlike most of the people who comment that eNom can simply "make it up in volume" regardless of their margins on sales.

    It's only my opinion. Take it for what it's worth.

    -t
    myOstrich Internet - OpenSRS Domain Names & Digital Certificates
    http://www.myostrich.net

  31. #31
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    Originally posted by thewitt
    You can believe me or not - but unless eNom is running the show with less than 5 employees, they are losing money at these levels.
    I understand that some comments are your opinion however, some of your opinions blur into baseless commentary. If you're telling me that Enom's total business model could not support five employees, and that if they do in fact employee 5 employees (rather than 4, which is less than 5) that they are losing money, I'd have to say that you need to have another go at that analysis again.

    If you can provide statistics which detail how enom has not been successful, then I will most certainly agree with your assessment of the situation. From what I've seen however, they have been successful, and this leads me to believe that they have done an analysis as well.
    HostHideout.com - Where professionals discuss web hosting.

    Chicken

  32. #32
    The thing that neither of us know here is what kind of capital investment they have, and what their other products contribute to the bottom line. They charge $7000 up front before any domains are registered in order to get their best prices. This pool of money is great, however it eventually gets spent. This is the wildcard in the equation - if they are spending this pool of money and not keeping it in reserve to actually register domains - eventually they may have a cash flow problem...

    We'll know more this time next year. They are certainly much smarter than I am to make their business work on such slim margins. I must have spent too much time in business school...

    -t
    myOstrich Internet - OpenSRS Domain Names & Digital Certificates
    http://www.myostrich.net

  33. #33
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    Yes, it is recommended to everyone here to adjust your business case as we know that dot com business is not for year 2002.

    We cannot afford to beat everyone price scheme, but a decent business case will be able to survive your company/entrepreneurs. Don't ask how, just do your own reviews.

    Good luck to everyone.
    tw.
    WirelessCon.Com BlackHat.INFO Business.NU

  34. #34
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    *

    Originally posted by Chris Marks
    The thing that many people are missing is that people offering these reseller accounts at $7 have no intention at all of making a living off of selling reseller accounts. It's simply quick money for very little effort.

    For anyone who did intend to make reselling of domain reseller accounts their job...you're basically SOL.
    Three pages and only this post one nailed what's really going on? (That's not including the OT debate on eNom itself, in which the only thing agreed upon is that nobody here really knows ) I can't imagine considering making a living of reselling domains. Like Chris said, the only reason I would do it is to make a little extra money on the side. I'm not saying it's impossible to make a living off reselling domains, but it's like pointing at Yahoo and saying "But they did it!"

  35. #35
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    Originally posted by thewitt
    The thing that neither of us know here is what kind of capital investment they have, and what their other products contribute to the bottom line. They charge $7000 up front before any domains are registered in order to get their best prices. This pool of money is great, however it eventually gets spent. This is the wildcard in the equation - if they are spending this pool of money and not keeping it in reserve to actually register domains - eventually they may have a cash flow problem...

    We'll know more this time next year. They are certainly much smarter than I am to make their business work on such slim margins. I must have spent too much time in business school...

    -t
    Enom are part of a larger group and they have a somewhat more sophisticated approach than just selling domains the way you describe.

    The politics and deals at the top end will never be known to other than those participating, so applying all these figures from the ICANN and Verisign web sites and from basic correspondence is not going to tell you how they operate.

    We have spent a deal of time dealing with ICANN accreditation issues and the transparency is not going be available for the readers of this forum unless some quite large changes occur in this industry, so Harvard MBA's [which are in increasing abundance] and others, are unlikely to immediately have the wherewithal to analyse the business satisfactorily.

    The grab for business at skinny margins is often repeated in many industries, and usually by inexperienced or short term players.. but in some cases by smart guys too..

    It is a pisser to have people undercut you all the time, but unfortunately for those who are bitching, these are *market forces* in action.. the way we do things in the western world.

    Gordon made a good comment in that he raised prices and profits.. this is business.. it's a fluid thing and the *cottage industry* mentality that wants to employ price fixing has need of some experience in the world of real business, or get big enough to control a market and get away with it.

  36. #36
    Originally posted by thewitt
    I don' t believe that eNom will continue to support this model over time anyway.
    I agree, but for a different reason. Can you imagine the support nightmare that's being created? Resellers are *supposed* to use their parent as their primary point of contact for all issues, but how many of the "business people" offering $6.95 accounts for $10 or less will ever support their subs? None of them because they have no vested interest in doing so. Got your setup fee, thanks very much, you're not making me any money, bye bye.

    Sooner or later eNom will have to put a cap on things before the whole pyramid scheme becomes a logistical nightmare. Personally I'm hoping for sooner.

    Best wishes,
    Simon.
    http://www.AQHost.com
    Fast, reliable dual Intel Xeon servers
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  37. #37
    Originally posted by no1v2

    Three pages and only this post one nailed what's really going on? (That's not including the OT debate on eNom itself, in which the only thing agreed upon is that nobody here really knows ) I can't imagine considering making a living of reselling domains. Like Chris said, the only reason I would do it is to make a little extra money on the side. I'm not saying it's impossible to make a living off reselling domains, but it's like pointing at Yahoo and saying "But they did it!"
    I was wondering if anyone had actually read my post

  38. #38
    Originally posted by Chris Marks
    The thing that many people are missing is that people offering these reseller accounts at $7 have no intention at all of making a living off of selling reseller accounts. It's simply quick money for very little effort.
    I read your post too

    I think you missed something important though. That $7 setup fee may represent quick money, but the reseller also shoulders the risk of $40+ per transaction in chargeback fees for any fraudulent transactions committed in the sub-accounts that he/she creates. Let's see - $7 in, no recurring income, risk of $40+ per transaction out. Hmmmmmmm. Not a good business model regardless of whether you want to make a living or just a small part-time income.

    The "little effort" part misses the fact that as I mentioned above resellers are supposed to provide support for their subs. Wait until that rule is enforced a little more often by eNom and you'll see the market change very quickly.

    Best wishes,
    Simon.
    http://www.AQHost.com
    Fast, reliable dual Intel Xeon servers
    Excellent uptime record
    Efficient and friendly support

  39. #39
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    Originally posted by Chris Marks


    I was wondering if anyone had actually read my post
    Chris, I think maybe you're right here and AQHost, I think you are making an assumption that the total number of domains actually registered via all these 'cheap' resellers actually amounts to a large number.. it doesn't. They just make a lot of noise here.

    The number of 'support' enquiries isn't really so huge either..

    Rather than the 'scheme', as you call it, ceasing to function, I'd prefer to see the reality of the whole thing cause the few 'business people' who are happy with a couple of bucks here and there to buy drinks or whatever, leave the scene.

    The deal isn't idiot proof, but it'd be better to remove the idiots than the deal..

  40. #40
    Don't get me wrong here, I'm certainly not saying that it's a good thing to be offering these accounts at $7...I'm simply stating that for them it is quick money for little effort, and the low price beats out everyone else.

    By selling it so cheap, they *might* make some good money in volume, but chances are not all that many people will find their deal. Thus, they could have been making $25+ per account by not going so low in the first place, and had some peace of mind when it comes to chargebacks.

    I offer reseller packages on my domain registration website as well, but my rock bottom rate deal comes with a much higher setup fee. I might not sell as many, but I'm protecting myself. It's not really any different than being a manufacturer of a product - you have an absolute minimum price you can sell it at. The more product a client buys, the lower the price goes for them, until it reaches the bare minimum. So, you make money through volume, or you make the same money through higher prices, less volume.

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