It is a fact of life. While some people win, some end up losing. Sometimes, you also got to lose in order to win.
There are a lot of losers in this economic downturn. However, believe it or not, there are also a lot of winners.
A year ago the exchange rate was 2USD ($2) to 1GBP (£1) or $1=£0.50. That meant that for every time I earn $1, I literally threw away half of it away to convert it to pounds sterling. With the United Kingdom being a very expensive country, the same $1 had even much less spending power than it would in the USA.
So if I earn $100,000, when I convert it to pound sterling, I would end up with the same spending power that someone in the USA would have with lets say, $30,000. That is like throwing away $70,000.
However, with most domain sales taking place in USD and most domain parking companies and affiliate partners in the USA, it is inevitable that I transact in USD.
The current economic downturn has done me some good. Thanks to the banking crisis and the economic fallout, the British Pound has lost some value. It is now a case of $1 to £0.70. Last year a $10,000 domain sale would have netted me just £5,000. Today, after conversion I get close to £7,000.
This is good news for my newsletter subscribers, domain investors and domain flippers. I can now afford to offer even more fantastic deals in our newsletters, as the USD now has more spending power here in the United Kingdom.
This is therefore a win-win situation.
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I beg to differ! I am located in the UK and this is a perfect time for domain buying rather than selling as there are many deals floating around. This worse exchange rate, however, means that although the prices have fallen, it would still cost the same number of £s as it would have at the end of last year.
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Pound,
Feel free to differ. It is always great to hear differences in opinion.
However, after reading your comment, I realised that you are not actually differing, but rather agreeing.
You see, you are on the buying side, while am on the selling side. So we can’t really see eye to eye here. When I lose, you win and vice versa.
A year ago, a domain that I would sell for $10,000 would net me £5,000 after conversion. Today the same transaction would net me £7,000 after conversion. That is an extra £2,000.
I have 2 choices. I could sell at last year’s price and gain an extra £2,000 in profit (foreign exchange gain) or I could adjust my price so that I end up earning the same £5,000 after conversion.
This would mean that I would now sell the same $10,000 for only $7,143. This is almost $3,000 less. This would become very attractive to buyers. Hence buyers would think that they are now getting more deals on the table (exactly what you said in comment).
For an American seller, it would be loss, but as a British seller, who would spend the USD proceeds in pound sterling, it is really the same as last year, hence no loss.
If I choose to reduce prices, I may end up selling more domains (units), hence making more profits.
So it would become a win-win situation. Buyers get more deals, while I would end up making more sales.
Now let me address your last point. Yes, as I said at the beginning of the post, while some win, some lose. Unfortunately, because the pound is weaker, and you would be a British buyer buying in dollars (importer), you would end up having increased costs.
So, even when I reduce prices to $7,142, the Americans would end up paying $3,000 less for a $10,000 domain name, while you still pay the same £5,000 ($7,142 x 0.70) that you would have paid last year, after conversion of pounds sterling to dollars.
I hope I didn’t confuse you at all. If you are still differing, please share your thoughts.
Kevin
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