Real indicators of price

At a recently held auction of RIPE IP space a /16 block was sold to several bidders. No individual block prices were published but based on the information that was given we have attempted to make an intelligent guess.

‘Winners of the auction were found by taking the collective of bids that generated the highest total income.

When the winners were calculated it turned out that the winning bids were within a range from € 8 to € 13  per IP address with an average of € 8.82 per IP address. Out of 93 bids there were 16 winners. The distribution of winners relative to block size is shown in the table below.’

Block Nr. of IP-addresses per block Nr. of Winners
17 32768 1
18 16384 1
19 8192 0
20 4096 1
21 2048 3
22 1024 4
23 512 2
24 256 4

65536 IP addresses at € 8,82 makes a total of € 578027,52

We put all the known variables into a spreadsheet and played with the price per IP for each sale until we were able to get an exact match with the total amount of the sale. There are probably other combinations possible but overall the difference won’t be very far off this result. We started off with the assumption that the largest block was indeed sold at € 8,- and at least one of the smallest blocks at € 13,-.

32768 * € 8 = € 262144

16384 * € 9  = € 147456

4096 *   € 9 = € 36864

2048 *   € 9 = € 18432

2048 *   € 10 = € 20480

2048 *   € 10 = € 20480

1024 *   € 11 = € 11264

1024 *   € 11 = € 11264

1024 *   € 11 = € 11264

1024 *   € 12,01 = € 12298,24

512 *    € 12,5 = € 6400

512 *    € 12,6 = € 6451,2

256 *   € 12,7 = € 3251,2

256 *   € 12,99 = € 3325,44

256 *   € 12,99 = € 3325,44

256 *   € 13 = € 3328

Total               € 578027,5

When we look at the prices we have seen with our own sales we find that these prices are very similar to the auction’s. The pricing you see on our Buy blocks Now page are a reflection of this.

These auction results also pose an interesting question. What is the value of a /16? Is it the € 8,82 that was fetched at this auction, or would that be below the price that was fetched for the /17 in this block? We believe that the winners of the auction of the bigger blocks were lucky. If you require a block the size of a /16 you would be best off buying the one contiguous block rather than smaller snippets comprising the same number of IP addresses. Unless of course you have specific routing plans for smaller blocks. Paying between € 8,50 and € 9,- per IP, an asking price we have already seen in the market, would be good form.

We are not a big fan of auctions as they are time consuming and laborious. From a buyers perspective it is not always convenient having to wait till the auction closes not knowing whether you have actually purchased what you require. A seller might think he will get the optimal price using an auction but auctions usually attract a different kind of audience often looking for a discount. Often times a seller is better off naming his price and waiting for a quality buyer instead.

On the up side auctions usually give an insight into how a market is doing and what direction prices are going. Therefore the results of this auction is a real indicator of price in a market that is otherwise very secretive when it comes to pricing.